Mom-and-pop businesses go boom on the Web
August 26, 1998
by Leslie Goff
(IDG) -- George and Shirley Kalvinsky's cigar shop is nestled in a small tourist town on the Delaware coast. During the peak summer months, they receive familiar faces from up and down the Eastern Seaboard who make Greybeard's Tobacco and Coffee a regular part of their summer vacation.
Come September, when the summer residents leave, business slows. The Kalvinskys usually close their extra storefront near the beach and settle into a quieter routine at the main store.
This year, all that will change. The Kalvinskys have opened a new location that their loyal customers can visit anytime to pick up their favorite hard-to-find cigars. And new customers who've never heard of Rehoboth Beach, Del., can surf by and check out the merchandise. Yes, Greybeard's has set up shop in cyberspace.
While Greybeard's already serviced a modest number of summer customers year-round via mail order, its long-distance business has doubled to about 8% of the store's $700,000 in annual revenue since launching its Web site in January, says George Kalvinsky. Moreover, the Web site has generated more walk-in traffic for the store this season — people who said they'd been summering in Rehoboth Beach for years but never knew about the store until they saw it on the Web.
The Kalvinskys' Web site illustrates how mom-and-pop shops are boasting the appearance of big businesses on the Web and transcending borders to reach far-flung customers. A depth of selection of merchandise, detailed product information written with flair and professional, high-quality graphics can all work together to make even the most humble enterprise look like a big-time operation.
The Great Southern Sauce Co., a cozy storefront in the heart of Little Rock, Ark., has sold salsa, barbecue sauce and other favorites from south of the Mason-Dixon Line to customers as far away as London and Saudi Arabia. While the site has down-home appeal, with recipes and folksy product descriptions, the sheer number of sauces available makes visitors think the company is a huge mail-order business, according to owners Amy and Andrew Moore.
Likewise, most online shoppers would be surprised to learn that College Depot, an electronic-commerce operation that sells college-type merchandise — from hemp bracelets to inflatable dorm-room furniture — is based in Donal and Bridget Gleeson's family home in Trumbull, Conn. The Web site, which boasts 50,000 products, weekly merchandise giveaways and secure online ordering, fosters the notion of a huge retail operation.
"We try to convey the image that we're substantial because we think that helps to build trust," says Donal Gleeson. He landed on the idea of a retail site for students after researching underserved market niches and has established alliances with trading partners that ship their merchandise directly to customers. The site was launched last October and in its first academic year did less than $100,000, with about 1,000 orders. Gleeson is optimistic. "We expect it to be much bigger this year," he says.
About one quarter of small businesses in the U.S. have a Web site, according to a recent survey of 1,000 companies with fewer than 100 employees by Yankelovich Partners, Inc. for IBM and the U.S. Chamber of Commerce. Of those, 29% use their sites to receive orders. Interestingly, only 46% said their sites are worth the time and effort put into them.
The Kalvinskys, Moores, Gleesons and other entrepreneurial families are among those who believe they can reap their share of the expected electronic-commerce harvest: a projected $5.8 billion this year, $9.9 billion next year and $15.6 billion in 2000, according to New York-based research firm Jupiter Communications, Inc. And that's in U.S. sales alone.
"This Internet is great. I could live on the North Pole and sell bikinis and do a booming business," says Scott Girner, owner of Aloha Pools and Spas in North Little Rock, Ark. The 20-year-old family business launched its Web site last spring and got 12,000 hits in its first three months. That generated $100,000 in business — 3% of Aloha's usual annual revenue — all of it from outside the state. Who knew, in the vernacular of The Beverly Hillbillies, you could sell cement ponds over the Web? Girner started out a doubting Thomas; now he's a true believer. "I've yet to get any orders from the moon or Mars, but I've gotten them from everywhere else," he says.
They've got personality
More than just selling merchandise, small-business sites sell their business. They create an image, promote a lifestyle and make a connection between entrepreneur and customer. Like the classic general store, mom-and-pop shops on the Web invite shoppers to come on in and stay a while. What's more, they can teach the big boys a few things about what works in online commerce.
"They have a lot of personality; they let customers know there is someone out there who cares about the products," says Ken Allard, an analyst at Jupiter Communications. "You can see the pride vs. a large company's Web site, where everything is generic and the pride doesn't come through."
Small companies on the Web usually take a greater interest in checking their E-mail — and are frequently more responsive to customer requests than megacorporations, according to Minda Caesar, marketing manager for IBM's Home Page Creator, a do-it-yourself Web site publishing package aimed at small business.
In fact, among small businesses with Internet access, E-mail is the most common application, according to the IBM/Chamber of Commerce survey. About half of respondents said they use the 'net to glean information about potential customers. Relationship-building, more than actual sales, may prove to be the real breakthrough for mom-and-pop shops on the Web.
"It's a tricky route sometimes," says Gleeson of that relationship. "We want to be appealing enough for students to view the merchandise but not off-putting for the parents who pay the bills." For instance, Gleeson is reworking the name of a gift basket meant for students to send parents that he had called the Adult Care Package. "Some people said it seemed to imply that it was of an adult nature in another sense of the word," he says.
Responding to E-mail has generated more business than online ordering capabilities for Greybeard's and The Great Southern Sauce Co. Kalvinsky says he gets 15 to 20 online orders per week — but 30 to 40 E-mail messages. The Moores maintain regular E-mail correspondence with site visitors, including a regular customer in New Jersey who has inquired about the possibility of opening an East Coast franchise — a direction The Great Southern Sauce Co. is eager to pursue.
The Moores acquired the 6-year-old business in May from its original owner, who put the store online in 1996 but spent very little energy updating it. Despite the neglect, the site continues to draw about 80 catalog requests and 20 orders a month. The Moores say they plan to make the Web a critical part of their expansion strategy. Eventually, they hope to see online sales account for 50% of their total revenue, which now averages $350,000 to $450,000 a year. Although they haven't tracked what percentage of revenue comes from Web-related sales, they say 70% of customers who receive a catalog place an order. "We were amazed to see the activity on the site — [the previous owner] was reaping benefits with no work at all," Amy Moore says. "But we think it can take the business to a whole new level."
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