In today's business world the availability of Internet technology allows us to utilize a new media resource to help us run a business. However, it is still very new and often very confusing medium to deal with. A small business could by use of the Internet present a new image of itself and possibly reach a completely different set of potential customers. A good web site will visually impress and captivate any potential customer that comes across it. No matter who made it and where they are located, the web site will serve as the store front, and you will never need to do anything about the physical location or site of the store. The Internet is available to any one with an interest or a product to sell. There are virtually no requirements or restrictions and access is achievable at a reasonable price through very simple means. In order to make the Internet marketing option available to more people and to present it in a down-to-earth way, I've written this paper which presents an example of a small (fictitious) business in metropolitan San Francisco starting to use the Internet as a market. I will be talking about some of the requirements for going on the Internet, some of the costs of doing so.

The paper investigates a marketing strategy for an inner city retailer aiming to expand their business. The retailer is selling a product such as flowers or party paraphernalia. The location of the store is a low income neighborhood of a metropolitan city (San Francisco in this case), and its current customer base is limited to the locals. The retailer would like to target upper-end customers who are unlikely to frequent the neighborhood. The neighborhood is considered unattractive by the high-income citizens and they would not naturally enter the location of the store.

In order for the retailer, let's call her "Perla's Roses", to reach beyond her neighborhood and expand her customer base, she would like to advertise her business outside the local neighborhood. She feels that this would best be done by creating a web site and publishing it on the Internet.

This paper will discuss the "how to's" of making and running such a web site and also touch on some of the added fixed and variable costs.

Perla's Roses was originally a very small flower store specializing in roses, but soon expanded to include orchids, bouquets and most common flowers. Now Perla has a wide selection of date bouquets, funeral bouquets, roses, irises and lilies, and the locals love the quality and variety available. Perla has, however, not dedicated much funding or effort to the appearance of the store. She has had the store for 6 years and is known and preferred by the locals when they buy their flowers, but she would at this point like to expand her customer base.

After considering her options and talking to friends, she feels that publishing a site on the Internet would be her best option. She has good selection of flowers, but she doesn't feel that the appearance of her own store matches up to the up-town stores she has seen. She is thinking of running a delivery service to the new customer base, rather than having them come to the store itself and possibly not return due to the reputation of the neighborhood.

Perla's budget is very restricted. The flower store is doing well overall, but flowers are not commodities that produce very high revenue. Perla has room in her budget for spending about $15,000 to $20,000 on the entire project. She considered relocating the store, but she likes her customers where she is and the store is located right next to her apartment. She also considered spending the money on renovating the store, but her problem is not making the inside of the store nicer, but that her store is in an unattractive building and a poorly maintained neighborhood. Perla is afraid that the high-income customers she wants to reach will have some sort of restrictions against coming to visit the store, or not liking where the store is located and therefore come once or not at all.

Perla is faced with the following problems:

First Perla must get a personal computer (PC) to work as a server for the web site. Almost any new computer sold in common electronics stores will have enough processor speed, storage space and memory to work as a server, but the faster the computer is the faster the web site will run1. The other restriction is the connection speed to the Internet. She has the option of buying a computer and the software required and then using this system as her web server or buy server space with an Internet Service Provider (ISP). In both cases she will need a connection to the Internet which will also require the services of an 15P2. Since Perla wants to have the orders delivered, she needs to know what the orders are and what address they will be going to, and this will be complicated without a computer. To run a commercial web site you will most certainly need a computer.

Once she has the server and the Internet connection established, she needs to design the web site itself. There is a multitude of ways to do this: You could do it yourself after reading a "HTML for Dummies" or other such instructional reading, but I doubt that this will produce a very professional looking web site. If you want to market your product and sell it on the Internet, you really need to have a well constructed and professional looking site. For this you will need to hire someone to do the coding of the web site for you and maybe a photographer to take some good quality pictures to put on the site. Pictures are worth a thousand words, and that is not less true in the advertisement world. There are plenty of web site developers out there that will charge very reasonable amounts to make you just the site you want.

If you want the site to allow the customers to pay with credit cards, you need to take the web site and its development one step further by acquiring the services of an Account Verification System (AVS). This is a string of companies who are connected directly to the bank databases all over the country with secure lines and have licenses to check credit cards. Some of these companies will also be able to help develop your web site, and offer very reasonable prices for small businesses. One such provider is Silicon Valley Square (www.sv2.com)3, who will take your ideas and help you turn them into something you can publish on the Internet. It is also good idea to subscribe to a blacklisting of credit cards to help prevent credit card fraud, but this is optional, and in Perla's case it's probably not necessary, since she will have a very limited circle of Internet customers. They will in most cases be located within San Francisco.

With all these things taken care of Perla can finally begin to start doing the thinking about the delivery of the product. The web site will, if the code for it is written properly, be able to e-mail the orders with the delivery address to Perla when the credit card has been verified by the AVS provider. At this point Perla has a specific order that she has to complete and deliver. The delivery is the new part, and for this she thought of employing one person. The new employee would help her out with the flowers on a daily basis, and take care of delivering orders when needed. The main expense of Perla's expansion is the car she will be using for delivery. She has her own worn out old truck, but she has been saving the money to buy a new truck, and this would serve ideally as the delivery vehicle.

Having dealt with the main issues of designing and running the web site itself, we can review the pros and cons of Perla's solution:

With the web site Perla has the chance of taking her business to the high-end customer (in this case the Financial District, SF). The high-end customer would not naturally have come about the store, but with the web site serving as the virtual store front they will never have to. They will only see the web site and the delivery truck or maybe only the employee delivering the flowers. With the web site Perla is able to present a new image, and not only that, but she is able to charge different prices in the store and on the web site. Assuming a new financial district-type customer base, she could for example charge a 15% higher price and offer free delivery anywhere in San Francisco. The Internet marketing solution offers a chance to sell your product virtually anywhere even if you are just a little business in a small town.

The drawback of using a web site to attract and handle business is that it is still in a developmental stage. There are many ways that simple things could go wrong or temporarily be out of order. When running a commercial web site and using several service providers (connection, site maintenance and credit card verifications), only one of them has to go out of commission for the whole site to be out of order. Furthermore it could present a problem to find the right service providers as there are many. Only the real professional developers and service providers know what they are doing and they are still few and far between. The added costs of the hardware, the Internet services, the delivery vehicle and the new employee might present an initial problem, and might handicap the business financially if the web site is not successful.

The next thing Perla has to deal with will be how to advertise her new web site. The first thing to do is to make your site seen on the Internet. It's not that expensive to buy add space on the popular Internet search engines like Yahoo, AltaVista, Excite and Lycos on their local servers, so that people in the area will see you when ever they search for something. A cheaper option would be to get in contact with all the 'rings'4 on the Internet and have them put references to your web site on their web sites. A very good site for San Francisco is http:flwww.citysearch7.com which is a site that covers every business from art and restaurants to theaters and where to buy flowers. In order to make it easier for people 'surfing' the Internet to find Perla's Roses she would probably want to change the name on the web site from "Perla's Roses" to "San Francisco's Best Flowers". Other relevant words should be put in the code for the web pages for the search engines: In Perla's case words like: 'flowers', 'cheap flowers', 'best flowers', 'roses', 'orchids', 'bouquets', 'San Francisco' and other relevant words that people are likely to use when looking for flowers in San Francisco. Any sort of physical advertisement on TV or billboards will be completely out of proportion for a small metropolitan business, unless we are talking basic cable. Radio stations, even local ones, would probably be a great expense and not worth it because of the limited coverage and exposure. The marketing should only be done for the web based version of the store, and this is best done on the Internet itself as described above.

The associated costs will divided in two: the one-time cost of acquiring all the needed hardware, software, vehicle, connection and design and the monthly fees for connection, credit card verification and web site maintenance.

To try and assess the one-time costs, let's sum up the needed components:

The truck will probably run about $1 0-12,000 new or slightly used, and this will be by far the greatest expense. You could probably use any vehicle you have for the delivery, but Perla decided to take the extra step and buy a new truck while she had her wallet out. Basically the delivery of flowers could be done with any vehicle available, but Perla needs a new car in this case and she also has additional plans with the truck. She wants to paint the logo from the web site on the van. It is very important to have some sort of recognition, and the easiest way to do this is with an attention catching logo. In this way Perla advertises everywhere she drives and every time the employee goes to deliver flowers anywhere.

The computer won't be too expensive, but will still cost you about $2-3,000 depending on the speed and the software you want on the machine. If you chose to buy it with some of the popular companies like Dell, Gateway or Compaq, you will have the option of buying lots of peripherals. There is no need to buy any other peripherals than a printer to print the orders and the invoices. Other than that the only thing you need this computer to do is maybe update the web site and check e-mail for you. You just need the standard package of processor speed (~300MHz), Ram (64MB) and Hard drive space (6GB) with a modem (56Kbps) running Windows NT with a printer connected.

The multitude of web site developers and Internet server providers available, you should have no problem finding one that will help you develop and maintain a professional looking site. Depending on what you want your web site to do, the price will vary. Both the one-time installation fee and the monthly expenses will differ from package to package, and you will want to evaluate what package you want for your business. If you, like Perla, are selling flowers, you might not want more than just the good looking web site with an 1(800) number on it in order to cut down your costs a little. If you have high revenues and maybe a more 'technological' product (computer circuits, computer hardware, cars or something else which is appealing to people who use the Internet), you might want to think about some of the other options mentioned, but in Perla's case we chose to go with the simpler and less expensive solution.

In any case you will want an ISP and this might be the most important thing to actually look into quite carefully. There are many of them available throughout the Bay Area and many of them are just one or two-person companies with a leased T-1 connection to the Internet providing for 40 or 50 user modem connections. You want to make sure that you find an ISP who will:

It might also be a good idea to look up the multitude of web site that will give you information about the ISPs available or how to find one5. When you do get to the web site of an ISP you're interested in, you should probably consider if you like the site or not. An ISP with a good site is, in my opinion, more likely to be able to provide a better service for you as opposed to someone with just one page with a company name and a phone number. A good site is one that will let you easily access the above information like terms of service, what kind of connection they have to the Internet, prices, phone numbers and support service. Make sure you shop around for the best deal for your business, and know what your options and alternatives are before you sign up.

The new employee will also involve some additional expenses to your company, but this is necessary if you want to run a delivery service. The delivery service is necessary because Perla is running a commercial web site selling locally. If Perla was selling something else available to people out of state, then she could just use Fed Ex or UPS to deliver the product. To keep the cost down on the extra employee, you might consider hiring the person part-time, and restrict the hours that you will deliver. Also the job is a position that requires little skill beyond having a driver license, and it should not be paid more than a base salary with commission on the delivery.

In the example with Perla's Roses I tried to show how a business in a less desirable neighborhood in a metropolitan city or maybe any small company that is somehow disadvantaged can expand its business to more upscale and wider markets than what it is currently involved in. The Internet and its electronic graphical interface eliminate the need for establishing your business in a known and 'desirable' area. On the Internet you only see what you are presented and the can be no prejudges on race, socio-economic status or store location. The Internet allows the focus ~o go back to the quality of the product and the service provided, not the location and aesthetics of your physical address.

How to find an ISP and other information:

Web sites selling flowers:

Open Market Providers:

San Francisco Sidewalk

Internet Servers - Cyborg

Information on E-Commerce

Footnotes

1 Something to aim for: Pentium Celeron 300MHz, 64MB RAM, 6GB Harddrive, modem/Ethernet card with Windows98 and Personal Web Server installed. Systems like this run about $2,000.

2 ISPs are companies that have direct access to the global network of computer subnets transferring information from one to the other (World Wide Web/Internet). ISPs are easily found with a little searching. There are plenty of local, national and global ISPs to provide the Internet connection. Price range is from $30 to as much as you want to pay, depending on the service rendered.

3 Plenty of Open Market Providers can be found at: http ://www.openmarket.com/partners/ssv/westcoast.htm

4 Rings are links/references to a chain of web sites with a common interest like 'Home and Gardening' or 'Pamela Anderson'. A ring can share any interest and they have lots of references to sites of interest.

5 Look at these web sites for starters: http://www.findanisp.com and dogwold.seagull.net/isp.html