Shoestring Marketing: Retailers can't ignore online marketplace

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With more than 6 million small businesses in the United States, it remains a mystery as to why only a small percentage has elected to exploit the online marketplace. A number of the major online players, including Microsoft, AOL, Verisign and eBay, provide extensive start-up and hosting platforms for the small business that wants to crack the e-commerce code. |ret||ret||tab|

With the Internet now firmly established as an integral part of the American home and with broadband fast becoming the preferred connection into that home, e-commerce has become a revenue source that the average small business, particularly the retailer, cannot ignore. In fact, e-commerce sales in the United States alone totaled more than $51.3 billion in 2001 and are projected to grow to $76 billion in 2002.|ret||ret||tab|

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How Does Yahoo! Do It?|ret||ret||tab|

Yahoo! Small Business has been in operation for five years with a subscriber base of 20,000 merchants and a monthly audience of 10 million visitors who touch the small business site (www.smallbusiness.yahoo.com). Most merchants who use the service employ fewer than 50 employees and list revenues at $10 million or less. As would be expected, the bulk of the e-commerce action centers around retail and wholesale sales and services, with consumer electronics and specialty goods, particularly apparel, occupying a commanding presence. According to Bud Rosenthal, Vice-President, General Manager of Yahoo! Small Business, the company's current concentration is on recruiting small businesses that are well established and employee-based, with less emphasis on the small office-home office single practitioner. |ret||ret||tab|

To a major extent, Yahoo! and its competitors provide an array of services aimed at establishing a successful front-end operation, i.e. getting the storefront up-and-running and leading customers to the front door. Yahoo! Small Business, for example, offers three primary services that help the small business develop a presence on the Web, reach new customers and hopefully close sales:|ret||ret||tab|

Get Online secures a Web address (domain), offers an easy-to-use e-mail option for multiemployee business use and provides tools for building a business Web site.|ret||ret||tab|

Sell Online offers the availability of an actual online storefront with attendant features such as referrals for start-up design assistance, provision of shopping cart and secure credit card processing, and access to buyers and customers who are Yahoo! users or visitors. Sell Online also offers an auction capability, a classified ad service and a merchant credit card billing and payment program.|ret||ret||tab|

Promote and Market Online gives merchants the opportunity to buy a standard listing, and special sponsor listings in the Yahoo! Directory and Yahoo! Yellow Pages.|ret||ret||tab|

For all such e-commerce services, the key benefits to the small business merchant derive from association with a well-known, stable online global brand as well as the potential customer reach that the brand delivers. Most small businesses will gladly consider paying for the opportunity to be seen in the company of a Microsoft or eBay and have access to their massive user audience. |ret||ret||tab|

Since most e-commerce facilitators like Yahoo! focus on the transaction and sale of tangibles, particularly within a retail setting, for the service provider, e.g., small business consulting firm, the benefits are less evident, e.g., driving traffic to the site, domain-based email for all employees, e-mail marketing, etc. |ret||ret||tab|

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Does it work?|ret||ret||tab|

While precise industry data is guarded, merchant churn rate is estimated to be in the 10-20 percent range which compares favorably with the 35-plus percent rates experienced by cellular phone, cable television and online hosting services. For the majority of online merchants, the primary benefit lies in gaining access to customer and prospect traffic. Says Allan Schwartz, owner of We Love Macs, and a Yahoo! Small Business merchant, "they get eyeballs to the store."|ret||ret||tab|

But there also are complaints that most e-commerce facilitators ignore the back end of the transaction, the back office functionality, namely hidden problems and hiccups that go into running a successful e-commerce operation from helping with customer fraud situations to assisting with inventory management and order tracking. As Rosenthal notes, "We need to present a more holistic approach, and we're working on it." |ret||ret||tab|

This means that eventually even the smallest and least sophisticated small business will have access to a fully-integrated front counter-back office environment where transactions flow seamlessly and the dollars roll in. |ret||ret||tab|

Irrespective of the initial e-commerce hype and the equally hyperbolic and unreasonable gloom-and-doom stories that now surround the issue, the e-commerce horse has clearly escaped the corral and every small business obsessed with increasing revenue stream would be ill advised not to investigate the potential that this opportunistic channel has to offer.|ret||ret||tab|

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