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HolidayBuyer's Guide
Tech Industry

Net boom eludes Main St.

Virtual business districts provide a new marketing tool to local shops, but the initial success of Internet marketing remains elusive for small businesses.

Chip Owen expected that an online presence would bring in new business for his sign company both within and beyond the seaside city of St. Augustine, Florida. But getting on the Web "just didn?t pan out" for Owen Signs, according to its president and namesake.

"The Net's gotten so big that it's hard for people to find you," Owen said, explaining why he decided to close his Web site. Although his company got a couple of email inquiries, including one from Germany, not one sale came from marketing on the Internet.

Across America this year, virtual business districts have begun to provide a new marketing tool to local shop owners on Main Streets everywhere. But, as with many things built on promise, the initial success of Internet marketing remains elusive for these small businesses.

Their advice: Don't stop advertising in the old-fashioned Yellow Pages. At least not yet.

Whether the Net will become a major commercial thoroughfare for local proprietors and their communities will depend largely on the advent of cheap mass-market Net access devices, advances in software, and changes in how consumers think about using the medium to do their shopping.

While some online communities and networks give away sites for free, most cost between a few hundred and several thousand dollars apiece to set up, plus additional monthly fees for Internet access and other services. They range from simple listings to several-page sites with product descriptions, color photos, graphics, and online order forms.

Many local merchants aren't sure it was worth the cost and effort. Some who launched sites earlier this year said their initial excitement has given way to disappointment as their sites have brought in few sales.

Brattle Square Florist in Cambridge, Massachusetts, which is linked to Harvard Square Online Community, launched its site in September to let customers read about the flower selection and download a form to fax orders. But Steve Zedros, the store's manager was not impressed with online results. "I have maybe gotten a handful of orders in the last four or five months," he said.

Zedros acknowledged that the service "hasn't been as beneficial as [I] thought it would be," even in a high-tech enclave such as Cambridge. And reports are even bleaker from merchants in less "wired" communities.

Still, not everyone has given up hope.

Despite slow going this year, analyst Peter Ashton, said that "there is enormous potential out there" for local businesses on the Web.

"The real delay is on the consumer side. There needs to be more education about the interactive possibilities of shopping via the Web," said Ashton, president of Innovation and Information Consultants in Concord, Massachusetts.

Indeed, industry analysts expect consumer spending on the Internet to grow into a multibillion-dollar business by the end of the century.

Forrester Research estimates that consumers will buy $7.1 billion a year on line by the year 2000, compared to Jupiter Communications, which expects $7.3 billion in annual online sales by the same date. International Data Corporation is a bit more cautious with an estimate of $6 billion in online sales by the end of the century.

Yet many believe that it will take mass-market Internet products and services if electronic commerce is to trickle down to local shops. Such devices, like network computers and set-top cable boxes with Internet access, are expected to bring prices for the consumer hardware in line with those of television sets.

Work also remains to make the Internet easier to surf. Too much content and too little organization is a common complaint.

"There are too many moving parts," said Frank Haberlach, whose company, Frank Haberlach Insurance, advertises on the Port Orchard.Com virtual community, as well as a national site for insurance brokers called 4Insurance. "I don?t think the average Joe is going to get passed the first few pages and provide all the personal information."

For reasons such as this, V.A. Shiva, president and chief executive officer of Millennium Productions, the company that runs the Harvard Square site, said he expects the ramp-up to be a gradual one.

Millennium gave away simple, one-page Web sites to 700 businesses in the square. However, "only about one percent have traded up to larger Web pages," Shiva said. Millennium also offers the shopkeepers a chance to upload a coupon free of charge.

"If you come through Harvard-Square.com on the way to the restaurant [with the coupon], you get some value added for your trouble," Shiva said.

Rhoda Richards, co-owner of My Dog pet shop in Harvard Square, said the strategy has already drummed up business.

"We've had a couple of people come in with our online coupons" since the company opened its doors and its site four months ago. Richards said she and her business partner are thinking up setting up an online catalog and might delve into bona fide electronic commerce next year.

Local entrepreneurs at Millennium and CommuniCreations, which design corporate Web pages for a living, said they build the virtual communities "to give back to the community." They are joined by local universities, newspapers, and community groups. Several corporations including Microsoft, Yahoo, and America Online are also constructing sites in several U.S. cities that highlight night life and local attractions.

Yet the merchants who are best pleased by their sites are local businesspeople that their limit goals.

Marketing Director Lisa Patterson of Centinel Bank of Taos, which is part of the La Plaza de Taos Telecommunity, said the regional bank has never expected more than good publicity from its site.

"We didn?t analyze it from the standpoint of profits and losses," she said. "We look at it as another form of media."