Online Small-Business Midwives Target Mom-and-Pop Stores

Specialized web sites that help little companies go online almost instantaneously and at very little charge are fiercely competing for the attention of small-business owners.

By JEFFREY A. TANNENBAUM
Staff Reporter of The Wall Street Journal.

Just as midwives can aid pregnant women, these Web sites increasingly help small businesses start online ventures. Besides hosting Web pages or arranging for hosting through a third party, they provide e-commerce tools and related services — often without charge.

The sites, called e-business service providers, which began appearing about two years ago, are proliferating fast. Now there are more than a dozen sites, such as http://www.Bigstep.com "Where e-business is everybody’s business," and http://BizLand.com Inc., "Imagine your success. We do."

"I’ve got stacks of mail from companies wanting to host my Web site," says Raymond Hagerman, a 30-year-old co-owner of a kite store in Surf City, N.C.

He isn’t alone. Millions of small businesses have become the frequent target of pitches as the Web sites catalyze the rush to online selling.

The good news: E-commerce specialists say small companies usually have little to lose from taking up the offers. "However poorly you make your choice, you are still going to be far ahead of the game," says Raymond L. Boggs, who oversees small-business and home-office research at International Data Corp. The Framingham, Mass., concern projects that small companies (under 100 employees) selling on the Internet will nearly double this year, to some 1.6 million, in large part due to the e-business service providers.

Some Caveats

Nevertheless, many small-business owners will want to look carefully before they leap at free offers. Though far cheaper than hiring consultants for custom Web-design projects, using free software offered by the new service providers gives firms less flexibility in creating sites.

Moreover, small companies can quickly outgrow free service and begin facing a monthly fee (albeit usually a modest one of $50 or less) for listing inventories. And some of the e-business Web sites have been known to crash, freezing out customers from Web pages for hours or days.

And the longevity of some service providers is a question. Most have yet to find a way to make money. They are spending heavily now in anticipation of finding a profitable angle later — such as selling sufficient advertising to third parties or upgrading clients to paid services. "This is a very crowded Internet space, and you’re going to see a lot of culling," says Serge Wilson, founder of Freemerchant.com, an e-business enabler he sold this month to ShopNow.com Inc., Seattle.

But for small businesses, the free services offered by e-business service providers are often sufficient to launch e-commerce efforts. "It’s kind of a trial-and-error process, and why spend money if you don’t have to?" says Kneko Burney, an e-commerce specialist at Reed Elsevier’s Cahners In-Stat unit in Scottsdale, Ariz. Ms. Burney says nine of the 19 e-business providers that she tracks offer free service. By contrast, avoiding the providers and hiring Web-design consultants can easily cost a firm more than $10,000, she says.

Success Story

The e-business providers can work well, say customers such as Mr. Hagerman of Topsail Kite Connection. "Kites Aren’t Just for Kids Anymore!" the kite store proclaims. And thanks to the Internet, Mr. Hagerman’s kites aren’t just for Surf City shoppers anymore.

Six months after opening the store, Mr. Hagerman launched a web site. To his delight, the site — which takes credit-card orders electronically — generates some $15,000 in sales a year at almost no cost or trouble.

Indeed, Mr. Hagerman gloats that "some people think I’m paying bundles and bundles of money" for Web-site hosting. In fact, he says he pays only $99 a year, and the host, Go2Net Inc.’s HyperMart Network, would give him free service if he were willing for his Web site to run banner ads arranged by HyperMart.

Getting started is often surprisingly easy. "In four or five hours, I had pictures and prices loaded and ready to go," says Michelle Miller, 32-year-old owner of PictureSticks.com, http://www.picturesticks.com/ a Bensalem, Pa., seller of picture frames shaped like hearts and balloons. She set up the catalog using tools from BizLand.com of Burlington, Mass. The service is free as long as she lists 12 or fewer products. (Unlimited catalogs cost at least $25 a month with BizLand.)

Confusing Pitches

Of course, no launch of an e-commerce effort comes with a guarantee that anybody will pay attention. It can be tough to be the fifth — much less the fiftieth — company in a given Web niche. But the e-business providers promise, among other things, to help new small-company Web sites exchange banner advertising and become known to Internet directories — measures aimed at building traffic.

Yet the pitches to small businesses can be confusing, since details differ and claims of uniqueness abound. And the services aren’t perfect, some users say.

Consider Ray Ritchey, co-owner of ChildBook.com, http://www.childbook.com/ a Rowland Heights, Calif., marketer of Chinese-language books for children. "I had my own Web site with no shopping cart," or ability to accept online orders, he recalls. The site advertised his business but didn’t take online orders. "Sales were pitiful," about $2,000 for the first two years of part-time work. So he became a client of Bigstep.com. Mr. Ritchey now can take credit-card orders through the Web, and sales have soared to $2,000 a month for what now is a full-time effort, he says.

But fast-growing Bigstep.com — with 70,000 clients and a goal of 200,000 by year-end — sometimes has trouble accommodating all of the traffic. One service outage this month lasted nearly 48 hours. "It’s a love-hate relationship," Mr. Ritchey says of Bigstep.com. "I love how easy it was to get set up and get going. I hate the outages." He says he is investing about $1,600 in software that will enable him eventually to operate without the help of any e-business enabler.

Andrew Beebe, chief executive of Bigstep.com, based in San Francisco, acknowledges the recent outage but says that, in general, "We have had incredible reliability." He also says the company is building "deep, long-term committed relationships" with most customers.

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