March 2, 1998,
Mall shopping comes home via Web -- ISPs, Internet resellers are front line in developing, deploying virtual storefronts
Egghead Inc. announced in February that it would close all its retail stores and become a Web-only storefront, it was a sure sign of the times. Though many companies have sprouted from the
electrified soil of the Internet-Amazon.com and ETrade, to name just two of the most successful-it was the first time the physical went virtual.
Electronic commerce is no fad. Estimates range widely, but Cambridge, Mass.-based Forrester Research Inc. estimates $200 billion will be transacted on the Web in 2000. In 1996, an estimated $194
million was spent on holiday shopping, which accounted for 41 percent of non-travel-related online transactions, according to Jupiter Communications Inc., New York.
For VARs, particularly Internet resellers that shun product and sell service, Web commerce represents the Holy Grail of a brave new world. As the Egghead scenario demonstrates, companies are
anxious to pare their bricks-and-mortar costs of doing business. Moving to the Web means dramatically lowering labor, utilities and distribution expenses.
Web commerce is not for the faint of heart. The software is in its adolescence, complex and raises a host of security issues. The Test Center set out to examine turnkey electronic storefront
solutions for resellers and found these products are targeted at different market segments. They vary in scope, application, functionality and, of course, price.
For the budget-conscious, Forman Interactive Corp.'s Internet Creator works well for small shops where the storefront is hosted by an ISP.
Inex Commerce Court Professional is appropriate for midsize businesses looking for an easy-to-use industrial-strength solution built on the Microsoft platform. The product is optimized for the
Microsoft SQL Server database and works in perfect harmony with the Microsoft Site Server Web management package.
IBM and ICat go after medium- to large-size businesses with scalable solutions that support multiple operating systems and Web-server platforms. Both products support Windows NT and Unix, but the
ICat Electronic Commerce Suite goes one step further, supporting Macintosh servers. A third-generation product, ICat provides a more refined solution but is double the price of IBM's Net.Commerce
Lotus Domino.Merchant 2.0 Server Pack and Microsoft Site Server Commerce Edition take an all-encompassing view of the enterprise and look to automate the workflow of E-commerce. Microsoft's Order
Processing Pipeline (OPP) visually organizes the business processes involved in each stage of purchasing. Domino.Merchant enforces an approval process before additions or changes to the store's
content can go live.
Conspicuously absent from this review is financially beleaguered Netscape, which refused to provide its Netscape Merchant System. The company claims the product's complexity and the effort
required to get it running make it impossible to review. Frankly, the Test Center does not believe that argument. Furthermore, would a reseller want to recommend a product deemed too complex for a
team of experts to review?
Deploying a Web storefront is a complex undertaking because it interacts with so many parts of an organization. Marketing, sales and art departments need the tools to develop content and monitor
the store. Order processing, shipping and the warehouse require realtime update access. Billing and accounting departments need to connect to collect the money.
The Web server is but one software component of a complete storefront. Other components include the following:
- Content control and design tools for Web storefronts that allow Web pages to be designed quickly while enforcing a ridged set of design rules. The ability to first publish to a staging
server or revert back to a previous version is a key requirement.
- A catalog builder that defines templates for building dynamic Web pages from information contained within the product database. It should allow for easy importing of product data from
- A shopping cart that allows visitors to place items in their virtual basket while they continue to browse the store. The ability to handle multiple colors and sizes may be an area of
- Order processing, which includes everything from taking the order, calculating the shipping costs and taxes, getting the credit-card authorization number, and removing the product from
- Transaction processing, which occurs when payments are processed. Alternatives include realtime vs. batch processing (get the money when the transaction occurs or get all the money at the
close of business), using the store's merchant account or third-party processor, such as CyberCash.
- Usage analysis that allows the storekeeper to see the movement through the site as well as the products that are moving.
- User profiling, which provides the storekeeper with an understanding of the shopper preferences. This allows the storekeeper to direct the shopper and cross-sell other products. Amazon.com
suggests other books the shopper may be interested in when selecting a book.
The diagram on page 106 uses a graphical representation to contrast the workflow of a virtual store and a physical one.
Of course, one element not discussed here but of top importance is security. Firewalls, authentication, virtual private networks, encryption and secure transactions all are necessary parts of
E-commerce. The Test Center will review firewalls in the April 27 issue.
The most important part of the storefront is connecting it to the money. There are several means of paying for a product, and the most common is the credit card. Many major credit-card issuers
today will waive the $50 deductible if the purchase was made online.
A credit-card payment can be processed not only by the store but increasingly by virtual malls a store resides in or third-party clearinghouses that traffic in online bucks.
The Internet also opens a new type of transaction, the so-called microtransaction. This is basically a fraction-of-a-cent charge for each click; "click charges" are usually seen where
information is the product sold. Most of the products in this review support microtransactions.
While consumer commerce garners the ink in the mass media, Web commerce is more just storefronts. Resellers dabbling in this complex field should focus on more than just retail:
Business-to-business electronic commerce also represents a compelling example of lowering costs.
One of the best examples of this form of E-commerce is underwear manufacturer Fruit-of-the-Loom, which uses electronic commerce to track the sales and inventory of nearly 40 clothing
distributors, which in turn track sales at thousands of retail outlets. A similar system at Amazon.com alerts book publishers when reprints should be ordered.