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Mom & Pop on the Web
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December 4, 2000: 12:30 p.m. ET
Small retailers are finding their way to the Web this holiday season
By Staff Writer John Chartier
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NEW YORK (CNNfn) - Online retailers are expected to drum up more than $11 billion in sales this holiday season, double what they made a year ago. The online sites of major retailers such as Wal-Mart, Kmart, Target, Toys R Us and others are expected to drive many of those sales.
But what about the little guy?
Many small retailers know they want to tap the potential of the Internet, particularly as merchants learn that making it as a pure play, or Internet-only retailer, is a dicey proposition.
And they're finding ways to take advantage of the Web's selling power this holiday season, whether it's using the services of a portal or listing site, or linking up with a large, well-known and established retailer.
"We can safely say the number [of mom and pops] is rising. We think it's a terrific opportunity for niche retailers rather than the very small mom and pop," Jupiter Research analyst Michele Rosenshein said. "Rather than try to fulfill nationally, small to mid-size retailers may have several small stores in a region and they may know their niche well."
However, small retailers should follow the mantra of Clint Eastwood's popular film cop, Dirty Harry -- "You've got to know your limitations" -- meaning they should understand whether their product is unique enough to do well on the Web, Rosenshein said. For many, this isn't the case. Trying to capture their own local or regional market is sometimes better for a small merchant than trying to reach the world.
"It's very important you have a unique product to offer," Rosenshein said. "If you're a small stationary store, and you go up against Staples (SPLS: Research, Estimates), you're not going to make it on quill pens," Rosenshein said.
But small merchants typically don't have the budgets for huge marketing and advertising blitzes that their larger competitors do, and in many cases, lack the technical know-how or the cash to hire people who do.
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We mentor the merchant on how to successfully sell online, and we think we have the formula for driving local shoppers to local businesses
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Robert Wood
CEO, shabang!com |
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So they are finding other avenues to get on the Web. One way is through portal sites such as shabang.com.
Founded by former Microsoft (MSFT: Research, Estimates) senior consultant and developer Robert Wood in 1997, Richardson, Tex.-based shabang!com gets mom-and-pop merchants up on the Web, and also holds their hand as they learn the ins and outs of Internet commerce.
"We mentor the merchant on how to successfully sell online, and we think we have the formula for driving local shoppers to local businesses," Wood said.
For $99 a month, Shabang!com takes information from small retailers and puts together and hosts Web sites for them. However, once the site is up and running, it is up to the retailer to attract customers and manage traffic and sales online. Shabang!com provides online tutoring for the retailers and advice on how to run a successful site, but it does not manage the day-to-day operation of its member Web sites.
A learning experience
For the mom-and-pop retailers, it's important to remember this is a learning experience.
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Nancy and Art Hay own Toy Works, a small Fort Worth, Tex., toy store they have operated for 15 years. After 18 months as shabang!com clients, they say they have not logged a single Web sale.
The couple believes they are unique in that they provide extensive customer service as well as products not offered by the big chains such as Wal-Mart (WMT: Research, Estimates) and Toys R Us (T: Research, Estimates).
Although still looking into it, Nancy Hay acknowledged their inability to log an Internet sale could be their own fault and not necessarily shabang!com's because of their limited computer and Web experience.
"I put everything together, sent everything over to them, and they put it together and put it up for me," Hay said. "In that aspect they did a wonderful job. It just never went anywhere."
Nevertheless, Jupiter's Rosenshein points out that retailers such as Toy Works need to take measures to boost their visibility on the Web and get the word out to customers.
"First of all, merchants need to understand the traffic patterns that occur on the Internet," Rosenshein said. "When it comes to 'location, location, location" on the Net, you really need to find a location where there is a tremendous amount of traffic."
That means seeking out partnerships or affiliate programs with large retailers or directory listings on the Web, such as Found.com, which not only lists retailers, but provides product descriptions and has a search-by-zip code feature.
Some big retailers offer affiliate programs on their Web sites. Amazon.com (AMZN: Research, Estimates) for example, has a section on its site called z-shops, which provides customers with links to a host of independent merchants offering a variety of items.
Shabang!com agrees with Rosenshein. The company encourages its clients to seek out partnerships with local groups in the merchant's own marketing region. For example, a Fort Worth business might try to get local churches, schools and non-profit organizations to add its link to their Web site. That costs a lot less than trying to go head-to-head with a big-name retailer in advertising and marketing.
"Those are the kinds of opportunities we need to educate our clients about," said Bill Richardson, shabang!com's marketing executive. "Helping those merchants understand how to do this, we're building the tracking mechanisms within Shabang, and the tools to help."
Shabang!com also offers its own affiliate programs with the likes of OfficeMax, CompUSA, Neiman Marcus, Fogdog Sports and Buy.com.
This also helps lend familiar names to a site where some consumers may initially feel uncomfortable with buying because it's unfamiliar. That's important because some of shebang!com's clients' Web sites do not show up in search engines; they are only visible through shabang!com's Web site.
A successful model
Rosenshein cites outdoor sporting goods retailer REI as a successful example of a medium-size retailer that has made tremendous strides on the Internet. The 62-year-old company already had the advantage of experience, being well-established with 55 physical stores, and fairly deep pockets when it first hit the Web in 1996. Nevertheless, the company recognized that to move from a chain with regional interest to one with national and international scope on the Web, they had to market their products as uniquely high-quality goods.
"They've been doing extremely well on the Web. Their Internet business has really launched them from a largely regional company to have a pretty significant national presence as well," Rosenshein said.
REI Spokeswoman Jennifer Lind said the company had more of an advantage than other smaller retailers because of it is larger than most. She pointed out a few things that smaller merchants should keep in mind when thinking about going the e-commerce route.
Being focused, knowing who you're trying to sell your goods or services to and offering value, are musts when developing an Internet strategy.
"Our entire reason for being on the Web is to be where our customer wanted us to be," Lind said. "We saw from the very beginning what we needed to do. We knew that to be successful we had to differentiate ourselves by offering things our customers can't get anywhere else."
She also said it is imperative to have it set in your mind that your site is going to be the best, a category leader.
"We knew that we need to lead this space. We were very clear it wasn't just about getting on the Web. It was about being the leader," Lind said.
Connecting Main Street to the Web
Whether or not sites such as shabang!com prove successful, it has gone a long way toward bringing the Web to small merchants who otherwise might not have thought themselves capable of taking advantage of the Internet.
But small retailers should carefully target their audience.
"What we're saying is that what the Internet needs to do, particularly for them, is to take the power of the Internet, much like you put a magnifying glass in front of the sun, and give them the resources to drive traffic into their stores," said Bill Richardson, shabang!com's marketing executive. 
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shabang!com
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