Prepping for the Holidays -- Online


By Erin Chambers For a while, Richard Ross played with the idea of opening a second location for his successful toy shop, but the thought of additional rent and permit expenses kept scaring him off. In 2001, however, he did add another company address -- on the World Wide Web.

Ross, owner of The Silly Goose in Essex, Mass., says his Web site, www.usillygoose.com, is as much a priority this year as his storefront. He projects that more than half of the $200,000 in revenue expected for the crucial November-December holiday period will come from online. Cyber-sales have grown steadily, and now one of Ross's four employees does nothing but maintain and expand the site.

"For the amount of work it takes, it's like running another full-time business," says Ross, who started the company in 1998 after a career in marketing for several high-tech startups in Boston and Silicon Valley. But it's time well spent, he says, because in November alone, the site received over 500,000 page views.

GREEN CHRISTMAS. Ross is far from alone. With the holiday shopping season now in full swing, many small-business owners are devoting as much -- if not more -- attention and resources to their Web sites, according to the recently released 2004 Business Barometer of Online Activities.

For a growing number of entrepreneurs, the real shopping frenzy didn't begin on Black Friday, but on Blue Monday, the first day back at work after the long Thanksgiving weekend, when consumers are lured to online shopping by the high-speed Internet connections in their workplaces. According to research firm comScore, consumers spent about $391 million shopping online on Blue Monday, a 30% increase over a year ago (see BW Online, 11/30/04, "Very Merry E-Tailing").

William Wilkinson, director of the Small Business Development Center at the University of Illinois, says small business benefited from the spending spree. "Small retailers, and especially arts-and-crafts types, are getting on the Internet and really expanding that part of their business," says Wilkinson.

DECKING THE HALLS. According to the Business Barometer survey, commissioned by Web-hosting consultancy Interland (INLD) in the weeks leading up to the holiday season, more than 77% of small-business owners said their operation is healthier because they have a Web site, and more than 45% believe online sales will be better this holiday season than in 2003. Perhaps most surprisingly, almost 60% of respondents said updating their sites was more of a priority than updating their stores' appearance, which was a top priority for only 15%.

Even though just about anyone can post a Web page, the tools to do so have become more sophisticated. And experts say the Internet continues to be an equalizer for entrepreneurs going head-to-head with bigger competitors, so it's commanding more and more of their operational focus.

"It really levels the playing field for small business," says Jim Johnson, entrepreneurship professor and director of the Urban Investment Strategies Center at the University of North Carolina's Kenan-Flagler Business School. "But just because you have a Web site doesn't mean people know it's there."

UPHILL BATTLE. The Business Barometer study, in part, seems to highlight the recognition among small-business owners that an active site has become a vital complement to their bricks-and-mortar operation. Maintaining the site and finding new ways to drive up traffic with only the help of a very small staff remain challenges, but small-business owners appear increasingly concerned with bolstering their online presence.

In the survey, more than 58% of the 530 participants said updating their Web site was among the top three ways they prepped for the holiday shopping season, followed by offering special promotions (38%) and using direct marketing (32%). At the bottom of the list, only 28% identified offline advertising as one of their top priorities, and just 15% named updating in-store decorations.

Although it's still an uphill battle for them, savvy entrepreneurs are finding they can jockey for position with the big guys online in ways they never could do on the ground. They have been using carefully crafted language on their sites and also buying targeted online search ads (see BW Online, 11/22/04, "Tis the Season for Online Tools"). For example, if you search for "wooden toys" on Google (GOOG), Amazon.com's (AMZN) wooden-toy section comes up 13th behind boutique retailers like Tuliptoys.com and Ken's Wooden Toy Shop.

SAME NICHE, NEW LOCALE. That said, some of the old retail rules still apply, and a flashy site alone won't do the trick. Just like on Main Street, the most successful small businesses are those that offer unique products and a type of customer service that large retailers can't match.

Ross, for one, specializes in old-fashioned toys -- "no batteries and no video games" -- and is steadfast about maintaining that niche. "When one of our products goes into the mass market, we pull it off the shelves," he says. These days, some of those shelves just happen to be digital. Chambers is a reporter for BusinessWeek Online in New York


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