Christine Larson


Home About Me Writing Samples My Book For my Students		Breakaway (A Special Report) --- Shopping Carts Online: Web store sites to sell your products can be cheap, but will they meet your needs? By Christine Larson 11/27/2000 The Wall Street Journal Page 10 (Copyright (c) 2000, Dow Jones & Company, Inc.) When Gretchen Looney began selling women's athletic wear on her Web site, ChixRhul.com, in January, she chose Yahoo Store as her shopping-cart provider. The online store, which costs $100 a month, was simple to build and required almost no technical knowledge from Ms. Looney and her three-employee oporation, based in Morgan Hill , Calif. "It was cheap, and when you're a small company trying to make ends meet, that's the easiest way to go," she says. Today, with the site's revenue topping $3,000 a month, she requires more. The store's limited design template, she says, doesn't match the slick graphics and animation found elsewhere on ChixRhul.com, and her long-term vision includes live coverage of women's sports and other content that Yahoo Store wasn't designed to support. "We're ready to graduate," she says. She's now working with a Web developer to build a custom e-commerce site that will cost $75,000 to $100,000. She expects the new site to generate some $500,000 in sales next year. But while some small merchants, like Ms. Looney, find their needs quickly outstrip the ability of free or inexpensive shopping-cart providers to keep up, others may never need to graduate, even if they grow dramatically. In recent months, free and low-cost shopping-cart services like Bigstep.com, Free Me rchant and Yahoo Store have started introducing premium features designed to accomodate the fast-growing companies. And, while those features may not have been enough to keep Ms. Looney around, they at least indicate a willingness to keep up with their customers scaling ambitions. How well will a given freebie or inexpensive cart meet your company's growing online needs? Here are some issues to consider when contemplating an online shopping-cart service: What will you need as you grow? Are those services available now? Not every small e-commerce operation is poised for the kind of growth Ms. Looney anticipates. Indeed, only 7% of small businesses say the Internet generates 5% or more of their revenue, according to Framingham , Mass. , research firm IDC. But small companies doing business online quickly learn that even modest growth can quickly boost their needs from basic site building to advanced back-end features. "Two and a half years ago, the barrier to entry was designing a Web site. This year it's having a system for complete customer care and fulfillment," says Tony Roeder of RedWagons.com, who last year sold some $800,000 worth of Radio Flyer wagons through the Yahoo Store. This year, he expects revenue from his Oak Park , Ill. , business to hit $2 million. Some services already offer -- for free or a fee -- greater integration of sales data with accounting, inventory and order fulfillment. While these might not seem important in the earliest stages of e-commerce, they can prove a godsend later, as Sue Schwartz, founder of specia lt y yarn site, YarnXpress.com, discovered. When she first launched her West Milford , N.J. , business in August 1999, her inventory fit in a single room. "When I started with six different yarns, I could keep everything in my head," the middle-school assistant principal says. Now Free Me rchant's free inventory tool tracks her hundreds of skeins stacked in a Wisconsin warehouse. "I couldn't live without it," she says. To keep pace, inexpensive cart providers are updating their features regularly. Yahoo Store, for example, added a real-time inventory control tool in September and launched a partnership with NetLedger to provide online accounting. Bigstep.com will soon offer tools allowing customers to list products on a variety of shopping portals. Microsoft's bCentral is currently rolling out services to handle more complex tasks, including a tool that automates customer relations, available before the end of the year, and a finance management service slated to launch early next year. And eCongo plans to offer wireless messaging services and beefed-up back-office features early next year. What do you pay for? Bigstep.com and Free Me rchant still provide free shopping carts. Hypermart will still host your Web site gratis if you carry ads, and provide a basic shopping cart for $19.95 a month. And you can get started on Yahoo Store for $100 a month if you're carrying 50 items or fewer. Most incremental fees are relatively low, typically between $5-$30 a month. Online credit-card processing almost always costs money, paid to a merchant-account provider. Some, but not all, sites boost their prices when you add more products to your site. And you may pay a premium for backend services like automated inventory control, accounting or links to order fulfillment systems. Microsoft's bCentral, for example, will probably charge about $29.95 a month for its new accounting tool, a lt hough pricing hasn't been finalized, the company says. Mark eting and customer acquisition services cost more -- and may be more important to growing businesses. Ms. Schwartz, for example, pays $9.95 a month to shopping site Respond.com for referrals of customers seeking knitting supplies. Similarly, Yahoo Store merchants can opt for a listing on the Yahoo Shopping directory, paying a 2% share of revenue if they sell more than $5,000 as a resu lt . Some providers have recently simplified their pricing by bundling their services. Microsoft's bCentral, for example, now offers a $24.95 package including a shopping cart, e-mail in-box, newsletter, online calendar, address book and document storage. Bigstep.com also plans to bundle premium services in the near future. How long are you willing to wait for upgrades? Are you willing to improvise? While the freebie and cheapie cart providers try to stay a step ahead of their customers' needs, they don't always move quickly enough. "We've sort of cobbled a system together," says Red Wagons' Mr. Roeder. He exports customer data and order information from Yahoo's database into off-the-shelf order management and accounting systems. In a separate operation, he forwards Yahoo's data to the fulfillment house he's contracted to help handle this year's holiday rush. And Nina Mason of Orange, Calif., found ways to sidestep the limitations of the standardized templates that most freebie carts provide. Wanting a romantic look for her online store, A Pocket Full of Posies (www.apocketfullofposies.com), which sells tea, china and other Victoriana, she souped up Bigstep.com's templates with HTML, the Web's basic programming language. "I was doing way more with their site than they probably thought someone would do," she says. YarnXpress's Ms. Schwartz considers it a benefit, not a compromise, that Free Me rchant accommodates her tinkering. When she wanted to add features not offered by Free Me rchant, she patched in a free home page, search engine, bulletin boards and live chat, each from a different provider. But she's quick to point out these additional features are just bells and whistles. "Free Me rchant provides every possible business system I need," she says. "It's still the core of the site." Graduation day? So far, small businesses haven't been migrating away from their original free or cheap e-commerce sites in large numbers, according to Kneko Burney, director of e-business infrastructure and service at research firm Cahners In-Stat Group, based in Scottsdale, Ariz.. But they might not stay put for long. "You'll definitely start to see that migration next year," she says. It's not necessarily growing revenues that will push small businesses into upgraded systems -- the freebies are generally designed to support even vastly increased sales. It's the growing demand for complex systems and increased personalization that are most likely to force upgrades over time. The companies most likely to graduate to custom development are those that require more control over graphic design or integration of customer data with inventory, supply chain and accounting systems, or businesses with mu lt iple locations or a traveling sales force that needs real-time access to backend records. Many small businesses don't fear outgrowing their system, but worry that if their provider folds or changes its business model, they'll be forced to as well. "My big fear is what happens if Bigstep goes away?" says Mrs. Mason. "It's such a big fear I don't even think about it."

Breakaway (A Special Report)
---
Shopping Carts Online:
Web store sites to sell your products can be cheap, but will they meet
your needs?
By Christine Larson

11/27/2000
The Wall Street Journal
Page 10
(Copyright (c) 2000, Dow Jones & Company, Inc.)

When Gretchen Looney began selling women's athletic wear on her Web site, ChixRhul.com, in January, she chose Yahoo Store as her shopping-cart provider. The online store, which costs $100 a month, was simple to build and required almost no technical knowledge from Ms. Looney and her three-employee oporation, based in Morgan Hill , Calif.

"It was cheap, and when you're a small company trying to make ends meet, that's the easiest way to go," she says.

Today, with the site's revenue topping $3,000 a month, she requires more. The store's limited design template, she says, doesn't match the slick graphics and animation found elsewhere on ChixRhul.com, and her long-term vision includes live coverage of women's sports and other content that Yahoo Store wasn't designed to support.

"We're ready to graduate," she says. She's now working with a Web developer to build a custom e-commerce site that will cost $75,000 to $100,000. She expects the new site to generate some $500,000 in sales next year.

But while some small merchants, like Ms. Looney, find their needs quickly outstrip the ability of free or inexpensive shopping-cart providers to keep up, others may never need to graduate, even if they grow dramatically. In recent months, free and low-cost shopping-cart services like Bigstep.com, Free Me rchant and Yahoo Store have started introducing premium features designed to accomodate the fast-growing companies. And, while those features may not have been enough to keep Ms. Looney around, they at least indicate a willingness to keep up with their customers scaling ambitions.

How well will a given freebie or inexpensive cart meet your company's growing online needs? Here are some issues to consider when contemplating an online shopping-cart service:

What will you need as you grow? Are those services available now?

Not every small e-commerce operation is poised for the kind of growth Ms. Looney anticipates. Indeed, only 7% of small businesses say the Internet generates 5% or more of their revenue, according to Framingham , Mass. , research firm IDC. But small companies doing business online quickly learn that even modest growth can quickly boost their needs from basic site building to advanced back-end features.

"Two and a half years ago, the barrier to entry was designing a Web site. This year it's having a system for complete customer care and fulfillment," says Tony Roeder of RedWagons.com, who last year sold some $800,000 worth of Radio Flyer wagons through the Yahoo Store. This year, he expects revenue from his Oak Park , Ill. , business to hit $2 million.

Some services already offer -- for free or a fee -- greater integration of sales data with accounting, inventory and order fulfillment. While these might not seem important in the earliest stages of e-commerce, they can prove a godsend later, as Sue Schwartz, founder of specia lt y yarn site, YarnXpress.com, discovered. When she first launched her West Milford , N.J. , business in August 1999, her inventory fit in a single room. "When I started with six different yarns, I could keep everything in my head," the middle-school assistant principal says. Now Free Me rchant's free inventory tool tracks her hundreds of skeins stacked in a Wisconsin warehouse. "I couldn't live without it," she says.

To keep pace, inexpensive cart providers are updating their features regularly. Yahoo Store, for example, added a real-time inventory control tool in September and launched a partnership with NetLedger to provide online accounting. Bigstep.com will soon offer tools allowing customers to list products on a variety of shopping portals. Microsoft's bCentral is currently rolling out services to handle more complex tasks, including a tool that automates customer relations, available before the end of the year, and a finance management service slated to launch early next year. And eCongo plans to offer wireless messaging services and beefed-up back-office features early next year.

What do you pay for?

Bigstep.com and Free Me rchant still provide free shopping carts. Hypermart will still host your Web site gratis if you carry ads, and provide a basic shopping cart for $19.95 a month. And you can get started on Yahoo Store for $100 a month if you're carrying 50 items or fewer.

Most incremental fees are relatively low, typically between $5-$30 a month. Online credit-card processing almost always costs money, paid to a merchant-account provider. Some, but not all, sites boost their prices when you add more products to your site.

And you may pay a premium for backend services like automated inventory control, accounting or links to order fulfillment systems. Microsoft's bCentral, for example, will probably charge about $29.95 a month for its new accounting tool, a lt hough pricing hasn't been finalized, the company says. Mark eting and customer acquisition services cost more -- and may be more important to growing businesses. Ms. Schwartz, for example, pays $9.95 a month to shopping site Respond.com for referrals of customers seeking knitting supplies. Similarly, Yahoo Store merchants can opt for a listing on the Yahoo Shopping directory, paying a 2% share of revenue if they sell more than $5,000 as a resu lt .

Some providers have recently simplified their pricing by bundling their services. Microsoft's bCentral, for example, now offers a $24.95 package including a shopping cart, e-mail in-box, newsletter, online calendar, address book and document storage. Bigstep.com also plans to bundle premium services in the near future.

How long are you willing to wait for upgrades?

Are you willing to improvise?

While the freebie and cheapie cart providers try to stay a step ahead of their customers' needs, they don't always move quickly enough. "We've sort of cobbled a system together," says Red Wagons' Mr. Roeder. He exports customer data and order information from Yahoo's database into off-the-shelf order management and accounting systems. In a separate operation, he forwards Yahoo's data to the fulfillment house he's contracted to help handle this year's holiday rush.

And Nina Mason of Orange, Calif., found ways to sidestep the limitations of the standardized templates that most freebie carts provide. Wanting a romantic look for her online store, A Pocket Full of Posies (www.apocketfullofposies.com), which sells tea, china and other Victoriana, she souped up Bigstep.com's templates with HTML, the Web's basic programming language. "I was doing way more with their site than they probably thought someone would do," she says.

YarnXpress's Ms. Schwartz considers it a benefit, not a compromise, that Free Me rchant accommodates her tinkering. When she wanted to add features not offered by Free Me rchant, she patched in a free home page, search engine, bulletin boards and live chat, each from a different provider. But she's quick to point out these additional features are just bells and whistles. "Free Me rchant provides every possible business system I need," she says. "It's still the core of the site."

Graduation day?

So far, small businesses haven't been migrating away from their original free or cheap e-commerce sites in large numbers, according to Kneko Burney, director of e-business infrastructure and service at research firm Cahners In-Stat Group, based in Scottsdale, Ariz.. But they might not stay put for long. "You'll definitely start to see that migration next year," she says.

It's not necessarily growing revenues that will push small businesses into upgraded systems -- the freebies are generally designed to support even vastly increased sales. It's the growing demand for complex systems and increased personalization that are most likely to force upgrades over time.

The companies most likely to graduate to custom development are those that require more control over graphic design or integration of customer data with inventory, supply chain and accounting systems, or businesses with mu lt iple locations or a traveling sales force that needs real-time access to backend records.

Many small businesses don't fear outgrowing their system, but worry that if their provider folds or changes its business model, they'll be forced to as well. "My big fear is what happens if Bigstep goes away?" says Mrs. Mason. "It's such a big fear I don't even think about it."