from the Wall Street Journal
January 29, 1998
Merchants Trade Main Street
For the Information Superhighway
By JANE COSTELLO
Special to THE WALL STREET JOURNAL INTERACTIVE EDITION
Tim Brockett is leaving Main Street in the dust.
The founder of Branford Bike Shop, a bicycle store located in the town
center of Branford, Conn., Mr. Brockett closed up shop on Dec. 31 and
will open for business on-line next month. Having run a successful
mail-order service in conjunction with the store, he plans to move his
20,000 customers to the Web in an effort to cut costs and free up
time.
Links
[Go]Join an on-line discussion about Web-based businesses.
[Go]Egghead to Close All Stores to Focus on Net Commerce
Branford Bike
www.branfordbike.com
All Destinations Travel
www.alltravel.com
Pandora's Books
www.pandorasbooks.com
"I took it as far as I could," he says of his retail business. "I want
to concentrate more on doing things for myself. I'd like to get
married, have a family, and not spend so much time working."
While it is unlikely that retail shops across the country will padlock
their doors and relocate to cyberspace en masse, some forward-thinking
entrepreneurs are betting that doing business from a Web site instead
of a storefront can be profitable. But preparation is important in
making a successful transition.
Nancy Zebrick, a travel agent once based in Cherry Hill, N.J., and now
located on the Web, closed her office in a shopping mall on Nov. 1 and
moved her operations to the back room of an industrial park. Ms.
Zebrick has spent the last three years building her Web business to
the point where it made financial sense to branch out without the
benefit of a branch.
"I could see the writing on the wall," says Ms. Zebrick, who bought
the travel agency in 1994, just before the airlines began to impose
commission caps on tickets. She decided to focus instead on big-ticket
items such as cruises and all-inclusive vacations.
In 1996, All Destinations Travel had sales of $1.8 million, with 20%
of business derived from the Web site. By 1997, the company captured
70% of its clients from cyberspace and recorded annual sales of $3
million. Ms. Zebrick expects that figure to grow to $5 million by the
end of 1998. "It's all timing," she says. "Like any good
businessperson, I turned a wrong into a right because I was stubborn
and refused to give up."
Mr. Brockett prepared for the transition to the Web by surveying his
mail-order customer base. More than 50% of his existing clients have
Web access, and most said they would be willing to place an order
on-line. Mr. Brockett believes that his mail-order profit margin of 6%
could double when mailing costs and other expenses are rendered
obsolete by the move to the Web.
Although cognizant of the fact that he may lose a large number of
customers who prefer to shop by mail instead of e-mail, Mr. Brockett
has already factored that risk into the equation. The reduced costs
and low overhead, combined with the fact that he will no longer spend
40 to 60 hours per week in the store, make him optimistic about the
viability of his newest venture.
"I can lose up to half of my sales and still do better than I did last
year," he says. "What I want is to be able to keep it small but
profitable."
Although tenacity may be a key element to being a successful
entrepreneur, doing business on the Web requires going beyond
traditional marketing skills associated with having a storefront.
Unlike the retail setting, customers are "just a click away," says
David Arnold, a consultant based in Eugene, Ore., who conducts
seminars for companies planning to develop or expand their Web sites.
"The Web is a different culture. People come looking for expertise as
well as selection, and they come to the Net expecting something for
free."
Mr. Arnold advises clients not to get "too fancy," and to concentrate
instead on making a site fast-loading and easy to navigate. "A Web
site is not a baseball diamond in Iowa," he says. "Just because you
build it, doesn't mean anyone will know it's there unless you're
proactive about it."
While he emphasizes the fact that merchants can use the Web to impart
the kind of expertise that wouldn't be feasible in a retail
environment where they're paying employees by the minute, he cautions
clients against putting too much information on-line or making
"garbage" links that do not add value to their site. Customers may
appreciate the interaction, he says, but are likely to get frustrated
if they can't find something they know should be there.
"Clearly, there is a lot of potential for doing business on the Web,"
Mr. Arnold says, "but you need to be careful. We still don't really
know what makes a Web business work. I like to think of it as
supplementing a business rather than supplanting one. It's still most
effective for that purpose."
Regardless of the many potential stumbling blocks, some small-business
owners are closing their stores in an effort to expand their market.
Pandora's Books, a store selling pagan and occult products in Toronto,
became a Web-only business on Jan. 1. The 23-year-old owner, who goes
by her spiritual name, Aislinn, says she is glad to be rid of her
store which, she says, was on a good street, but too far from the main
road. She believes that cyberspace will provide a friendlier
environment and allow her to take advantage of the "huge" market that
already exists on the Web for these products, which range from incense
to spell kits.
"It's not such a great thing sitting around and waiting in an occult
store," she says. "Some of the people who came in were pretty scary."
Aislinn says she is also hoping that the open nature of cyberspace
will help her capture business that might otherwise not have come
knocking on her door. More potential customers will feel free to
peruse her selection on-line without the fear of being seen through a
store window.
"The pagan community in Toronto is quite large, but we're still only
the Toronto pagan community," she says. "I've already gotten calls
from people in small towns in Canada who are excited about this
stuff."
But all of these small business owners will face similar hurdles when
it comes to peddling their wares on-line. "It takes a lot of effort to
do things correctly -- it's not a slam-dunk thing you can do in five
minutes and give up your retail business," says Irv Brechner, the
founder of Smart Business Supersite and a direct marketing consultant
for on-line businesses. On-line entrepreneurs need to be prepared to
deal with the ambiguities associated with consumer shopping habits,
and adjust their expectations accordingly.
"There are some people who just like to shop in stores," he says.
"They'll buy certain things by mail order and certain things on the
Web -- especially music, books and travel. But it doesn't work for
every product. When it comes to buying a gift for my wife, I just want
to be able to go somewhere and look at it."
The on-line marketplace has already changed dramatically in terms of
winning consumer acceptance, and these entrepreneurs are banking their
future on the fact that attitudes toward shopping on-line will
continue to evolve alongside the technology. In the meantime, they are
looking forward to the challenges associated with going solo in
cyberspace.
"I had tears in my eyes when I took down the sign," says Branford
Bike's Mr. Brockett, "and I still feel a little sad when I walk by the
store. But I feel like I'm on the edge of something much better, that
will work out for me personally and for my customers. I want to keep
that balance in my life."
Copyright © 1998 Dow Jones & Company, Inc. All Rights Reserved.
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