E-Tailer's Digest July, 1999
|The Internet and You
Part I on developing a Web site for your store
I was invited to give a seminar on the Web and retailing at the National Stationery Show in May. The audience for this all-day event (Independents Day, sponsored by George Little Management and Gifts & Dec) was primarily made up of independent retailers. In the afternoon we broke up to form roundtable discussions, this gave me a chance to interact with those on the front line of cyber retailing folks just like you. Our conclusions? The World Wide Web is creating a big stir among retailers.
Of course, there were a lot of questions. If the Web is a global phenomenon, how does it apply to me at the local level? Who shops on the Internet, and why? Is anybody making money? Do my competitors have Web sites? Is the Web going to put me out of business? Is it difficult to establish an Internet presence? How are people going to find my Web site? And what about security?
They are all legitimate questions, and there is an answer for each. For starters, respected research firms have estimated the Internet population to be between 62 and 165 million people worldwide. Who are these people?
There are many Net-based surveys that try to determine the profile of Net surfers or shoppers. Every six months, the Graphics, Visualization, & Usability (GVU) Center at the Georgia Institute of Technology in Atlanta does a thorough survey of the Net population that has become an industry standard. Their October 1998 survey reported that the typical user is, on average, 37 years of age (with most falling between the ages of 2125 and 5155). Of these users:
According to the GVU survey, people shop on the Net for a variety of reason. In order of importance:
Will these people never shop at your store? On the contrary: According to a Find/SVP study, 51 percent of Net searchers are looking for a local store in which to purchase merchandise.
Three or four years ago I would have said that anything under $100 would sell on the World Wide Web. Today, my answer is that anything will sell! Currently, the most popular items are computer hardware and software, travel and entertainment packages, books, CDs, gifts, toys, flowers and greetings, clothing (which is showing the biggest increase), groceries, and pharmacy products.
Contrary to popular opinion, many companies are making money on the Web some youve heard of, like Dell Computers (some $14 million a day in sales). Net businesses in the stationery and gift industries include Blue Mountain Arts and Office Depot (which reported $67 million in Internet and catalog sales for 1998). The oldest commercial site hot sauce retailer HotHotHot, which was started because its owners felt that it was too expensive to open a brick and mortar store is still going strong.
StrikingItRich.com, a book by Jaclyn Easton, lists 23 companies that have had success on the Net. One of them, Coastal Tool & Supply in Connecticut, now earns $10,000 a day on the Web, has done away with its catalog business, and is opening a 30,000-square-foot store right across the street from its biggest competitor: Home Depot.
Two gift retailers, Amydoodles and Art a Deux (a.k.a. My Sentiments Greeting Cards), only do business on the Net. Both are doing well and claim their businesses have grown in new directions.
Your Web Site
Now that you have background knowledge of Web retailing as a whole, its time to look at how your store can become a part of this worldwide revolution. A good place to start is with your competitors. Are they on the Net? Not sure? By clicking on www.networksolutions.com/cgi-bin/whois/whois, you can find out if they have registered a domain name. If they have, you can be sure it will only be a matter of time before they "open a store."
The most important aspect of establishing a Net presence is setting a budget. Too many retailers try to start a cyber business on a shoestring, only to find that that approach doesnt work. After all, you wouldnt open a brick and mortar store without fixtures, or without funds for advertising. Opening a store on the Web is no different.
The amount you commit to your budget will depend on what it is you want to accomplish. The costs of establishing a site include both one-time and ongoing charges. The initial one-time charge is for the registration of your name (URL) and the right to use that URL. This costs $70 for the first two years, payable to InterNIC Registration.
Hosting charges for the physical location of your site run at least $50 per month. Site development can cost as little as $1,500. Finally, you will have ongoing site maintenance charges that are usually a percentage of the original development costs $50 and up per month.
In your first year, plan to spend a minimum of between $2,500 and $5,000 (for a small site with few options). More options, such as a shopping cart, secured server, and more interaction can boost the cost to between $5,000 and $25,000. A medium-sized site with even more products, services, and options will cost you $20,000 to $50,000.
In next months column, well look at what your site should contain, how long of a commitment you should make to maintaining it, how you should promote it, and how you can avoid visitor dissatisfaction.
|GEORGE MATYJEWICZ is Chief Marketing Officer and a Partner at GAP Enterprises, Ltd. a management and marketing Solutioning firm that assists retailers. He is a veteran of the Internet and the computer field, as well as a former retailer and the moderator of E-Tailer's Digest. Matyjewicz can be reached at (201) 939-8533 Ext 821 or e-mail to georgem(at)gapent.com or write to him c/o G&DA, 345 Hudson Street, New York, NY 10014|
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