Article | Links to Profitable sites
Bad Judgment Calls:
Man wasn’t meant to fly, Stocks can’t get any higher, You can’t sell on the web
This ‘telephone’ has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us.
Western Union internal memo, 1876.
The Internet is shouldering an ill-deserved attack. Web sites for profit have been smacked around like a revealed snake oil salesman. Electronic entrepreneurs are touted as inventive, but foolhardy. Businesses, especially small businesses, fear that their investment in a site will bring no or little return. Experts warn that on-line commerce may be a fad. There are only a few companies selling on the World Wide Web today, but there were fewer yesterday. You’ll find a few smart companies are processing the path to cyber-success.
The Internet levels the playing field for small businesses by allowing access to a greater number of affluent clients while lowering the cost of reaching them. It also allows for greater interaction with a local, physical community. It is similar to every first phase industry. Companies are plowing ahead to create the maps for everyone else’s trip to the electronic frontier. But the first one’s always get the first choice of property.
Small companies can get onto the Internet for a few hundred dollars and be on their way to an expanding market. This allows them to compete against the big kids in their industry. It also allows them to test what works and what doesn’t. Mail order allowed entrepreneurs a similar opportunity in the past two decades. The world wide web is the mail order business of the next millennium.
It also allows small and medium sized businesses to move into the big leagues. Burt Auto in Denver, Colorado pumped in a $100,000 to start their site. Another dealer in Denver didn’t want to get into the field, until "there is proof that a profit can be made." There’s still time, but first to market is always a good idea. Burt has shown remarkable foresight and reaped the benefits of on-line marketing. Developed by Navidec, Burt Auto, according to Lou Rubbo, Director of Business Development for Navidec, is selling more than 60 cars a month over the Web. They target 1997 for selling 300 Internet car sales a month making the site a virtual dealer unto itself. How did Burt and Navidec do it?
The initial investment was the boldest move. Burt created an on-line form for potential buyers to be pre-approved. You can make an appointment to drive a certain car after work and have the keys waiting for you when you get there. You can buy the car on-line. Burt has also made sure they advertised the site effectively. Their commercials always display the address (www.burt.com) if not scream about it on TV. The print ads always have Burt's Web address and Navidec works with them to make sure they get coverage on an off the Internet. They offer information about car maintenance and parts. Burt offers more than cars. They have links to other interesting sites locally and promote Denver and Colorado through their site. Burt is capturing the local and non-local car buyers.
A site on the Internet for US immigration information (non-government), www.immigration-usa.com provides official forms, information and links to immigration lawyers. They sell software to help people get through the bureaucratic hurtles of immigration. The site is owned by Information Technology Consultants. When I e-mailed President Photius Coutsoukis about the effectiveness of the site he wrote, "Our Web Site costs less than $100/month (excluding my time)". They generate over $10,000/month in revenue.
Small businesses on the Web are generally doing better than larger in relation to percentage of increased revenue. One reason: a small company can become an international distributor, practically overnight. Although some large sites are getting hundreds of thousands hits a day, they are not necessarily selling product. The goal for most large companies on the Internet is brand recognition and customer loyalty more than direct sales. Large companies already have massive distribution networks to deliver their goods; they just need to keep their name in the consumer’s mind. But they all give you the opportunity to buy something on-line.
The little guys can reach their local market 24 hours a day without the labor intensive department of Customer Service Representatives. They can reach a potential customer in Europe without ever picking up the telephone. A California hot sauce (http:/www.hothothot.com) company has sold $60,000 (25% of revenue) worth of sauce in the last year. They offer dangerously hot sauces for the craze that has captured America and is going international. They can sell directly in this international market, or find distributors in countries they never even considered, and achieve this without the cost and time it would have taken just 5 years ago.
Another California company, Virtual Vineyards, sold around $100,000 in sales over the Web in 1995. Major cities get the lion’s share of specialty products in stores. Companies like VV can reach a consumer that doesn’t want to drive into a city just to get wine, or possibly potential customers in the city who never even knew they existed.
In its first year, Bras Direct is looking at topping 400,000 in revenue from its site at http://www.brasdirect.co.uk. They have a good on-line catalog of women’s bras and lingerie. They provide a very intuitive shopping cart they claim to be the "possibly the best…in Europe. According to Carl Christensen, they will reap that income with "very little overhead. They are attracting both women and men to the site because, "There are …many men,…,who are rather embarrassed about buying lingerie…" But not on-line.
Some experts estimate an Internet community of over 80 million by 1997. There is a possibility of a slowdown in the number of new subscribers, but at the current rate, the market available now is beyond any small company’s dreams. The market has changed dramatically in the past year as well. From being a white professional male majority market, the Web has become a virtual melting pot of every imaginable group including seniors, women, children, and minorities. For every niche seller out there, there are niche buyers looking for you on the Internet.
Author: Davyd Smith is President of EGuide, a Denver based Web site and marketing company specializing in solutions for small to medium sized businesses.
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Copyright © 1996 EGuide
Last updated November 03, 1996