There are both short-term and long-term solutions to both problems, however. In two to five years some solutions should come from CommerceNet, a consortium of large electronics companies in Silicon Valley formed to facilitate the process of doing business on the Internet. Backed by $12 million in federal, state, and private funds, CommerceNet is working to make on-line businesses easier and safer to run. CommerceNet intends to develop an on-line marketplace connecting thousands of organizations and electronics companies in northern California, enabling them to distribute product information, order goods and services, and collaborate on projects through computer hookups between offices. Its founders also hope to protect the exchange of sensitive financial data and other information.
But small companies do not have to wait for CommerceNet's buds to open before they plunge into electronic commerce. Larry Grant, a florist in Ann Arbor, Mich., took his business on-line earlier this year. Although he is one of the first owners of a small business to go on-line, Grant is a technological neophyte. He does not own a personal computer. He does not care one whit about how the Internet operates. A fax machine, in fact, is his one concession to modern technology. But Grant, owner of Grant's Flowers and Greenhouses and an FTD florist, has seen his business grow by more than a third since he opened an electronic storefront on the Internet, earlier this year.
Last December Grant turned over some basic advertising material, mostly photographs and descriptions of bouquets, to Branch Information Services, in Ann Arbor, a company that helps small businesses open electronic storefronts on the Internet. Jon Zeeff, president of Branch Information, typed and scanned the material into a computer and designed the layout.
Grant's electronic storefront comprises multiple files made up of pages on a computer screen. The first page greets customers and draws them in, much as a conventional storefront does; subsequent pages present the goods or services for sale. The result is an electronic color catalog -- a series of a dozen screens featuring Larry Grant and his flowers. Unlike conventional catalogs, Grant's does not incur the cost of printing and mailing, and it can be changed and updated within hours.
Zeeff placed the file for Grant's Flowers into what he calls the Branch Mall, the electronic equivalent of a shopping mall, which is connected to the Internet. People browsing the Internet can use various directories to find the Branch Mall, which features 50 or so storefronts. Users can gain access to each storefront, including Grant's Flowers and Greenhouses, with a simple click of the mouse.
A customer orders the flowers by entering information on his or her computer screen. The order goes to Branch Information, whose computer in turn generates a fax transmission, giving the specs of the order, to Grant's Flowers. As the operator of the on-line mall, Branch Information thus fulfills two critical functions: it creates an Internet sales channel for Grant's Flowers without any need for Larry Grant or anyone else at his company to touch a computer; and it maintains the storefront in its own computer, so there's no direct connection between Grant's Flowers and the Internet -- which means users (and hackers) are less likely to threaten the security of Grant's Flowers.
Grant is thrilled by the additional sales coming his way. "We've become a world business," he says, citing orders from throughout the United States as well as Canada, Australia, and Europe. His electronic storefront produced about 40 orders on Valentine's Day and another 40 on Mother's Day, and now generates as many as 6 orders daily. "It's all business over and above what I had been getting," says Grant. "And it should keep getting better."
To get a spot in the Branch Mall, stores pay monthly fees. A simple one-page storefront costs $960 a year; multiple pages are substantially less expensive per page. It's just one way to do business on the Internet.
Jon Lusk, president of Digital Dynamics Inc., also in Ann Arbor, opted for a more modest storefront than Larry Grant did -- a one-page ad for his company's service, CD-ROMs made to order. Digital Dynamics sells primarily to corporate and academic markets interested in a permanent medium on which to store data. Prices range from $200 to $30,000 per disk.
Just one sale a year at the high end of that price range can bring a huge return on Lusk's investment in the Internet. He's now pursuing the first potential customer to come through his storefront in the electronic mall. "It gives me the opportunity to reach a wider audience for a price that's difficult to duplicate," he says. "I don't have to have a television-size budget, but I can still reach millions of people."
Another company, Conlin-Faber Travel, opened a storefront in the Branch Mall this past summer, for about $3,000 a year. Chris Conlin, the company's president, runs three conventional stores in Ann Arbor and one in San Francisco but was intrigued by the potential of an entirely new sales and marketing channel. "What," he wanted to know, "can we sell outside our two geographical areas?"
Two of the travel products offered by Conlin seem perfectly suited to an electronic storefront. Conlin uses the Internet to list last-minute discounts on vacation packages, taking advantage of his ability to move new information onto the network very quickly. He also sells custom travel books -- produced after customers fill out electronic forms indicating the city they plan to visit and the information they need -- on topics such as sporting events, tourist attractions, restaurants, and shopping.
