Would anyone care to read about Lance Estes? After you've completed reading, please don't anyone tell me ZULU/ESVS doesn't know what it's doing by bringing eCommerce Corp and Mr. Estes on board. I also ask, while reading, that you consider Mr. Estes remarks about Mr. Hayton and Zulu as depicted in the most recent Wired article:
Five tips to consider
before venturing down
the road to e-commerce
Thinking about cost, application choice,
security, customer service, and ISP
selection
By Jim Carr
Summary
Getting started in electronic commerce requires
selecting an e-commerce application and working
with so-called "CSPs" (commerce server
providers). We provide four "rules of the road" and
name products developers are actually using.
(3,500 words)
NetscapeWorld
has become
August 1997
Table of Contents
Topical Index
Search
veryone wants to cash in on building the booming electronic commerce
marketplace -- but you already know that. What you may not realize
is that helping others create online "storefronts" requires more than merely
throwing some HTML code together.
Setting up a storefront on the Internet "is another ball game entirely," says
Lance Estes, president and CEO of Ecommerce Corp. (Stamford, CT), a
Web development and hosting firm that has built e-commerce sites for
Sports Illustrated and Entertainment Weekly. "Anyone can build a static
page," he says. "Very few people can build dynamic databases" on which
the best e-commerce Web sites are based.
Database connectivity is just one of the many critical issues Web
developers face as they migrate customers onto the world of "e-business,"
as some vendors like to call it. Builders of electronic commerce storefronts
-- which are more clearly defined by calling them transaction-enabled Web
sites -- must handle a wide range of tasks not normally associated with
Web development.
These include helping clients market their e-businesses, understanding the
tradeoffs between the various e-commerce applications (and boy, are there
a lot of those!), and handling customers who think they know all there is to
know about the Web because they already have an online presence. Other
considerations include dealing with Internet service providers (ISPs) in an
interactive environment that places unusual demands on the ISP's
communications circuits, assuring a customer that the Web is a safe and
secure place to do business, and helping the online merchant calculate that
all-important "ROI," or return on investment.
It is, indeed, a rocky road to travel. Here, then, are five "rules of the road,"
listed in no particular order of importance (after all, one customer's passion
is another's poison), that will help smooth out the e-commerce
site-development process for every Web developer.
Advertisement
Rule No. 1: E-Commerce sites are complex and cost more to
develop and maintain than "static" -- or non-transactional --
Web sites
"If you concentrate on HTML you'll go hungry," says Stephen Latour,
Webmaster/Internet engineer at Contour Software, a Campbell, CA,
developer of software used in the loan and mortgage industries.
On the bright side, however, "the competition from high school-aged Web
types is zero," says Dave Roberts, president of Sonoma.Net, a Rohnert
Park, CA, Web developer and ISP. "There are probably ten times as many
issues on an e-commerce site than on a flat site," says Roberts, who uses
Netconsult Inc.'s (Redwood City, CA) Intershop Online product. For
example, he mentions how to handle such multiple purchases as mailing
three packs of coffee to three different addresses.
"We tend to work with clients who are more serious about their Internet
presence," adds Roberts, "people who are willing to deal with these issues,
and understand they'll pay extra for the integration services required to get
an e-commerce site up and running." For instance, he figures developing a
100-item product catalog would bring in $7,500 to $15,000, "depending
on the complexity of the product line."
Darwin Melnyk, president of E.Media Inc., a Portland, OR professional
services company that specializes in building e-commerce sites using iCat
Corp.'s (Seattle, WA) Electronic Commerce Suite, quotes similar figures.
"My customers generally spend $20,000 to $50,000 for deployment, and
they all want custom features," he says. "And by custom work, I mean
working with iCat's command language of 232 commands, which allow you
to push and pull data from databases, create live links, and pass variables
to payment processors."
Database integration requires experience...
"It takes years of SQL and database knowledge" to build a dynamic,
transaction-based Web site in which all pages are generated on-the-fly via
integration with a database, says Ecommerce's Estes. "We just finished
building a dynamic store (called livingbalance.com) for Oxford Health Plan,
a large northeast HMO, that is a totally database-driven site. Every page
after the index is unique -- it's generated as you ask for it -- so we can
serve up individual information to each person who comes to the site."
In the future, the database-driven nature of the site will allow Oxford Health
to do "personality profiling," says Estes. "If you come in and we know
you're a kid, we can present information in the way a kid wants to see it --
it would be the same information you'd give an adult, but in a different
way."
Intershop Online's strong integration with Sybase database technology is
the reason Sonoma.Net chose the Netconsult product in the first place,
says Roberts, whose firm has developed e-commerce sites for a number of
northern California specialty firms, including the Thanksgiving.com coffee
company. "My partner and I came out of the publishing industry," he
explains, "and we understand that when doing electronic commerce, it's
really important to have a strong back-end database."
No simple stuff
Working with technologies such as iCat's command language and
Microsoft's Active Server Pages (ASP) for its Commerce Server, "is very
difficult stuff," notes Estes. "iCat's is easier to learn than Microsoft's --
iCat's demands only some experience in SQL, but with Microsoft you need
a full-blown SQL background.
"With the Microsoft product, you have to know how to write ASP scripts,
which let you include validation rules and custom pop-up boxes that tell
users when they've done something wrong," says Estes. "It takes quite a bit
of time figuring out the mistakes (users) can make and programming that
into an e-commerce site."
Rule No. 2: Know thy e-commerce application
With the Web looking increasingly like the "Internet MegaMall," and more
and more companies adding online stores daily, it's no surprise that vendors
have made the e-commerce application suite the "hot" business software
product this year. In the last six to eight months, there have been no less
than two dozen of these packages, which generally include a product
catalog, online shopping cart and middleware to integrate back-end
services such as databases, credit card payment and fulfillment systems.
The abundance of products has helped lower prices. For example,
Microsoft's Commerce Server 2.0 is now a component of Microsoft's Site
Server Enterprise 2.0, which sells for $5,000; that's considerably less than
the $15,000 the product cost when it debuted as Merchant Server 1.0 in
1996.
But it also means Web developers must choose carefully among the
alternatives, matching the various applications' key features to their clients'
needs. Unfortunately, that's a far-from-straightforward process, akin to
shopping for a new car -- with Brand A offering more "bells" but fewer
"whistles" than Brand B -- making it difficult to keep abreast of what's
available.
Three market segments
The e-commerce products have settled into three primary segments.
Although these niches separate out mostly based on pricing, there is some
overlap in terms of features between the categories.
At the high end of the market are business-to-business applications in the
$100,000 to $250,000 range. These products generally appeal to large
organizations with the internal IS resources necessary to install, integrate,
and maintain such formidable systems. With these products, organizations
can build customized online markets for multiple customers, allow
customers to search online product catalogs and place and track orders.
These are key benefits for companies selling to other businesses on the
Web but of little use in single consumer-to-business markets.
Examples of this level of business-to-business applications include:
Trade'ex Corp.'s (Tampa, FL) Market Maker,
Connect Inc.'s (Mountain View, CA) OneServer,
Open Market Inc.'s (Cambridge, MA) Transact.
Other companies with products or plans for products and services are:
Sterling Commerce Inc. (Columbus, OH),
Actra (Sunnyvale, CA), a startup funded by Netscape
Communications Corp. (Mountain View, CA) & GE Information
Systems (GEIS),
BroadVision Inc. (Los Altos, CA).
In the middle, priced at about $2,000 to $10,000, are shrink-wrapped
business-to-consumer products that offer independent Web developers the
greatest opportunity. The template-based nature of these products allows
considerable customization of the finished storefront, thus giving developers
plenty of opportunity to add value to the software -- and not coincidentally
earn consulting fees! Such products include Microsoft's Commerce Server
and iCat's Electronic Commerce Suite, the two best known offerings.
Others in this market include Netconsult Inc.'s Intershop Online and the
Vision Factory's (Scotts Valley, CA) Cat@log.
There is also a low end of what might be called online store software from
vendors such as America Online Inc. (Dulles, Va.), ViaWeb Inc.
(Cambridge, MA), Virtual Spin LLC (Seattle) and CommerceWave
(Carlsbad, CA). These packages combine easy-to-use online page
authoring tools with inexpensive (as low as $49 per month) site hosting.
The low-end products' ease-of-use leaves little opportunity to add other
value, such as database integration and the like. What opportunity there is
at the low end is in helping potential merchants create compelling graphics
for their sites.
DAUNTING selection process
Even though the middle tier offers considerable potential, independent
developers still face the daunting task of picking among the multiple choices
available, says Juan Silvera, director of sales and marketing for ICN, a
Boca Raton, FL, developer of e-commerce sites, including the ICN
"SuperStation." And the criteria for choosing an application goes beyond
just product features.
"When a customer approaches ICN and asks us to recommend an
electronic commerce platform, we think of terms of deployment and
support," Silvera says. "The reason our customers have decided to stay
with Microsoft is support.
"iCat has a good solution, but the only problem is if you need someone
qualified to support iCat, there's only a handful qualified to work with the
technology and platform," he adds. "For instance, ICN recently
co-developed an e-commerce system with a company in Columbia, in
South America, and we used (Microsoft's) Merchant Server for that store.
"That's because there are a number of qualified Microsoft solutions
providers (in South America) with the ability to maintain and service a
Merchant Server site, and that is not true of iCat or even Netscape -- no
one in that part of the world has experience with those systems," Silvera
explains. "Yes, product distribution is important, but maintenance is more
so.
"Remember, these stores are very dynamic, you don't just build and them
and leave them alone," he says. "There are a lot enhancements to keep it
compelling all the time -- you're competing with other stores with similar
offerings."
iCat, for its part, works aggressively with independent developers to
promote its product, says E.Media's Melnyk. iCat "understands the
real-world experiences" involved in building online business sites, he says,
and integrates storefront-building templates created by a panel of
developers, such as himself, into its Commerce Suite.
He also says iCat's Commerce Suite "focuses on marketing and not IS --
it's designed to market and sell products."
"The out-of-the-box solution is never good enough," says Jason Heffran,
vice president of operations at Global Interactive Systems, a Louisville,
Kentucky consulting firm. "Even if you spend $10,000 on software, a lot of
customization is usually necessary." Global has created interactive Web
sites for the Kentucky Derby and the Indy 500 auto race, among others.
Heffran says his company used iCat for a while, but felt that, even at
$3,000, its price tag was too high. He believes the middle-tier solutions are
"too high end for the typical user but too low when we're talking to big, big
clients. I don't care if I have the best product in the world -- if it's a $500
product it'll be difficult to sell to a multi-million-dollar company."
Control over scalability
Instead, he prefers to custom-build sites with Cold Fusion, a Web
application-development tool from Allaire Corp. (Cambridge, MA). "If we
design a custom solution, it'll take longer," he agrees. "But we'll have more
control over its scalability."
Online store software vendors position their products by offering low prices
and providing both the application and Web site hosting services.
Customers pay a monthly service charge based on number of transactions
or catalog size or, at least in some cases, a set-up fee. The customer
doesn't buy the e-commerce application, instead customizes storefront
software that runs on the vendor's server using a browser and the Internet.
The vendor manages the hardware operations (e.g., the server, T-1, or T-3
connections to the Internet), while the online merchant maintains and
updates site contents remotely. Such separation of "church" and "state" has
become popular in e-commerce environments because it allows content
providers to update their commerce sites -- and remain competitive --
without jeopardizing server security and functionality.
Rule No. 3: Not all ISPs are created equal
Nor can they all be considered CSPs (for commerce service providers).
The demands of electronic commerce transactions -- such as enhanced
security, database accesses, and the "need for speed" in communications --
are beyond the capabilities of some ISPs, leading several vendors to use
the CSP moniker.
For instance, Bonnie Betts and Stef Fowler, the principals in The Gift
Center, a Stateline, NV, online store that sells collectibles from the House
of Lloyds, discovered their local ISP could not handle in-bound security
transactions when they first began moving to the Web. "We needed secure
submittals and because we were working with CyberCash Inc. (Redwood
City, CA), we needed to be able to process credit cards through a secure,
encrypted line," explains Fowler.
Their local ISP said it was going to have secure submittals, but after
working with them for several months, Betts and Fowler realized that was
not the case. "They needed new hardware and software to interface to
CyberCash -- no one could place an order securely unless it was done
through e-mail, which is not the way we wanted to go," she says.
The last straw came when "we had an order from Indonesia and they
wanted to pay by credit card (and couldn't)," recalls Fowler. The customer
"had to call me from Indonesia with the credit card number, which was
totally unacceptable."
Fowler and Betts settled on CommerceWave, one of the online storefront
solutions, because "it was far easier than going through an ISP," says
Fowler.
It'll cost more, too
E-commerce sites place greater demands on an ISP's resources. As a
result, ISPs generally charge considerably more for hosting e-businesses
than they do for similar Web sites -- primarily because of their highly
secure, transactional nature.
Sonoma.Net's Roberts says an e-commerce catalog with 5,000 to 10,000
items will cost "at least $400 per month. An unsecured site serving flat files
might cost $75 per month." Contour Software's Latour puts the numbers
for a 100-item catalog at about $250 vs. $30, while Ecommerce's Estes
pegs them at $300-$600 for a dynamic site, $125 for a static site.
Roberts points out that "security and database transactions are very CPU
intensive, so you have fewer sites per server," thus driving up hosting
charges. "Transactional sites are also very memory intensive -- a database
may be 40Mb to 50Mb of data, and in order to get good performance,
you have to host that data in RAM, and you have to run it on a fast server,
such as an UltraSPARC."
For most companies, however, going with an ISP is still cheaper and more
cost-effective than hosting the site, says Steve Conley, president of Conley
Interactive, which designs Web sites for large companies.
Before recommending that his customer, Supergraphics, a Reading, PA,
mail order retailer of magazines and posters, use Virtual Spin's Cartalog
online store product, Conley originally considered setting up a server here
and running an off-the-shelf package. "But that would have locked us into a
particular technology," he says, "and at this point, we thought it was better
to let another firm make that investment."
He feels the online store approach is a good one to follow "for the short
term, such as a year, to allow technology to catch up with the market. And
it gives (merchants) the ability to move on if (the hosting vendor) is not
keeping up or someone releases a better product."
Need for speed
The ISP's communications capabilities are also critical, says Conley. "Any
kind of delay dampens the shopping experience. What you don't want is for
one of your items to not load on (the shopper's) screen."
That means plenty of T-1 connections, which cost at least $1,500 to
$1,800 a month to operate, which adds even more to the costs of an
e-commerce site.
It's also important to look for an ISP that "specializes in managing
(e-commerce) servers," says Estes. "An ISP should have experience is
handling transactions over the Internet, know the pitfalls, and have security
already in place. Also, look at [the ISP's] clientele -- talk to someone
they're working with and try visiting one of their sites."
Rule No. 4: You've got to hold the client's hand
One of the "givens" of building an e-commerce site is the amount of extra
work required compared to static sites. And the "extras" include not only
actual programming, but dealing with client concerns about a variety of
issues.
Roberts, for one, says he's had to watch out for the type of customer who
tries to micro-manage the product. He had one client who "wanted to make
lots of little changes, such as wanting 'not that shade of blue.' They all
thought they understood the Web, and figured all kinds of things are simple
to do.
"But it's much harder to make those kinds of changes on an interactive site,
where there's a lot more work massaging the data, which has to be in a
certain format. And a lot of them didn't even have a database to begin
with," Roberts adds.
"Marketing and return on investment are big, big questions" in clients'
minds, says Contour Software's Latour. "Two years ago, people wanted to
be on the Web just for ego.
"Now, however, they're concerned with return on investment, so now
(Contour Software) is more and more into marketing, putting clients (and
URLs) in search engines, just generally assisting them with marketing,"
Latour says. "We're even building our own directory service so we can
help solicit business on our clients' sites."
A typical customer might ask Latour, "If I spend five thousand dollars on a
Web page, and spend $200 a month on hosting, how long will it take for
me to get a payback?" In answer, Latour says he did some forecasts for
one client, who is spending about $20,000 to build a site that will allow
customers to design and buy business cards and wedding invitations on the
Web.
Surprisingly, "Our customer can recoup the entire investment in about three
months," he found out. It's also worth noting to customers, Latour says, that
no other medium allows setting up shop for as little as the Web does.
Rule No. 5. Don't underestimate the important of security to
clients
"There's a large audience on the Internet that's still insecure about sending
credit card information on the Internet," acknowledges Latour.
Consequently, he says he spends "a lot" of his time working with clients to
build users' confidence in the security capabilities of the Internet. "Most of
our customers, unfortunately, are a little behind the times as far as
technology -- many are using 386 machines with Windows 3.1," Latour
says.
"They tend to be stuck in the mindset that Hollywood has created, that
Internet is insecure. This means we have to reeducate them and help them
understand the security technology used on Internet, such as encryption
with SSL (the Secure Socket Layer security protocol), and explain the
steps the browser makers have taken to prevent breaches of security.
"I would say about 30 percent of my clients are still a little insecure about
security as a whole," Latour adds. "Of that 30 percent, I spend anywhere
from a half hour to an hour explaining and answering questions about
security," he says.
Latour says he "walks clients through online demos so they can experience
security measures. Many times when I walk them through (the security
demos), it's the first time they've had exposure to security."
Resources
Actra actracorp.com
Allaire allaire.com
America Online aol.com
BroadVision broadvision.com
CommerceWave commercewave.com
Conley Interactive conleyinteractive.com
Connect connect.com
Ecommerce ecommerce.com
E.Media emedia.com
GE Information Systems geis.com
iCat http://www/icat.com
ICN http://www.???.com [??]
Microsoft microsoft.com
NetConsult netconsult.com
Netscape Communications home.netscape.com
Open Market openmarket.com
Sonoma.Net sonoma.net
Spectragraphics spectragraphics.com
Sterling Commerce stercom.com
Thanksgiving Coffee thansgiving.com
The Gift Center giftcenter.com
The Vision Factory thevisionfactory.com
Trade'ex tradex.com
ViaWeb Inc. viaweb.com
Virtual Spin virtualspin.com
About the author
Jim Carr is a Saratoga, CA-based business and technology freelance writer who's
worked in, and covered the networking industry, for more than ten years. Reach
Jim at jim.carr@netscapeworld.com.
THE LINK:
idg.net |
