E-commerce opening a world of opportunities
Value Computer spent years unsuccessfully using telemarketing and cold-calling to gain the attention of a certain company.
But once the Waukesha-based distributor and manufacturer of computer cables and connection products developed a site on the World Wide Web, the company it had worked so hard to attract found Value Computer on its own. That company has been a customer ever since.
Unlike the experience of others, Value Computer’s try at e-commerce was an instant success. According to president Jenni DeGlopper, Value has twice as many new customers as last year – 75% of which found the business via the Internet – equaling more than 90 new customers.
Additionally, the World Wide Web has taken Value business worldwide. The company’s Website accounts for 80% of international sales, along with providing leads in Saudi Arabia, London and Pakistan.
“We thought there was no demand for our products internationally,” DeGlopper says, “but our international customers found us through the Internet.”
The Internet is growing in acceptance as a legitimate medium through which to do business. Forrester Research, Inc., in Cambridge, Mass., estimates that business-to-business Internet transactions increased 1,000% in 1997 to $8 billion.
Revenues are expected to reach $327 billion – equivalent to 2.3% of total US economic activity – in 2002. Wholesale and business retail companies are expected to benefit the most, as sales in those areas are forecast to grow from $2 billion in 1997 to $168 billion in 2002.
Gregg Tushaus, president of Tushaus Computer Services in Wauwatosa, says it is to the advantage of small businesses to sell on the Internet because of the exposure a Website can give a business. Tushaus offers a service called Salessite Internet Sites, a section of the Tushaus Website which features customers’ sites. Tushaus aids in all aspects of developing a site, from building a marketing plan to designing the site to registering the site with search engines, and in return receives a commission from what is sold through the Website.
“Salessite takes the e-commerce concept and turns it into a partnership between the Internet provider and the seller,” Tushaus says.
But as more companies enter the realm of electronic or “e-commerce,” businesses realize that there is more to e-commerce than having a place on the World Wide Web.
Elliott Erickson, owner of Pro Golf of Wisconsin, a Salessite customer, decided to try e-commerce because he thought it would provide an extra opportunity for sales volume. He chose to work with Tushaus because the Pro Golf staff did not have the expertise to design and develop a Website internally. The results, says Erickson, have been modest thus far.
“We get a lot of inquiries but not a lot of buys,” Erickson says. “People are shopping but not buying. I don’t know why that is. It could be our prices, it could be the fact that people fear the security risks involved in purchasing over the Internet.”
Tushaus maintains that Salessites are secure. Information sent through Salessites is encrypted, and digital identification numbers are used so that the chance of someone capturing credit card information from the sites is slim to none.
“It’s much easier for someone to take your credit card slip from the garbage and copy your number off that than to get it through the Internet,” Tushaus says.
John Orth, president of CyberZonics in Mequon, agrees, calling Internet transactions “more secure than any other place you use your credit card.”
Orth adds that “the sense that e-commerce is less secure than other credit card transactions is false.”
With encryption, a credit card number is encoded, just as messages an army might send in war would be encoded. Only someone with the key can read the code. And it generally would take a very large computer, such as a supercomputer, to break a code, industry insiders say.
They also note that merchants you’re buying from on the Web usually don’t even see your actual credit card number; only the bank does.
Sales Concepts, a Brookfield-based company and Salessite customer that provides various staff training programs, uses its Website in place of mail-order catalogs, which are more expensive than a Website, according to company president Melissa Blair.
“Websites are cheaper and easier to update than four-color catalogs,” Blair says. “Websites are very cost-effective for small businesses because you can put online what you would normally send via regular mail as part of media kits and other mailings. Four-color printing gets very expensive.”
Which is not to say that a business should do away with the use of regular mail altogether in favor of Internet promotion. Sales Concepts still does some mailings but has found the Internet to be a viable marketing tool.
“We send out postcards with our Internet address on them and encourage customers to see our Website or call us,” Blair says. “This is much cheaper for us than printing catalogs. And it works.”
Although Blair has received no purchases via the Internet yet since going online in January, she is not disillusioned by the e-commerce boom.
“Our Website is more a marketing tool for the business than strictly a sales tool,” Blair says. “If people simply get in touch with me because they’ve visited the site or if I generate good leads from the site, then it’s worth it. The Website is great visibility for the business even if people aren’t necessarily buying. Don’t get upset or give up if you don’t make a sale online right away.”
As far as perceived security risks are concerned, Blair also holds that Internet purchasing presents no more risk than does giving your credit card over the phone.
Whether Internet sites actually boost sales is still open to debate.
But DeGlopper says the key to a successful Website is successful marketing. Register your site with as many search engines as you can. There’s no cost involved, but it might take more than one try before your site is actually registered because the search engines receive thousands of entries daily and choose which ones they will add to their database. DeGlopper had to send Value’s information 16 times before it was registered with Yahoo!. And there are companies which will submit your Website to search engines for you. For instance, Submit-It.com does the job for $70.
“Marketing is vitally important,” DeGlopper says. “If you build it, they will not always come. People have to be able to find you through search engines.”
Naturally, there are legal issues involved in Internet commerce. Laws governing ownership, security, interstate commerce and privacy all apply to e-commerce.
According to Mark Foley, a partner with the Foley & Lardner law firm, if you hire an outside Web developer to design your site, make sure you determine, in a contract, who owns the source code used to create the site. Also, make sure you take the required steps to protect your customers from hackers. Furthermore, Foley advises, keep in mind that Internet business is a form of interstate commerce and that different laws may apply as transactions travel from one state to another.
“The Internet can be a very effective sales tool, but there are so many issues to address that you really need to work with someone who is used to dealing with these issues,” Foley says. “Small business people often try to avoid spending money on legal help in the beginning, but they end up spending more money in the end dealing with legal problems.”
Foley says it isn’t that expensive to have an attorney draw up an ownership contract.
April 1998 Small Business Times, Milwaukee
