In the Paleolithic era of the Internet (back in 1995), Scott Reeves and Mike Kennedy decided they wanted to sell computer parts on the Web. For 18 months they attempted to forge an efficient and sensible way to sell stuff on-line.
Instead, their business life was “a nightmare.” Their inventory included 35,000 items. Prices on many of them changed daily. It didn’t take long for them to realize they needed an automated data base program so they could easily search for parts. And they needed a system, which made it easy to modify the price or the definition of any item. Not to mention the headache of setting up secure transactions.
So they invited various programmers to give them a bid for secure system that would search just three fields. The median price for their custom program turned out to be† $65,000. “We were selling $60 worth of computer parts and were keeping $5 with each sale. That’s when we realized we were in the wrong business,” says Reeves with a chuckle.
So Reeves asked Kennedy, a former Microsoft employee, to write a program that would solve their selling needs. Having experienced the difficulties of e-commerce first hand, they felt they knew exactly what services and features they needed to include to accommodate most merchants interested in on-line commerce.
The two friends created DigitalStorefronts.com, a Web site selling e-commerce applications. Reeves, now the president of the Enumclaw, Washington, company, and Kennedy, its senior technician, have developed two computer programs for different segments of the e-commerce market. The programs are both Web based, which means retailers don’t have to download any programs onto their computers or worry about hardware compatibility.
Merchants don’t have to be fluent in Java or understand ASP scripting with DigitalStorefronts.com software. Even better, they don’t need a working knowledge of secure sockets. DigitalStrorefronts.com has completely eliminated the problem by placing its software on secure servers. Security has always been a consumer hot button on the Internet.
“Our goal was to make it simple to get on-line and be ready for e-commerce,” says Reeves.
Simple Merchant Solutions
The first offering is InterCart, a program written for the average Internet merchant. Virtual storeowners who sell up to 50 items whose prices are fairly stable are best suited for this application. Retailers can modify the offering, but they will need to know HTML to do so. HTML knowledge is not necessary for any other part of the process.
InterCart includes secure transaction processing, order notification, merchant account transactions, drop down menus, and radio buttons, check boxes and site administration, among others. Users can instantly connect their current Web pages to the DigitalStorefronts.com site with a link or button. The price for this service is $19.95 per month. There are no extra transaction fees for either program.
RetailPro, which costs $49.95 a month, allows merchant users to add or edit items without knowing HTML. Users simply log on to the site, alter the description on any product and then press the update button.
The third leg of DigitalStorefronts.com’s marketing plan is to enlist others on the Web to sell InterCard and RetailPro to merchants. Their primary targets are Internet Service Providers (ISP) and Web developers, businesses that have their own retail customers who might need DigitalStorefronts.com’s services. The company then becomes their ASP provider, charging $10 per month per customer for InterCart and $20 a month per customer for RetailPro.
DigitalStorefronts.com places no ceiling on what the ISPs can charge their customers for this e-commerce service. “With our pricing, our partners can make a 100 percent mark up and still stay absolutely competitive,” says Kennedy. The company, located in a suburb of Seattle, charges no up front fees. Its partners aren’t charged anything until they set up an e-commerce site for a customer and start collecting their own fees.
Extra Revenue Sources
Reeves points out that portal sites are known for their free access. But today’s cutthroat competition has them searching for other revenue sources. “Our e-commerce solution provides a value-added service that can help them generate extra revenue for portals like this because ‘free’ is killing them,” says Reeves.
Users receive all upgrades through e-mail. Upcoming additions to the program include inventory controls, more shipping options and the ability to put items on sale.
Both programs have been in the marketplace since April 1999. Currently, the software company has 200 merchants and 105 partners worldwide, all recruited by either word of mouth or search engine referral. Reeves says the company has been growing 70 percent a month since October 1999.† Customers range from Mom and Pop sites with just two employees to Web sites for multi-national corporations.
Outsourcing is a perfect solution for companies new to e-commerce. Most important in today’s warp speed world, solutions like DigitalStorefronts.com are immediate. Kennedy estimates programmers would need at least 12 months to design and test a new e-commerce system; their program takes 60 minutes or less to implement by computerphobes. “Why reinvent the wheel when we have it right here? These days, people don’t have time to wait. If a company’s Web site doesn’t have e-commerce, they are pretty weak. They’ll always be playing catch up to their competitors,” notes Kennedy.
The calculator side of the software, he points out, is particularly time-consuming for developers. DigitalStorefronts.com users need only worry about marketing not math.
The e-commerce pioneers report that niche marketers have had the most success with e-commerce to date. Two customers who are enjoying significant revenues sell slot cars or glass dolls. “You can enjoy tremendous sales if you’re selling something the average public can’t find at the mall,” says Reeves.
Lessons from the Outsourcing Primer:
- Outsourcing e-commerce solutions gives the merchant instant selling capabilities on the Internet.
- Merchants don’t have to download software or worry about hardware compatibility with Web based e-commerce solutions.
- Outsourcing e-commerce provides secure transactions for the customer.