Assessing the Need for an Online Store

Internet consultants once claimed it was possible to sell anything over the Internet. But the recent dot-com downturn has shown that this isn't the case. It's true that the Web is a great way for customers to order many types of products and services. And almost any small business can benefit from

If you're thinking about issuing such an invitation, there are a few considerations to keep in mind:

• Your niche. The biggest Web-based retailers spent millions of dollars to establish themselves — and many of them are no longer in business. Growing businesses can't compete on this level, and they probably wouldn't want to. Many online businesses, however, have successfully targeted underserved market niches — for example, selling out-of-print sailing books.

  The same goes for market segments such as CDs, videos, drugstore items, and software. Make sure your site offers something special that customers won't find on sites run by the Internet giants — or for that matter, at the corner store.

• Your competition. Chances are someone else already sells your product over the Web. In fact, the online competition might be fierce. That doesn't mean you should steer clear of it, however. Instead, you can try to figure out ways to steal market share.

  Review your competitors' sites and improve upon them. Your typical competitor's Web site may download slowly or have poor aesthetics. Or maybe the company doesn’t offer a strong enough selection; maybe you can offer a fairer price. If nothing else, perhaps you can be the first company to sell a given product with great customer service, on-time delivery, or a money-back guarantee.

• The nature of your product. Some products sell especially well on the Internet. You should decide if your goods fit that description.

  CDs and DVDs sell well on the Internet because it's easier to gather information about them online than in a store. Books sell well on the Web because it's easy to build a community of customers who will review the books they purchase and read other customers' reviews. In both cases, sites can track customer preferences and suggest possible purchases — as a result, customers often buy more items than they intended initially. And consumers know that a copy of a book or CD they buy online will be identical to a copy they'd buy in a store.

  The Web also is a great place to sell products that most people don't like to shop for. On the other hand, there are some things consumers need to touch or try out in person before they buy: You can't test a lounge chair or try on lipstick over the Internet. That said, if you have both a store and a Web site, customers can check out items in your store and then purchase them later online.

• The nature of your business. You should also consider the logistics of selling certain items over the Web. Even if you offer low prices, for example, shipping charges could make it cheaper for customers to shop for the same products locally. Customer service is another touchy issue; many online stores suffer because they can't offer the level of service customers expect from brick and mortar stores. And the more products your online store offers, the more careful you'll have to be about tracking your inventory. You don't want to risk having customers buy out of stock or discontinued products.

  As many online businesses have learned, shipping, customer service and other overhead costs can quickly outweigh any extra business you generate through your Web site.