In days of old, before consumers were able do all their holiday shopping without leaving their homes, before the days of television commercials, and yea, even before the heyday of the venerable department store, there was the Fuller Brush man. And the Hoover Vacuum Cleaner man. And, of course, the milkman.
Consider the fictional Willy Loman in Arthur Miller’s “Death of a Salesman.” Roaming door-to-door salespeople like Willy grew to become American cultural archetypes, exemplars of the struggles of the common man to improve his lot and provide for his family through the art of the sale. For better and for worse, they epitomized the American obsession with commerce, material wealth and well-being.
Well, those days are indeed long gone, though reminders still exist. This third installment of a five-part series on do-it-yourself e-commerce examines how, and why, a growing number of entrepreneurs — as well as established brick-and-mortar retailers — are following in the footsteps of the door-to-door seller by launching their own e-tail businesses.
Part 1 takes a look at some of the factors driving the growth of the small business e-tail marketplace, as well as some of the major players involved.Part 2 focuses on key issues and system attributes that aspiring e-tailers should consider when developing their business plans and choosing hosting solutions.
Everything Old Is New Again
Despite the justifiable media focus on big business and the consolidation of commercial power that has occurred in recent decades, small business has perennially been a major driver of U.S. economic growth.
This continues to be the case in the digital age. For example, eBay has been expanding its presence in the small and medium-sized business e-commerce hosting space, as evidenced by its recent acquisition of ProStores.
“EBay responded to the needs of sellers,” said ProStores director Julian Green, “who were asking for an e-commerce storefront solution beyond the existing eBay Stores solution.”
They wanted a tool “that would allow them to operate an additional channel with sophisticated control over the customization of the buyer experience and their brand, and enable them to be successful with multichannel e-commerce,” he told the E-Commerce Times.
It’s really the tools and technology rather than the nature of the retail trade that have changed. E-commerce provides living proof that “everything old is new again.” Driven by technological innovation and economic restructuring, e-commerce is spawning a new generation of small business e-tailers and independent e-tail outlets.
Cutting out the middle man and buying direct in the hope of getting a better deal has been one of the main attractions of making purchases via the Web. Interestingly, that has produced a whole new sector of online intermediaries — from Internet stockbrokers to retailers — and has paved the way for the shift from brick-and-mortar retail operations to online sales. It has also opened up a practically limitless amount of cyberspace for hanging out a shingle.
Rather than going door-to-door to drum up business or setting up a “mom and pop” store in the neighborhood, people are using the Web — together with a mix of old and new communications, marketing and promotional strategies — to build their own e-commerce businesses and entice customers to buy — and then come back to buy again.
There are a number of demographics that provide evidence of this growing trend, Emily White, Google’s director of online sales and operations, told the E-Commerce Times.
“Internet advertising revenue reached a record high of (US)$3.9 billion in Q1 2006, with a forecast of steady growth. Small businesses that do not leverage the power of online advertising run a substantial risk of being excluded from the Internet’s vibrant global marketplace,” she said, citing the Interactive Advertising Bureau and PricewaterhouseCoopers.
The current value of paid-search advertising is about $7 billion, based on McKinsey Group estimates, White added. “They also estimate that advertisers will spend $9 billion to $12 billion on paid search in 2007, up from around $5 billion in 2005. “
SMB Internet ad spending will increase 40-45 percent each year through 2010, according to Yankee Group’s forecasts, White said.
These forecasts are reason enough for Google — and many other e-commerce hosting and support services providers — to target the SMB market. “Google’s online search advertising allows small businesses to market themselves inexpensively, reach target customers and measure the success of their marketing efforts,” claimed White.
“[We] make it easier for online merchants to acquire new customers and drive sales. For example, we introduced Google Checkout, a checkout process that makes online shopping faster, more convenient and more secure for Google users, enabling shoppers to purchase from participating stores with a single Google login,” she added.
An E-Tail Success Story
Bob and Rhonda Pizor of Butler, Pa., got into e-commerce about three years ago after watching an e-commerce hosting company’s infomercial. After doing some research and strategizing, they launched their first e-tail site.
Unable to turn a profit, they concluded that neither the hosting company’s product line nor its platform and support services were up to snuff. “[We] never really made any money with them. Their product line was not as marketable as we had hoped,” Rhonda Pizor told the E-Commerce Times.
Undeterred, the couple investigatedShopster.com’s offerings. Calgary, Alberta-based Shopster is one of a growing number of technology and service providers capitalizing on the growth in the B2C (business to consumer) e-commerce sector. For $29.95 a month, the company provides an e-commerce platform, as well as support services, that enable an e-tail business to launch.
“When we first signed up for Shopster’s beta program,” Pizor said, “we figured, ‘Let’s give this a run and see what we can do with it.’ It only took us about a week to find out what a great product line Shopster offered, an awesome support system in the staff and members, and a company that was determined to be successful.”
The rest, as they say, was history. “We hurriedly went to work on ourfirst store, and within a week or so had sales coming in every month,” she enthused.
“We now have seven stores with Shopster, and we have had sales coming in every month since joining in March. All this, and we have yet to really start a major advertising campaign as we are still setting up our stores with the look and feel we want — merchandise, etc.,” Pizor said.
The Pizors’ seven Shopster e-tail outlets span a wide range of merchandising — from gift items to sporting goods — which are interrelated, in terms of their management approach.
“We totally support the niche aspect of online marketing, but we also know that you take a big hit when you only offer to a targeted audience. As all our stores are set up to offer related merchandise, we have purchased a domain, and we are currently building a gateway to all our stores,” she explained.
As for the couple’s expectations for their Shopster e-tail business, Pizor said, “We don’t hope, but are determined, to build a profitable business over time. Shopster offers us everything we have been seeking — an opportunity to be successful, offer products we trust to our consumers, a company we can grow with, a business we can put our hard work into and be proud of, but most of all, the opportunity to better our lives.”
Bookkeeping, Accounting and Marketing
New Web interfaces, plus an array of integration tools and methods, allow e-commerce hosting providers to assemble the application, data management, and telecommunications components necessary to support viable online retail businesses on a large scale.
For example,Intuit andAffinity Internet, a ProStores partner and developer of the WebStores e-commerce platform, in June introduced the QuickBooks Merchant Service for WebStores, which enables e-tailers to manage online sales using a customized version of Intuit’s popular accounting software.
The bookkeeping and accounting package is specifically designed to handle required e-commerce business functions such as managing sales tax liabilities, tracking inventory, and accounting for transaction fees and other expenses associated with online credit card sales.
One of the most important considerations when shopping for an e-commerce hosting and e-tail support system is how effective it is at freeing the e-tailer to focus on the marketing and sales aspects of the business.
“Online merchants want to spend more time focusing on their inventory and product specializations, and less on store maintenance — they’re experts in their products and customers, not necessarily in Web design,” noted ProStores’ Julian Green.
“E-commerce vendors definitely need to help their customer with search engine optimization and online marketing,” Philbert Shih, SMB analyst with Tier1 Research, told the E-Commerce Times.”These are two areas that the typical SMB just getting into e-commerce is likely to know nothing about and is going to need the most help in,” he said.
“It is a core piece of the puzzle,” Shih emphasized. “Setting up an e-commerce site on the Internet is one thing, but reaching customers and exploiting the massive market that is the Internet is a whole new ballgame. Newcomers are just not equipped with the right knowledge in this area — ask an SMB what a PPC (pay per click) ad is — and service providers must help in this regard.”