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HolidayBuyer's Guide
Internet

Net giants make room for little guy

The race is on to get small businesses online, with deals being announced almost daily, including Excite@Home and Amazon initiatives.

The race is on to get small businesses online, with deals being announced almost daily.

Excite@Home today launched Work.com, a Web portal for businesses. It will offer online tools to help entrepreneurs manage their small businesses and interact with other companies.

Excite@Home's announcement comes one day after Amazon.com said it would rent space to other merchants online. The area on Amazon's Web site, dubbed zShops, will allow small merchants to get online and tap the Net retailer's surging customer base.

As Don Hutchison, general manager of Excite@Home's @Work division put it: "The business-to-business marketplace is exploding."

In addition, portals such as Yahoo and Infospace are hosting merchant Web sites. Yahoo has some 6,000 shops.

Despite the promise, analysts caution against getting too excited about the money-making opportunities. For one thing, Forrester Research predicts that e-commerce sales to local businesses will amount to $6.1 billion in 2003, about 6 percent of the projected $108 billion total e-commerce sales.

That's smaller than the total for the brick-and-mortar world, where small and mid-sized merchants account for about 50 percent of retail sales.

In addition, the small merchants that already are online seem to have mixed results, with some seeing revenue jump 50 percent within two weeks of going online and others seeing little to no revenue growth, said Zona Research analyst Jack Staff.

The problem small businesses face, Staff said, is that getting a Web store up and running requires time, money, and technical expertise--and small businesses often face a shortage of all of these.

Customers also must be able to find stores on the Web and trust their brands enough to buy from them. As in the real world, big brands are becoming increasingly important. Wal-Mart already has forced many small businesses to close and the Web threatens to extend that trend, said Forrester Research analyst David Cooperstein.

"Big brands are going to be the winners [on the Web in the next three to five years]," Cooperstein said.

Still, the new sites being launched offer some hope for small merchants online, analysts say.

For example Amazon's zShops help merchants set up shop quickly and inexpensively, Staff said.

Small businesses also seem to be having some success at eBay. Although eBay executives declined to say how many small businesses and merchants sell on its site, the company now has some 15,000 Power Sellers, each of whom sells at least $2,000 on the site each month.

Despite eBay's strides, the online auctioneer concedes that the auction format is not for all merchants and consumers. "You're not going to buy a lot of your household goods through the auction format," a spokesman said. "You may buy them online, but you're not going to get into a furious bidding war over a tube of Crest."