Setting Up Shop E-commerce is booming. Here's how you can get in the game.

Being small and agile was one reason Holt Educational Outlet, adevelopmental-toy discount retailer, was able to initiate ane-commerce strategy relatively quickly. The 20-year-old catalogretailer in Waltham, Massachusetts, which has a warehouse that alsofunctions as a retail store, decided to delve into the Internetlast year. Unlike large companies that mire a Web project inmeetings and paperwork, president and CEO Paul Holt's50-employee firm took action quickly by hiring an executive who wasexcited about the Web site idea and ran with it.

David Lord, the company's new CFO and chief informationofficer, wanted to make Holt a major presence in theeducational-toy market on the Internet. "We redeveloped ourbusiness plan and decided that e-commerce would be our corestrategy," Lord says. "Because we wanted to compete withthe big guys and grow nationally, and because we knew we didn'thave the kind of money to invest in our own stores across thenation, we believed if we put the proper e-commerce plan in place,we might just be fast and aggressive enough to growquickly."

Lord hired a team to help run his department and implement thecompany's e-commerce strategy. The team chose Microsoft as itsmain platform and bought several state-of-the-art servers. It alsobought Microsoft e-commerce software and signed up for multiple ITphone lines, i.e. more powerful lines for faster connections.Finally, it integrated its accounting software into Microsoft'ssite server.

The Web site, which Lord says cost about $50,000 (not includingemployee salaries), was launched last October--nine months afterLord was hired. When a customer orders a toy from the site, thesystem enters the information into Holt's financial system,then fulfills the inventory, processes the accounts receivableinformation and completes the credit card transaction.

Holt says all the hard work has been worth it: His company isnow considered a major player in its industry, with projected salesof $2 million this year. And it recently entered into an agreementwith Playmobil USA, which provides Holt with the exclusive firstrights of distribution to sell some of its toys online. Playmobilalso benefits from the agreement through an aggressive Internetmarketing campaign that utilizes banner advertising and onlinedatabase marketing generated through Holt's Web site."We'll be able to give Playmobil information about peoplesearching for its products," says Lord. "Playmobildoesn't have to hire a customer service firm to questioncustomers [about] the products they like; we can put a question on[the site] and have 5,000 answers for them."

Besides its success with Playmobil, Holt's Web site offersspecial features that children and adults are signing up for by thebucketload. For example, the site's search engine, ToyDetective, lets shoppers track down specific toys by criteria suchas age group, type of toy and brand name. And the site's ToyRegister lets children preregister for their favorite toys andreceive via e-mail personalized news geared toward theirinterests.

Many small companies such as Holt are doing everything they canto jump on the e-commerce bandwagon. They understand that having anonline store means a small company can look big without having tospend big bucks. If you're thinking about becoming one of thosecompanies, where do you begin? Following are some products andservices to give you a head start.

Melissa Campanelli is a technology writer in Brooklyn, NewYork, who has covered technology for Mobile Computing &Communications and Sales & Marketing Managementmagazines. You can reach her at Melisscamp@aol.com

Choices, Choices

If you want to launch a Web site for your company, you can hirea Web site hosting company to house and maintain the serverequipment, or you can start from scratch. If you choose thedo-it-yourself route, there are several kinds of servers availablethat are geared toward small businesses. These includeMicrosoft's Internet Information Server 4.0, (http://www.microsoft.com/ntserver),IBM's new Netfinity 3000 (http://www.ibm.com), andHewlett-Packard's NetServer E 50 (http://www.hp.com,). All three servers arepriced between $2,000 and $3,500.

But buying the server equipment is only the beginning.You'll also need to choose a network infrastructure; the typeyou select will depend on the size of your business, how tech-savvyyou are and how often you plan to modify your catalogs. Some goodmidrange packages that allow users to connect a virtual storefrontto a database and generate reports are Cat@log Builder from TheVision Factory (http://www.thevisionfactory.com),iCat Electronic Commerce Professional Suite 3.0 from iCat (http://www.icat.com), and Microsoft SiteServer 3.0 Commerce Edition (http://www.microsoft.com). Thesepackages cost between $1,495 and $9,995 and include features suchas indexing, searching, and a virtual shopping cart (where yourcustomers can drag products to a shopping cart icon before addingthem up and paying for them).

If you're a beginner, some popular e-commerce softwarepackages to check out are O'Reilly's WebSite Professional2.0 (http://www.oreilly.com),Forman Interactive's Internet Creator 4.0 (http://www.forman.com), PeachtreeSoftware's PeachLink (http://www.peachtree.com), Yahoo!Store (http://store.yahoo.com,), VirtualSpin's Cartalog (http://www.virtualspin.com), andthe newly released Online Merchant from Alpha Software (http://www.alphasoftware.com).Despite their simplistic approaches, these packages allow you toimport HTML text into existing pages to customize your site as yourbusiness grows. Prices range from $0 to $799, and all programs arehosted by either the vendor or a partner ISP. While site-hostingfees are usually based on the number of items in your store, allstart at less than $100 per month.

Even More Options

For an all-in-one solution, check out Encanto Networks' e.goCommerce (http://www.encanto.com). Thisminiature Web server costs $1,295 initially, plus $49.95 per month.The system's features include Web store creation, orderprocessing and electronic payment processing.

A new addition to your lineup of options is the AT&TNetworked Commerce Services' eCommerce Suite (http://www.att.com), which bundles a setof services, including Web hosting, a secure payment service andconsulting services for site design and implementation. For $695 amonth and a setup charge of $500, this isn't a bad buy.

For a product designed to make your Web foray as easy aspossible, check out iCat Commerce Online. This service includestools to create a simple storefront in minutes, and it offersfeatures such as search indexing, and tax and shippingcalculations.

ICat hosts the site through major ISP facilities running oniCat-owned computers and servers. This relationship allows thesystem to run 24 hours per day and offers customers secure shoppingas well as a CyberCash option that makes real-time credit cardauthorizations and encryptions. Stores selling 10 items or fewercan be created for free; fees for larger stores are based on thenumber of items. A 50-item store is $49 per month, for example, anda store with 3,000 products is $349 per month.

Hiring a consulting firm is another option--and for smallbusinesses with no MIS staff and a limited knowledge of technology,this may be the way to go. In fact, according to one recent study,one of the reasons Web commerce has been slow to evolve until nowis that small businesses are afraid of the many components of Webstores, which must all work together seamlessly. Consultingcompanies are experts at putting all the pieces together, which isespecially important if you plan to link your site to legacyapplications, such as inventory and accounting systems. Prices forthese services vary, but to give you one example, SnickelwaysInteractive, an e-commerce consulting company in New York City,charges around $50,000 on average for its services.

This is just a sampling of the many options available to helpyou get started. With a little research, even novices can join theranks of entrepreneurs who have made the leap online--and neverlooked back.

Shopping List

hether you're doing it in-house or planning to use aconsultant, there are certain key ingredients required to launch atransaction-based Web site. David S. Linthicum, chief technologyofficer of SAGA, an enterprise application integration company inReston, Virginia, and author of several books and more than 250technology articles for major computer publications, explainsthem:

• Web server: All Web-storefront programs or commerceservers sit on existing Web servers. Entry-level products aredesigned to build sites hosted by a vendor or an ISP, eliminatingthe need to install or administer a Web server locally.

• Catalog builder/store administrator:Web-storefront-creation software packages allow you to generateHTML-based product catalogs using information from a database. Themore powerful packages can import data from Excel spreadsheets ordatabase files; entry-level packages typically require you to enterthis information manually. Good programs also offer administrativefeatures, so you'll be able to do such things as createpromotions and promote sales items.

• Database server: Most Web stores have at least two typesof databases: a product database and a customer database.

• Virtual shopping carts: These allow customers to selectitems for purchase and continue browsing through the store beforeplacing an order.

• Order processing/security: Processing orders involvestasks such as calculating taxes and shipping costs, and processingpayments. Some products integrate these functions; others rely onthird-party components. Many products include SSL (secure socketlayer) for securing transactions.

• Site analysis/reporting: All Web-storefront packagesshould offer the same basic site analysis tools found in Web-serversoftware for reporting the number of page hits. More sophisticatedpackages allow you to generate detailed reports on sales andcustomers.

• Links to legacy systems: One of the toughest challengesof Web commerce is linking your site to legacy applications, suchas inventory and accounting systems. Some midrange packages offerthis capacity; e-commerce or Web consultants can help you set itup.

Contact Sources

Holt Educational Outlet, (781) 788-6000, http://www.holtoutlet.com

SAGA, fax: (703) 391-8290, david.linthicum@sagafyi.com