Net Profit, Peril

The Register Guard (Eugene, OR), August 7, 2005 | Go to article overview

Net Profit, Peril


Byline: Tim Christie The Register-Guard

Selling stuff on the Internet - aka e-tailing - has been around more than 10 years, but for many small business owners, the Internet remains the digital frontier: untamed and teeming with potential and peril.

Ten years after Amazon.com came online, Internet retailing is entering "young adulthood," according to a report by eMarketer, an e-business research and analysis firm. An estimated 63 percent of Internet users ages 14 and older purchase goods online, the report says.

But figuring out how best to exploit the powers of the Web remains elusive for many retailers, even as ever more and more consumers are buying goods online.

Cindi Potter has been selling tea from her Eugene shop, Savoure, since 2000, and on her Web site, savoure.com, since 2001. But even though her potential customer base is immeasurably larger on the Web, sales through the company's Web site represent only about 5 percent of her total sales.

"What appeals to me is the potential for growth is so much greater," she said. "I keep getting told, it's a matter of time ... the longer you stay on the Web, the better positioned you are."

Potter said she still finds herself somewhat bewildered by e-commerce. She's still trying to figure out the best way to drive customers to her Web site. And she still struggles with the technical challenges associated with the site.

"There's so much I don't understand," she said. "I feel a little bit vulnerable. ... I'm holding on by the tiniest thread."

The savoure.com Web site has gone through several incarnations, and earlier this week, Potter added a new feature: selling tea to wholesale buyers. Most of the big tea dealers are in the East, and Potter said she's hoping to fill a niche by becoming a dealer for West Coast tea shops. Standing out among "very thick" competition from other online tea sellers is a challenge, she said.

"That's going to be a trick trying to figure that out, but I think it can be done," she said.

Visibility on the Web is the first issue confronting any small business owner attempting to expand sales through a Web site, said James Maguire, an analyst for ecommerce-guide.com, a site that covers Internet business of all types.

"Simply having a site hanging in cyberspace won't matter if no one knows it's there," he said.

Getting visible means getting found on search engines such as Google that people use to find products on the Web, he said.

Traffic on search engines increased 45 percent between spring 2004 and spring 2005, far outstripping increases in Internet usage, according to comScore. As a result, many retailers are spending a fortune getting listed as sponsored links on search engine results, Maguire said.

"Others are being left by the wayside because no one knows they're there," he said.

Consumer spending on the Web has seen double digit increases in recent years, from $56 billion in 2003 to $69 billion to 2004 and an estimated $85 billion this year, according to the eMarketer report. But online sales still represent a fraction of total retail sales - 1.9 percent in 2004, the firm said.

Unlike Potter, Bob Wolfe is an old hand at the e-commerce game and a newcomer to brick and mortar retailing. He established his wine business, the Oregon Pinot Noir Club, as a Web-based enterprise in 1993, and this spring decided to open a retail store in Eugene.

When he launched oregonpinotnoir.com in 1993, e-commerce was still in its infancy. Two sites that changed the way people bought and sold stuff - Amazon.com and eBay - wouldn't hit the Web until 1995.

Wolfe started the business with a 28.8 kbps modem and a 386 computer. He taught himself HTML (hypertext markup language, the computer code used to create Web pages) and created a Web page that was all text because no one had modems fast enough to view pictures, he said. …

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