Setting up shop: e-commerce is booming. Here's how you can get in the game

Entrepreneur, August, 1998 by Melissa Campanelli

David Lord, the company's new CFO and chief information officer, wanted to make Holt a major presence in the educational-toy. market on the Internet. "We redeveloped our business plan and decided that e-commerce would be our core strategy," Lord says. "Because we wanted to compete with the big guys and grow nationally, and because we knew we didn't have the kind of money to invest in our own stores across the nation, we believed if we put the proper e-commerce plan in place, we might just be fast and aggressive enough to grow quickly."

Lord hired a team to help run his department and implement the company's e-commerce strategy. The team chose Microsoft as its main platform and bought several state-of-the-art servers. It also bought Microsoft e-commerce software and signed up for multiple IT phone lines, i.e. more powerful lines for faster connections. Finally, it integrated its accounting software into Microsoft's site server.

The Web site, which Lord says cost about $50,000 (not including employee salaries), was launched last October - nine months after Lord was hired. When a customer orders a toy from the site, the system enters the information into Holt's financial system, then fulfills the inventory, processes the accounts receivable information and completes the credit card transaction.

Holt says all the hard work has been worth it: His company is now considered a major player in its industry, with projected sales of $2 million this year. And it recently entered into an agreement with Playmobil USA, which provides Holt with the exclusive first rights of distribution to sell some of its toys online. Playmobil also benefits from the agreement through an aggressive Internet marketing campaign that utilizes banner advertising and online database marketing generated through Holt's Web site. "We'll be able to give Playmobil information about people searching for its products," says Lord. "Playmobil doesn't have to hire a customer service firm to question customers [about] the products they like; we can put a question on [the site] and have 5,000 answers for them."

Besides its success with Playmobil, Holt's Web site offers special features that children and adults are signing up for by the bucketload. For example, the site's search engine, Toy Detective, lets shoppers track down specific toys by criteria such as age group, type of toy and brand name. And the site's Toy Register lets children preregister for their favorite toys and receive via e-mail personalized news geared toward their interests.

Many small companies such as Holt are doing everything they can to jump on the e-commerce bandwagon. They understand that having an online store means a small company can look big without having to spend big bucks. If you're thinking about becoming one of those companies, where do you begin? Following are some products and services to give you a head start.

CHOICES, CHOICES

If you want to launch a Web site for your company, you can hire a Web site hosting company to house and maintain the server equipment, or you can start from scratch. If you choose the do-it-yourself route, there are several kinds of servers available that are geared toward small businesses. These include Microsoft's Internet Information Server 4.0, (www.microsoft.com/ntserver), IBM's new Netfinity 3000 (www.ibm.com), and Hewlett-Packard's NetServer E 50 (www.hp.com). All three servers are priced between $2,000 and $3,500.

But buying the server equipment is only the beginning. You'll also need to choose a network infrastructure; the type you select will depend on the size of your business, how tech-savvy you are and how often you plan to modify your catalogs. Some good midrange packages that allow users to connect a virtual storefront to a database and generate reports are Catalog Builder from The Vision Factory (www.thevisionfactory.com), iCat Electronic Commerce Professional Suite 3.0 from iCat (www.icat.com), and Microsoft Site Server 3.0 Commerce Edition (www.microsoft.com). These packages cost between $1,495 and $9,995 and include features such as indexing, searching, and a virtual shopping cart (where your customers can drag products to a shopping cart icon before adding them up and paying for them).

If you're a beginner, some popular e-commerce software packages to check out are O'Reilly's WebSite Professional 2.0 (www.oreilly.com), Forman Interactive's Internet Creator 4.0 (www.forman.com), Peachtree Software's PeachLink (www.peachtree. com), Yahoo! Store (http://store. yahoo.com), Virtual Spin's Cartalog (www.virtualspin.com), and the newly released Online Merchant from Alpha Software (www.alphasoftware. com). Despite their simplistic approaches, these packages allow you to import HTML text into existing pages to customize your site as your business grows. Prices range from $0 to $799, and all programs are hosted by either the vendor or a partner ISP. While site-hosting fees are usually based on the number of items in your store, all start at less than $100 per month.