Hoping to lure small businesses online, e-commerce software vendor iCat
on Wednesday will launch a new service
hosting Web storefronts for merchants.
The new service, iCat Commerce Online,
will be free to merchants with ten or fewer items in their storefront.
As reported earlier,
the free services are come-ons designed to get merchants started, then
turn them into paying customers by charging monthly fees for stores with
Today, iCat launched an online resource center, called
iCat Commerce Source, for
merchants interested in getting into Internet commerce. The iCat Commerce
Source also includes partners such as CyberCash for payment processing, Taxware for sales tax information, and a
variety of marketing services for merchants to publicize their storefronts.
But the new service, previously code-named Lemonade Stand, also could pit
iCat against ISPs, telephone companies, and hosting services that already
market iCat's full-featured catalog software. However, iCat says it is
negotiating with such partners to open similar Web malls for small stores.
Still, iCat's "free for life" storefronts with up to ten items
could create costs for iCat with no corresponding revenue. Charges will
range from $49 per month for 11 to 50 items up to $349 per month for 3,000
"This is great, good old-fashioned experimental Internet marketing coming
out of iCat," said Chris Stevens, e-commerce analyst at Aberdeen Group. "In hindsight, iCat
will either look visionary or foolish."
ICat will outsource the hosting service to Exodus. Chief executive Craig
Danuloff said he is negotiating with other Web hosting services to make
similar offerings for small businesses, but none have been announced.
Stevens thinks iCat's pricing could shake up the Web hosting
industry, where the lowest prices for storefronts start around $30 per month.
"If it works for iCat, we'll see some dramatically reduced prices in the
very immediate term, and it might have implications for the Web hosting
market at large," Stevens said, noting that the service also will affect
rival catalog vendors, which include Intershop, Vision Factory, and Viaweb.
Viaweb, in fact, is primarily a hosting service--the line of business iCat
is entering. And Stevens thinks iCat will, like Viaweb, be considered by
ISPs and commerce hosting services as a competitor, not a partner.
Most Web hosting services base their rates on network utilization and
storage, two factors that reflect their costs. iCat, however, is basing
charges on a merchant-oriented measure: the number of items. "That probably
will not adequately match their cost structure," Stevens said.
ICat's Danuloff said the new initiative aims to address three barriers that
dissuade small businesses from pursuing Internet commerce: cost, confusion,
Other potential competitors include GeoShops, small merchant sites being
offered inside GeoCities, one of
the most visited Web communities. GeoShop merchants will benefit from GeoCities'
heavy traffic, something iCat cannot offer. Marketing initially will be the
job of individual merchants, although iCat might spend money to draw traffic
to its mall at a later time.
Nor are those the only potential competitors to iCat's new effort, noted analyst
Nicole Vanderbilt of Jupiter
Communications. The smallest merchants can sell online using
auction sites such as eBay or Onsale, forgoing a Web storefront