From...

April 13, 1999
Web posted at: 5:53 p.m. EDT (2153 GMT)

by Jacob Ward

(IDG) -- If you own a small butcher shop but have big Internet ambitions – whether they involve offering one-click sausage links or a rotating list of beef specials – it'll take more than registering www.HamHock.com to get your business online. You'll need a range of services – like design, hosting, transaction support and marketing assistance, just to name a few. There's no shortage of vendors eager to help.

"The pursuit of the small business has always been the holy grail of e-commerce," says Geoffrey Bock, a senior consultant with Patricia Seybold Group in Boston.

But new software companies, portals, startup service providers and ISPs are making a renewed push for a market that proved more difficult than many observers anticipated. With solutions ranging from online catalogs that cost $10 a month to suites of products and services that cost many times that amount, all players hope to get a piece of this enormous market.

They're not competing with each other as much as facing the inherent challenges of putting unsophisticated businesses online.

"Rarely do we hear, 'Why are you better than Yahoo Store?' It's usually, 'Can you do this for me?'" says WooJin Kim, VP of channel development for Netgateway.

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Shannon Jessup, Netgateway's VP of channel marketing, says, "We got a call from an Oregon cherry farmer who wants a Web store, but who doesn't have a computer. We fax him his orders, and he goes to the library to see his store."

Yahoo, which bought Viaweb last June and transformed it into Yahoo Store, is trying to use its brand-name status to entice existing consumers into opening their own online stores. "Small-business customers are very conservative and very cheap," says Paul Graham, producer at Yahoo Store and one of Viaweb's creators. "We don't have to explain ourselves for the most part."

NetObjects' David Kleinberg, executive VP of desktop products, says that the market will almost undoubtedly mature. "It's one thing to put up five pages that say, 'Hello, here we are, here's what we believe in.' But when you start to get traffic, you have to have a lot of control. We're not bothered by people going to Yahoo Store and the like, because we know they'll eventually need more."

Players in this market debate whether small-business customers are looking for the latest, fanciest technology, elaborate sales and marketing support, or stripped-down e-commerce for dummies. Some tools vendors argue that customers are keen to invest in the hottest technology; others, such as Steve Mitgang, senior VP of marketing and business development for Sitematic, a simple e-commerce solutions company, say almost exactly the opposite. "In the end, a product to a small-business person needs to be incredibly easy to use."

Companies like SmartAge, led by CEO William Lhose, and a startup called the Springfield Project contend that getting customers to a site is ultimately at least as important as technology. All seem to agree that whoever catches the newbies will get the most business.

That gives ISPs a significant edge. Say your jewelry store has been paying $19.95 a month to a local ISP. After a while, the Web-hosting bill becomes as familiar to you as the phone and gas bills, so when your local ISP representative offers you an opportunity to try a new service – such as offering your customers an online catalog of your goods – you'll be more receptive to that person than you would be to an unknown vendor.

If you're on the other side of the sales relationship, being part of an ISP means having a huge list of qualified prospects that smaller companies can't match. Rather than call every jeweler in the phone book, you can pitch e-commerce packages to the small store that upgraded its Web site with you last year.

The ISPs are catching on.

"E-commerce is a core business to us," says Sean Brophy, VP of corporate development at Verio, which struck a deal with NetObjects last month to promote e-commerce solutions to Verio's ISP customers. "The sweet spot is giving people their domain name and a basic Web site, and then growing the site as they adapt to the Internet."

Few small e-commerce software makers have been able to turn a profit in the small-business market. Bock says that with an ISP's sales channel, those small companies can change their fortunes. "The tools makers are lining up to dance with the ISPs," says Bock. The combination is extremely powerful. "Tool vendors have to have an elegant way to interface with potential clients: supporting a tool through an ISP is like a hot knife through butter."

Their business is small

If you think a browser is someone who will look but won't buy, these are a few of the companies angling for your business.

E-commerce vendors

SmartAge: Sells a four-pronged approach: Promote, sell, build and learn. The company offers a basic iCat commerce solution at $99.95 for a 100-item catalog, but has plans to expand.

Yahoo Store: Formerly ViaWeb, this site-building arm of Yahoo will, for $100, build you a catalog, inventory system and Web site. It remains unclear how Yahoo's acquisition of GeoCities will combine the two companies' offerings.

NetObjects: Builds solutions for burgeoning online businesses for anything from a few hundred dollars to a few thousand. It recently began cross- promoting with Verio.

Netgateway: For $149 a month, you can have an online store – even if you don't have a computer.

Sitematic: A 100-item catalog will cost you $69.95 a month, plus a $50 set-up fee.

GeoCities: Offers its GeoShops service for $99.95 a month, but new products and plans are on hold until the Yahoo acquisition shakes out.

ISPs

Concentric: Formed a partnership with CyberCash in March to offer e-commerce solutions and payment services.

EarthLink: The company began offering e-commerce at the end of last year, with its Breakthrough Software's product. It offers full-service packages for $80 a month.

MindSpring: A $99.95-a-month package, introduced earlier this year, gives businesses 50MB of Web space, in a partnership with Intershop.

Verio: The $74.95-a-month eVendor product enables a commerce-enabled catalog of up to 100 items. Verio has formed partnerships with iMall, NetObjects and First Data to provide small-business services.