Virtual Storefronts Come of Age
Analysts predict e-commerce sales has mushroomed into an $80 billion to $255 billion business. A White House study forecasts a $300 billion market by 2002. As these numbers demonstrate, the Internet is dramatically changing how Americans shop and the way merchants sell goods and services.
If you own a business, chances are that expanding your markets is a top priority - even a necessity - for maintaining a competitive edge. It’s no secret that the Internet has changed the way the world does business. It has, in fact, become a business imperative for many companies. Not only can the Web be a profit center, it can also provide effective customer service, marketing opportunities, improved customer communications and a way of growing operations from local to global.
“The Internet is leveling the playing field for small businesses that compete with big companies,” asserts Stephen Fickas, an associate professor of computer and information science at the University of Oregon. “The wide-open opportunities available online today are like those found last century in the Wild West.”
However, just like an Old West town that has come of age, the Internet is no longer uncivilized and underpopulated. If you are just now putting your business on the Web, chances are you will encounter competition that beat you into cyberspace. In addition, today’s Web pages need to be more innovative and Net savvy to gain an edge. Automatic e-mail updates, real-time customer chat rooms and sophisticated sales software are just some of the “bells and whistles” successful sites are using to attract new customers. These tools produce winning results for companies and consumers alike.
Today, with more and more customers lured by the convenience of shopping online, the consequences of not putting your goods on the Web are increasing. Small businesses that have thus far neglected to pursue this opportunity should carefully examine its potential. The volume of Internet commerce-related traffic has multiplied at a rate of 10 times during the past two years. Jupiter Communications, a leading Web forecaster, predicts that with the proliferation of cheaper PCs and Web TV, consumers will overcome any timidity they may have toward the Web and conduct more than $280 billion in online transactions by the year 2001.
To get a sense of this evolving scenario, consider a camera store in a small town in Colorado that once had a captive audience for its goods. Today, however, if a customer can gain rapid access to a library of information and comparison reports about products available, be guaranteed next-day delivery, and be able to purchase a product for a significantly lower price online, will that customer still find shopping at the local camera store a viable alternative?
In the early stages of electronic commerce, the technology that drove it was expensive, and the market and Web customers were less Internet savvy. Then, a successful Web page simply posted catalogs of products and took basic credit card information over the Internet or referred customers to a toll-free 800 number. Comparing those earlier Web sites to the sites on the Internet today, however, is a lot like comparing typewriters to PCs.
E-commerce Web pages are currently much more like virtual salesmen than online catalogs. And a better Web site does not always mean a higher price. Web technology has become more sophisticated and less expensive. Out-of-the-box technologies have enabled Web programmers and consultants to offer customized Web sites for a reasonable price. Here are just a few of the ideas small business owners are already utilizing to make their Web pages state-of-the-art:
Dynamic Web pages. Keeping inventory current on your Web site used to be one of the hardest things about e-commerce, since updating new information on products or removing old information meant reprogramming each page in its entirety. Now, adding new products to your Web site or home page is a snap. Dynamic Web pages work much like a customized template that allows even the most unsophisticated user to instantly add or update changes on an existing Web site. As a result, small business owners can provide their customers with up-to-the-minute information and better, faster customer service.
Inventory networks. Many small businesses already have links between their cash registers and their inventory. Inventory networks take this concept one step further by creating a system that links the Web site and the cash register directly to inventory. The Web site and the store or warehouse computer are both automatically updated, providing accurate inventory information to both the customer and the owner.
Cross-selling software. A successful salesman wouldn’t sell a sofa without suggesting a matching love seat. Today’s Web pages are just as clever. As online customers select items they are interested in purchasing, cross-selling software can automatically offer suggestions for accessories and companion items. Completely controlled by the owner/user, cross-selling software allows a business owner to offer better customer service and increase sales in an efficient yet low-key manner.
E-mail updates. It is not uncommon for an entrepreneur to contact a customer when an item of special interest arrives in the store. Through an optional one-time registration process, customers can now indicate the types of items in which they are interested and request e-mail updates as the products come in. As inventory is updated, e-mail notification programs scan inventory for key words, searching for items such as “jazz albums” or “Miles Davis recordings,” subsequently notifying the customer. In the future, look for programs that track customer purchases and automatically send e-mail updates.
Interactive e-mail. Let’s face it, no matter how interesting the content, e-mail messages look pretty boring. Although radically less expensive than mailers or flyers, e-mail has proven to be a largely ineffective direct marketing medium because of its bland nature. However, new interactive e-mail options such as full-color pictures, customized sound, active animation and changeable fonts ensure that your customers will take notice. In addition, interactive e-mail can get the job done at a fraction of the cost of doing the same on paper.
Shipping links. Virtual shipping has arrived. First, you can visit most major carriers like UPS online to check out delivery and rate information; you can even schedule and track your order. A second option is shipping software, a new phenomenon that allows a customer to choose among a variety of shipping options and services. These programs consider package weight and destination in order to calculate the cost of the customer’s preferred mode of shipment. Shipping software can also update your shipping records and issue purchase orders and shipping requests.
Virtual customers. Most people purchase online because it is a convenient way to shop. At times, however, it would be helpful to talk with other customers before deciding whether or not to buy. By posting chat rooms or inviting customers to share their opinions through the use of a “customer comments” page, business owners encourage online shoppers to communicate with one another about the products and services offered. This type of “virtual customer” software can be a real point of difference for the savvy Internet shopper. In the future, look for 3D virtual stores where customers are represented by 3D animated figures called avitars. Customers can literally walk over to a popular product to see “what everyone is looking at.”
New technology is turning e-commerce into the dynamic-selling medium that experts have been predicting since the Internet first became a commercial option. As technological refinements make the Web even more accessible and user friendly, virtual selling can only increase in popularity and efficiency, and eventually become an integral component of every company’s marketing plan. Have a look at your own Web site and think critically about whether it has what your business needs to stay competitive in the online economy.
Kosher Grocer Offers Cheesecake on the Web
The Kosher Grocer: Five employees, one warehouse and the World Wide Web added up to a swift business for this savvy food wholesaler. “It all began with a piece of cheesecake,” recalls Craig Diamond, president. “I was tasting a friend’s kosher cheesecake in March 1997. It was unbelievable-the best I’d ever tasted.”
What for most of us would end as a cherished memory of good food inspired Diamond to go into business. Although most private label foods cannot compete with brand name products at supermarkets, Diamond realized that the Internet could help circumvent this potentially stifling reality. As he says, “The Internet is the fastest, least expensive way to bring a specialty product to a large number of people.”
Based in Brooklyn, New York, Kosher Grocer is one of the world’s first online grocery stores. It offers more than 130 kosher gourmet items, including a full line of imported gourmet cheeses, pastas and breads, frozen dinners, sauces and spices. Desserts include strudels, Rugelach and, of course, cheesecake.
Shopping at the Kosher Grocer is quick and easy: all you need to do is log onto the Web site Kosher Grocer., click your way through the virtual aisles and load up your electronic shopping cart. Check-out makes the conventional “10 items or less” as appealing as growing your own food: a secure online credit card payment completes the trip.
“Most of our products are cheaper than retail because we have less overhead,”Diamond explains. Five employees in Brooklyn, a Long Island City warehouse and an efficient Internet retailing system all contribute to competitive prices. In fact, Diamond estimates that this set-up enables the operation to sell its products at 15 percent below retail values.
The Kosher Grocer Web site took three months to establish and was up and running in June 1997. After only one month of operations, orders had been placed from Japan, Australia, Singapore, France and all across the United States. In one instance, an Internet entrepreneur from Israel had seven days worth of food shipped to Singapore, where she was attending a trade show. Her plans changed at the last minute, sending her instead to Hong Kong. Because of Kosher Grocer’s Internet system, however, the order was successfully traced and re-routed to the new location.
“We’re growing,” Diamond states modestly. “Our future plans include two more warehouses in the U.S. and maybe opening some retail stores and a distribution center in Europe.” And to think it all started with a piece of cheesecake. Looks like small ideas have a big future when it comes to business ventures on the Web.
A Web Site Where Every Day is Christmas
At the Olde World Canterbury Village, historically styled in the English Tudor tradition, shopping for Christmas items has become a 24-hour-a-day, 365-day-a-year endeavor. The Village’s premiere attraction, Always Christmas, and its new addition, Chateau de Noel, offer a selection of some 60,000 collectible and holiday items from around the world. “At our Website, people can get into the holiday spirit any time of the year,” says Stan Alridge, president. Since going online, this imaginative enterprise, located in Lake Orion, Michigan, now ships to an international customer base.
Patrons can purchase everything from glass bear and Santa Claus ornaments to angel tree toppers or Christmas Candles. “Canterbury Village’s success is a powerful argument that e-commerce is here to stay,” claims Michael T. Marquardt, vice president of operations at Internet Operations Center (IOC), an IBM business partner that worked closely with Canterbury Village to design the site.
Canterbury Village., the Web site has an open, unsecure area for general information and browsing, and a secure online catalog. Customers register to enter the “virtual shopping mall” by providing identification data. To put the wary at ease, instructions for registration include assurances that any information is for the Village and store owners only, and will not be disclosed to any other vendors. After registration, shoppers are free to move about the virtual mall and put chosen items into a “shopping cart.” Once all items have been selected, the order is placed and processed securely. Customers also have the option of shipping their purchases directly to an address from their personalized “address book,” while an icon enables them to check on an order’s status.
“This solution is a prime example of how IOC worked closely with Canterbury Village to showcase its product line, facilitate purchases and provide reliable, secure transactions,” Marquardt notes.
In addition to the convenience of shopping online, the system developed by IOC provides very useful information to Olde World Canterbury Village merchants. Once orders are completed, a server accesses a database that handles customer profiles, product displays and transaction records. This enables Village merchants to conduct market research and track product purchases-thereby helping them improve customer service and find tune their marketing efforts.
Credit Card Transactions: Taking the Internet by Storm
Although consumers are becoming increasingly comfortable with the idea of placing credit card orders over the Internet, some customers-who readily give credit card information to waiters and faceless telephone operators-still remain wary. Experts are convinced, however, that while the Internet will never be completely free from the threat of fraud and theft (like any other kind of transaction), security software and customer awareness will make using a credit card in cyberspace just as safe as using it over the phone.
Credit card transactions are vulnerable in two ways: during the electronic mail delivery process and while they are being stored on a server. Although interception of an e-mail containing credit card information is rare, software programmers have developed Secure Links, a program that secures a link between the store and the customer to protect information from being intercepted during the electronic transfer process.
The real danger from credit card fraud is when a hacker breaks into a vulnerable server and gains access to a database of credit card numbers. To protect servers, credit card companies have created Secure Electronic Transactions or SET. SET encrypts credit card information from the very beginning of the purchase transaction.
Customers send information to the store, which then sends the still encrypted information to the customer’s bank along with a purchase order. The bank uses a personalized secure key to unscramble the number and then authorizes the transaction by sending back an approval code. From the time the number leaves the customer, it is protected by ecryption. Small business owners are also protected from cyber thieves because they are never in possession of the actual credit card number.
Secure Links and SETs let entrepreneurs run their credit card transactions in much the same way they conduct face-to-face transactions. The important thing to remember is that small business owners have been dealing with the threat of fraud since the inception of credit cards, and fraud prevention has proven to be a manageable problem. Experts believe that this will also be true for the Internet.