net successPosted on Friday, March 4th, 2005 by Joseph C.Panettieri
Small businesses are ringing up Internet sales. Have you launched your Web site.
From his specialty store in Greensboro, N.C., entrepreneur Giacomo (pronounced “Jack-a-mo”) Santomauro is fulfilling appetites across the country. Santomauro, founder and proprietor of Giacomo’s Italian Market, has spent six years building a local business that makes homemade salami, pepperoni, sausage and other specialty meats and cheeses. But when it came time to really build out his business, Santomauro knew he needed to cook up an Internet strategy. In mid-2005, he launched salamisbymail.com, a Web site that delivered instant results. Although he declines to disclose revenue figures, Santomauro says the site produces several major orders per week and easily pays for itself on a monthly basis.
Moreover, the site has transformed Santomauro’s local business into an international brand. Many of his relatives, scattered across Italy and Europe, now direct their U.S.-based descendants to Santomauro’s site. “In addition to having exposure and presence on the Internet, the site enables consumers from across the country to experience our great authentic foods without having to come to Greensboro,” crows Santomauro.
The New Net Stampede
Though impressive, Santomauro’s success on the Internet isn’t unique. Nationally, entrepreneurs are finding new ways to leverage the Web. Roughly 61 percent of small businesses currently on the Internet expect to rebuild or revamp their Web sites in 2005, according to a survey conducted by C I Host, a Web hosting and data center specialist based in Bedford, Texas. “Particularly interesting, 53 percent of our survey respondents will increase overall IT spending—which is great news for high tech in general,” says Christopher Faulkner, CEO of C I Host.
What’s driving business owners to the Web? The answer is twofold, says Thomas Gorny, CEO and president of iPower, Inc., a leading Web site hosting company that has signed on 300,000-plus customers in more than 100 countries since it started in late 2001. First, doing e-business today is easy, even for a business owner who has zero technical expertise. And it’s inexpensive. “We’ve made implementing online commerce solutions affordable and simple for even our smallest business customers,” says Gorny. “You don’t need programmers, Web site designers or developers. A company like ours does everything for you.” As an example, iPower offers basic Web hosting services for $7.95 a month. For $249, it will provide all the tools needed to get your business online, set up an online store, ensure maintenance and even create a custom logo.
Of course, none of this would matter if e-business wasn’t booming—and providing strong financial incentives for small businesses. Case in point: While traditional retail sales during the 2004 holiday season increased only marginally, year-over-year online sales from Thanksgiving through Christmas grew a merry 24 percent, estimates VeriSign Inc., an Internet software specialist in Mountain View, Calif.
“Competitive pressure is causing a lot of small businesses to migrate to the Web for e-commerce,” says Gorny. “A Web site enables business owners to broaden their reach and expand a customer base. There are no geographic constraints. With a Web site, they can also provide 24/7 availability. Not many small business can afford to offer that on their own.”
“Whether it’s paying bills, reading the newspaper or shoe-shopping online, the Internet and the wallet are increasingly becoming inseparable,” says Chris Winfield, president of 10e20, LLC, a New York-based Internet marketing firm. “The opportunities for small and midsize businesses are endless, especially with Web sites priced considerably less than a traditional marketing campaign.”
Web-based marketing (via e-mail and online advertising) can cost 30 cents or less per qualified lead, according to Google Inc., the leading Internet search firm, compared with $1 or more for traditional marketing and advertising media. Still, many small-business owners—including Santomauro—are Internet novices. Born and raised on Long Island, Santomauro spent his youth working in his family’s upscale seafood restaurant. There he quickly mastered restaurant operations, financial management, food preparation and every other facet of the culinary arts. Instead of tinkering with PCs and restaurant management software, Santomauro focused his time on customer service.
That approach served Santomauro well when he relocated to Greensboro and opened his specialty meat store in 1998. Yet when it came time to get on the Web, Santomauro knew he needed help. “That’s the number-one thing I hear from small-business owners,” says Paul Lipsky, associate professor of communications at New York Institute of Technology (NYIT), a college with campuses in Manhattan and on Long Island. “Everyone wants to get on the Web, but they know they can’t do it alone. The key question becomes: ‘How do I get started?’”
Do it yourself
In Santomauro’s case, he turned to a local Internet programmer, Dynamic Network Solutions, Inc., and cut a deal. Rather than paying Dynamic Network Solutions a flat fee for its services, Santomauro worked out a commission-based deal that involved no money up front; the developer pockets a small percentage of each online sale. This approach allowed Santomauro to reinvest his savings in his physical store instead of plowing hard-earned cash into a medium—the Web—that was unfamiliar to him.
Santomauro estimates that he’ll wind up paying about $5,000 annually to maintain his site. That figure includes Internet service provider (ISP) fees, commissions to his Web developer and site registration costs, among other variables. Of course, many small businesses operate their sites on a shoestring—paying $150 or less per year for hosting services—but those sites typically lack online sales capabilities. Notes Santomauro: “If you weigh the costs against the sales potential and online branding, I think $5,000 is relatively inexpensive for our site.”
Santomauro also tapped his older brother, Anthony, for Internet guidance. The elder Santomauro is vice president of planning for The Miss Universe Organization, which is owned by Donald Trump. In 1998, Anthony outsourced the business’s e-mail operations to Mi8 Corporation Inc. of New York. “We’re essentially a small business and we don’t have dedicated IT resources to manage our e-mail systems,” he says. “I concluded that outsourcing was the way to go here. My brother reached the same conclusion for his store in North Carolina.”
As a first step in creating a Web site, small business owners need to find credible help. Experts recommend scanning Web sites of other businesses in your area. “If you find a local site you like, it’s often easy to track down the people who designed it,” says Edward Golod, president of RAC Inc., an executive coaching service for small businesses in Manhattan and on Long Island.
For instance, visit register.com and type in a specific site name (for this example, use salamisbymail.com). Hit enter, and register.com will indicate that the site name already has an owner. Now click on “View whois” to determine who registered and designed the site. The resulting page provides contact information for Santomauro’s Web partner, Dynamic Network Solutions. “Once you track down the Web designer, be sure to get references from at least three to five customers before proceeding with any projects,” advises Golod. “It’s just like working with any outside contractor. You’ve got to do your homework to find credible help.”
The alternative to getting into e-business on your own or partnering with a mix of Web developers, ISPs and Web services outfits is to go to a provider that offers all the resources and capabilities you need to get your site up and running in order to operate an e-business. For instance, in addition to its core Web hosting, design and consulting services, iPower offers:
• Step-by-step tutorials with screenshots that are designed to walk you through the common tasks needed to step up and manage an online business.
• An array of branding and marketing tools, including corporate identity branding, implementation of your Web page content and copywriting. IPower also will provide you with the ability to mount banner campaigns and track sales and marketing campaigns, Gorny says.
• A control panel that enables small businesses to monitor and administer every phase of their accounts.
• Merchant accounts for Internet, mail order, phone order, retail and auction business. “It’s activated as soon as you submit your application,” Gorny says, “and affords 24/7 customer service, shopping carts and funds deposited to whatever checking account you want.”
Gorny says iPower also provides customers with message boards and display galleries to show their products. “These represent good ways for small businesses to communicate with customers,” he asserts. All this clearly represents an attractive package for entrepreneurs. According to Gorny, some 400 new small and mid-sized businesses purchase an e-business service from iPower on a daily basis.
Whichever approach you choose, however, you’re sure to add customers. “Anyone in the world can now find my business,” says Giacomo Santomauro. “For minimal investment, I’ve given my local business a global reach. That’s money well spent.”