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If you’re one of the 800,000 curators currently operating a shop on Etsy–the online marketplace for everything handmade–Outright wants to give you a gift. The cloud accounting software company has a new Etsy integration that lets users see all of the costs associated with their e-commerce business. The software is free for Etsy users from now until the end of the year.
Fritz Maytag Anchor Brewing for setting limits He invented what later became known as microbrewing. Without his Anchor Steam Beer and its brother brews, we beer lovers might have been consigned to choosing between Budweiser, Miller, and Coors. Instead we have a cornucopia of the finest brews available anywhere in the world, except maybe Belgium. And Fritz Maytag led the way. A young Stanford grad living in San Francisco in the mid-1960s, Maytag often enjoyed a glass of the 109-year-old local brew, Anchor Steam. One day he heard that the brewery was closing. He paid a visit, fell in love, and, in September 1965, bought a 51% stake in the business. Three years later, he bought the rest of the company. The whole shebang, he says, cost about as much as a used car. At the time, Maytag — an heir to the washing machine fortune — knew nothing about beer-making or business. “You know books like So You Want to Have a Puppy?” he says. “I bought So You Want to Learn Accounting.” Even to a novice, however, it was obvious that the company was sinking fast. Maytag soon learned why: Restaurant and bar owners complained that the beer frequently spoiled before they could sell it. So Maytag tinkered with the brewing process and the recipe, coming up with a new, improved Anchor Steam Beer that debuted in its bottled form in 1971. It was an instant success. Within four years, the brewery had maxed out its production capacity. Soon thereafter, Maytag was forced to ration the number of cases distributors could buy. He remembers the next few years as a nightmare. Customers were beating down his door, and there was simply no way he could satisfy the demand. He desperately looked for a new site, but he limited himself to locations in San Francisco out of respect for the historical connection between the city and the beer. Finally he found an old coffee roastery, where the brewery moved in 1979. Maytag vowed he would never go through rationing again. But the popularity of Anchor Brewing’s beers continued to grow. By the early 1990s, Maytag was facing the real possibility of another capacity shortage. He considered going public to raise capital, but rejected the idea because he didn’t want the kind of growth he would have to pursue if he took on investors. Size, he believed, was the enemy of quality. “This was not going to become a giant company — not on my watch,” he says. In the end, oddly enough, Maytag was saved by his competitors. Microbrewing was gaining popularity, and hundreds of small breweries were springing up around the country. Rather than resist them, Maytag helped fledgling rivals develop their brewing skills. They wound up growing fast enough that Anchor Brewing was able to avoid a second capacity crisis altogether. “It was a great relief,” says Maytag, now 67. “It’s not any fun when you can’t produce enough to satisfy people. What if you had a pizza store with 100 customers outside waiting in line, getting angry, fighting, threatening? In business school they say, ‘Raise your prices.’ Not in the real world. You get a backlash if you raise prices too much. You lose your validity. Luckily, we didn’t have to go through that again.” Rare is the entrepreneur who feels lucky that his competitors’ sales have diminished the demand for his product. But perhaps rarer still is the entrepreneur who can resist the pressures and temptations of growth and focus instead on creating what he really wants: a gem of a business. Bo Burlingham Martha Stewart, Martha Stewart Omnimedia because she took one for the team Richard Branson, Virgin Group because he’s game for anything. In fact, everything. Michael Dell, Dell Computer for being brilliantly straightforward Jim Sinegal, Costco because who knew a big-box chain could have a generous soul? Diane von Furstenberg, Diane von Furstenberg Studio for staging an elegant comeback Julie Azuma, Different Roads to Learning for offering hope and help to the parents of autistic children Fritz Maytag, Anchor Brewing for setting limits Ray Kurzweil, Kurzweil Technologies and other companies because he is Edison’s rightful heir Craig Newmark, Craigslist for putting the free in free markets Jack Mitchell, Mitchells/Richards because his family business makes an art of customer service Frank Robinson, Robinson Helicopter for whipping an entire industry into shape Mark Melton, Melton Franchise Systems for giving immigrants their shot at the American Dream Michelle Cardinal & Tim O’Leary, Cmedia and Respond2 for rewriting the rules for husband-and-wife teams Mike Lazaridis, Research in Motion because someone had to stand up for all those frustrated engineers Trip Hawkins, Electronics Arts and Digital Chocolate for still scrapping Warren Brown, Cake Love and Love Cafe because only in America will someone quit a secure job as a lawyer to start a bakery Muriel Siebert, Muriel Siebert & Co. for being a notable first with a worthy second act Chuck Porter, Crispin, Porter + Bogusky for verging on reckless Katrina Markoff, Vosges Haut for setting a completely unreasonable goal for her business Barry Steinberg & Craig Sumerel, Direct Tire and Auto Service for showing the power of the peer group Victoria Parham, Virtual Support Services for serving as a mentor to military spouses Tom LaTour, Kimpton Hotels and Restaurants for staying at fleabag hotels so that we don’t have to Mitchell Gold & Bob Williams, Mitchell Gold for creating a true comfort zone Izzy & Coco Tihanyi, Surf Diva for kicking sand in the face of conventional wisdom Tony Lee, Ring Masters for saving 16 jobs, including his own Rueben Martinez, Libreria Martinez Books and Art Galleries for simultaneously building a business and nurturing Latino culture
Many payment processing and merchant account providers do not accommodate international commerce. If you plan to market your product globally, you may need to search for an international provider. One such company is PlanetPayment. With this service your business doesn’t require a U.S. bank account and will be able to accept Visa, MasterCard, and American Express credit cards; accept payment in most currencies; and settle transactions in the major currency of your choice. PlanetPayment provides a merchant account and payment gateway software and claims to be compatible with most shopping cart technology. ClickPay apparently specializes in international accounts. The standard rates for a merchant account and payment gateway include a setup fee of $595, a monthly fee of $25, a per-transaction fee of $0.50, and a discount rate of 3.95%. For more information, visit MerchantWorkz or ShopforRates.com. Other international payment processors may have special requirements or impose limitations on their services. Some processors require that a merchant not based in the U.S. have a physical presence in this country, while others require only a U.S. address and phone number. Requiring a U.S. credit card merchant account, checking account, and federal tax identification number is also common. Don’t be surprised if you encounter separate application and setup fees for obtaining an international merchant account, as well as additional fees per transaction. MerchantService.com and iTransact.com are two other payment processors that offer an international commerce solution. Please see the MerchantWorkz profile of merchant account providers. In Europe, smart cards are quite common. One such card, popular in the Netherlands, is Chipper.com, although it is complex to use. Another, popular in Belgium, is Proton. Bull.net features smart cards for international markets. Copyright Â© 1995-2000 Pinnacle WebWorkz Inc. All rightsreserved. Do not duplicate or redistribute in any form.
Credit cards still reign as the leading method of payment for online purchases, but other payment options are available. Your product and your customers’ buying preferences will influence which payment methods you accept. In other countries, credit cards are not as pervasive, so you may want to consider offering alternatives for your international customers. Offering multiple payment options on your Web site, if you can afford it and maintain your profit margin, is a means to increase sales by increasing customer convenience and confidence. Many alternative methods are better suited to micropayments, charges less than $1, because the processing costs are often lower and credit card merchant account fees don’t apply. Providers that offer alternative payment methods, such as charging directly to a phone bill, electronic funds transfers (EFTs), and electronic checks, handle these transactions through a secure server or a payment gateway that encrypts the information, making these methods a safe means for consumers to purchase goods. With an EFT, phone bill charges, and debit cards, funds are verified before the purchase is complete, reducing the risk of fraud and insufficient funds returns. Offer Your Customers the Option of Charging Purchases to a Phone Bill eCharge offers an alternative payment method by allowing Internet users to “charge” purchases to their local phone bill. With eCharge, items priced low as $1 can be processed. Low charges make this method suitable for purchasing services such as memberships, subscriptions, and digital goods. To enable this payment method, the merchant must subscribe to the billing service and provide a link to eCharge on the merchant Web site. Consumers must download free software to their computers to use the service. Then eCharge connects directly from the customer’s modem to a secure server that automatically captures billing information. eCharge provides the customer with a billing service that is familiar, in the form of a local phone bill, and uses the same dial-up process as the Internet connection. There are no monthly fees, but a $50 setup fee is required, and eCharge imposes a per-transaction fee of 8.25%. Consumers pay a fee of $0.50 for transactions less than $10; $1 for transactions from $10 to $35; and $2 for transactions of $35 or more. Merchants may elect to absorb the consumer fee. Accept Payment with EFTs and Electronic Checks There is a fine distinction between EFTs and electronic checks. An EFT deducts payment from a personal or business bank account, and funds are verified before an EFT is approved. A merchant account is not required, but in most cases you’ll need an EFT vendor. An e-check generates a type of paper check that is then deposited into the merchant’s checking account and goes through the process a standard check would. Like a paper check, an e-check may be returned for insufficient funds, whereas an EFT is verified before the sale is completed. E-checks don’t usually require anything more than a standard checking account to be processed. This is an excellent option for business-to-business transactions. An EFT is generally a faster, more reliable method of payment than an e-check. Funds for an EFT are automatically verified and immediately transferred to your account. Using an e-check still produces a type of bank draft, whether paper or electronic, that follows the same process a standard check would. If funds are not available in the checking account to cover the e-check, the merchant will need to go through the same collection steps required to recover payment on a standard check. Bank overdraft fees and penalties for insufficient funds may be charged to the consumer. iTransact.com has two products that allow payment through a checking account. To accept e-check and EFT payments using this system, neither you nor your customers require special software or hardware. Coding is integrated into your Web site that effectively links your customers to a secure server. There they provide the necessary bank account information, and the EFT or e-check is initiated. The merchant and customer receive immediate verification of the order, and the merchant receives the customer’s name, address, phone number, e-mail address, items ordered, and the order total. Once the service is in place, EFTs may also be completed by phone or fax. You, the merchant, simply gather all the information that is on your customer’s check and then enter this information into your EFT software, whether it operates on your PC, POS terminal, or automatically via a Web-based application. Many MAPs, which process credit card payments, offer some form of EFT or e-check payment also. Charge.com is one such MAP, offering e-check acceptance setup free when you acquire a merchant account through them. Offer a Monthly Payment Option Qpass.com provides consumers with a monthly bill for digital products purchased online. Qpass works with merchants in two ways. A merchant vending digital content, such as software, subscriptions, music, etc., joins the Qpass network. Registered shoppers can then visit a member merchant and make purchases, which are stored on their Qpass account. Each month, Qpass bills the customer’s credit card, and the merchant receives payment. This system is ideal for micropayments or pay-per-use products. InterCoin is a similar service, currently in beta testing, enabling registered account holders to accumulate small charges from participating merchants. On a monthly basis, InterCoin will bill these charges to the account holder’s credit card or deduct them electronically from a checking account or digital wallet. One big drawback of this payment method is that the merchant won’t receive payment from InterCoin until the consumer pays for the transactions. Offer One-Click Shopping Qpass can provide members with one-click shopping on merchant sites outside the Qpass network. When a member visits a merchant who is not part of the network, Qpass provides PowerWallet technology, which allows customers to instantly fill out the forms required to make purchases. PowerWallet then stores the information, and the next time a customer purchases from that online merchant, he or she need only click one button. The merchant does not need to add anything to his or her site in order for Qpass customers to use this feature. The digital wallet is a new e-commerce service that facilitates one-click shopping. Microsoft Passport helps users reduce the number of steps necessary to purchase items online by allowing customers to create a single sign-in name and password to use at participating Web sites. Microsoft claims easy integration of the Passport wallet service with merchant Web sites through a link on the purchase pages that automatically retrieves the customer purchasing data from the Passport server. Merchants may extensively customize Passport so that customers purchase goods and services directly from the merchant site. Passport is currently available on selected Microsoft sites, and Microsoft expects to make this service available to third parties in early 2000. Offer Prepaid Shopping RocketCash is an online shopping service that allows parents to create an account that their children can access to purchase goods from RocketCash-affiliated merchants. Parents may fund an account using a credit card number with a spending cap imposed or by check or money order. Parents can also place other restrictions on the account, such as the time of day a child can access it and the sites the child may visit. RocketCash.com lets customers shop directly at the merchants’ actual Web sites, which enables access to complete product offerings, photos, reviews, merchandising, special promotions, and sales. And there’s virtually no difference between a RocketCash customer and a customer who visits your site and pays with his or her own credit card. RocketCash uses proprietary technology; merchants need only register as a RocketCash member in order to offer this service to their customers. Accept Smart Cards In Europe, smart cards are quite common. One such card, popular in the Netherlands, is Chipper, although it is complex to use. Another, popular in Belgium, is Proton. Bull features smart cards for international markets. Copyright Â© 1995-2000 Pinnacle WebWorkz Inc. All rightsreserved. Do not duplicate or redistribute in any form.
Online auctions aren’t just for collectibles anymore. They’re selling everything from moving services to real estate — and they may be muscling into your turf. Online watch retailer Grandwatches sells Omega, Seiko, and other quality brand-name watches at steep discounts not only on its own Web site but also on eBay’s and Yahoo’s online auctions. The discounts are possible because Grandwatches operates with gross margins ranging from 1% to 12%, compared with as much as 50% at traditional jewelry stores. How does the company get by with such razor-thin margins? Low overhead, of course. In fact, overhead can’t get much lower than it does at Grandwatches. The company consists of only Omar Nuno, a full-time Medicare claims processor at HMO Kaiser Permanente in Pasadena, Calif., who stays up late at his home computer putting up listings for new merchandise and trading e-mail with his customers. “It takes me a couple of minutes to put up another watch,” notes Nuno. “I have a vacation coming up, so I should have time to double my listings.” Nuno’s company is an example of a class of tiny enterprises — call them “microbusinesses” — that have come into their own online and may well be giving conventional small businesses a run for their money. The Web was supposed to level the playing field between large and small companies. It hasn’t, because small companies’ Web sites have been buried out of view from consumers in a sea of competitive entries. Large companies, meanwhile, whether they’re conventional corporations fortified by brick-and-mortar sales or dot-coms wielding vast piles of cash hurled at them by giddy investors, are buying eyeballs via massive advertising campaigns. But what the Web has done is level the playing field between small businesses and the micro-businesses that until now barely showed up on anybody’s radar screen. Those microbusinesses are individuals without a substantial — or in many cases, any — business history or infrastructure behind them. Operating with virtually no overhead, typically with little inventory, and sometimes in legal gray zones, these one-person shows are often able to offer fire sale prices and still maintain a modest margin. And the billions of dollars in revenues that they in aggregate are piling up come, to a certain extent, out of the coffers of more traditional businesses. The market Microbusinesses are tapping into powerful markets. Grandwatches’ Nuno, for instance, has sold watches to customers in Belgium and Japan. Another example is Ed Ciliberti, a Pacific Grove, Calif., real estate broker who three years ago opened a booth at a local antiques mall. It was a pleasant hobby, but he wasn’t clearing much. Last September he tried his hand at selling on eBay, and within three months he had earned about $30,000 on sales of $70,000. An antique peanut roaster that he’d bought for $250, and that failed to sell at the mall or at local auction, went for $2,950 on eBay. A copy of the first issue of Playboy magazine, which he’d bought for $900 and had autographed by Hugh Hefner, went for $11,100. Now he spends 60 hours a week online, whereas his real estate activities have been pruned back to 15 hours. Although the major online auctions have long been known for collectibles, an important change has quietly taken place during the past year or two: the auctions have become popular conduits for everything from real estate to automobiles. “This isn’t the tchotchkes business,” says Tony Surtees, general manager of the Commerce Group at Yahoo, which runs the second-largest online auction. EBay, the granddaddy of online-auction sites, lists more than 130,000 computer items and 6,000 cameras. “We have never wanted to limit ourselves in any way, shape, or form to the collectibles market,” says Brian Swette, eBay’s chief operating officer. As a sign of the times, he notes, the company plans to relabel its thriving “sports memorabilia” section as simply “sports” to reflect the fact that collectibles are being shouldered aside by “practicals.” Still, Swette and other eBay employees refer to their site as a trading community, apparently to preserve the notion that the online auction has more in common with swap meets than with malls or other retail outlets. “We offer something more personal, more special,” says Swette. “Almost every item has some level of uniqueness to it.” Really? I did a few quick searches of eBay and came up with the following counts of listings: 295 for screwdrivers, 65 for guitar strings, 108 for staplers, more than 7,000 for sweaters, 4 for disposable diapers, and 10 for hamster cages. Throw in countless watches, cameras, and baseball cards, and that short list places eBay in direct competition with almost every retail store in the downtown area of the midsize suburb in which I live. There is certainly no shortage of buyers. On any given day about 1.5 million people visit eBay, which lists close to 4 million objects. According to Forrester Research Inc., in Cambridge, Mass., online auctions got $1 billion out of consumers in 1999, and the firm predicts that that number will rise to $19 billion by 2003. As for sellers, none of the online auctions release a detailed breakdown, but eBay’s Swette says that there are hundreds of thousands of casual sellers on eBay who pull in less than $2,000 in auction revenues a month, and at least 25,000 “power sellers” who rake in from $2,000 to $500,000 a month. Who are those power sellers? Again, the auctions themselves don’t give out details. But Munjal Shah, CEO of Andale Inc., a company in Santa Clara, Calif., that provides financial and other services to high-volume online-auction sellers, claims that about 60% of all power sellers are conventional businesses that have opened up online-auction arms, often after having struck out with their own Web sites. That was the case with Marcello Veloso, who opened his Natick, Mass., sports card store eight years ago. But the business really took off, he says, when he started selling cards on eBay, two years ago. He’s kept the store, largely because it provides a handy facility for auction surfing, inventory storage, and shipping. “Right now,” Veloso says, “the money is on the Internet.” The other 40% of power sellers, says Shah, are individuals. Why are so many people creating one-person businesses focused on online auctions? Because they can. “The online-auction markets are creating the lowest barrier to entry that has ever existed,” says Shah. Microbusinesses could even spring up in the rapidly growing business-to-business auction market. I went to Bizbuyer.com’s Web site, spent about three minutes filling out a form to register as a moving company — sure, I had liability insurance, and no, my state didn’t require a license — submitted it, and a moment later found a “You have buyers!” button waiting for me. Clicking on it brought up an invitation to bid on moving a 50-employee telecommunications company from Massachusetts to Alabama. If I had gone on to bid and won the business, I suppose I could have subcontracted the job out or rented a truck and hired some college students with moving experience. VoilÃ : instant commercial mover. The competitive advantages For anyone who wants to remain with a business old-fashioned enough that it encompasses such relics of the pre-eBay era as employees, offices, showrooms, catalogs, and the like, it’s worth considering what one is up against in microbusinesses. EBay’s Swette estimates that an individual power seller achieves from 5 to 15 times the return on assets that a conventional small business does. No wonder: Not only do power sellers avoid major sources of overhead, but since many of them work from their homes, they often can take more tax deductions as well. And there is widespread recognition that many aren’t paying all sales and income taxes on their online take. “At the antiques mall, everyone had to have a resale license, and the mall took out sales tax,” says Ciliberti, the online antiques seller. “Online I don’t have to pay taxes on sales outside of California, and there’s nothing the state can do about it.” If, despite a low or nonexistent overhead, decent profits still manage to elude a microbusiness, that’s not necessarily a showstopper. Since many microbusiness founders are part-time entrepreneurs or have gainfully employed spouses, they can in effect operate like miniature dot-coms, allowing other sources of cash to subsidize the low prices they need to offer to undercut conventional businesses. If they do make a profit, eBay won’t take much of it: a listing fee ranging from 50Â¢ to $2 and a final-value fee based on the winning bid’s sales price — 5% of the first $25, plus 2.5% of the amount from $25 to $1,000, plus 1.25% of the amount over $1,000. (The fees for automobiles and real estate are higher.) Amazon.com and Yahoo, meanwhile, charge sellers nothing for auction listings (in hopes of drawing businesses away from eBay). At his local antiques mall, in contrast, Ciliberti was paying $550 a month for his booth plus a 10% commission on all sales. Besides not needing money to plunge into online auctions or cyberboutiques, microbusinesses also don’t need any operational expertise. Companies like Andale set up auction listings, process credit card payments, and help with accounting and inventory management, all for a modest fee. Amazon’s cyberboutiques, which the company calls “zShops,” come with a button that allows many of Amazon’s more than 15 million customers to charge an item in the boutique to their credit cards with a single click. The cost for a zShop: $10 per month and 5% or less of the sale price. “You don’t have to touch product or invest capital to get into this business,” says Andale’s Shah. Think that customers’ concerns about getting ripped off by a fly-by-night auction seller will keep them coming to your store? Don’t count on it. The feedback system pioneered by eBay — and imitated by Amazon, Yahoo, and others for their auctions — provides a simple and convincing means for determining at a glance whether a seller is trustworthy. It works like this: if a seller does anything to annoy a buyer, the buyer can give the seller a black mark that lowers the seller’s prominently displayed rating. Buyers who are still hesitant can use inexpensive escrow services like i-Escrow Inc., which will hold onto a buyer’s payment until the purchased item has passed the buyer’s scrutiny. EBay offers buyers up to $175 worth of insurance at no charge, and Amazon guarantees its zShop customers satisfaction on purchases up to $1,000. A brick-and-mortar store has to build an identity in the public’s mind and then make sure it has products on hand to back up that identity. Microbusinesses, in contrast, with their ultrafast inventory turnover and automatic exposure to potential customers through product listings, can leap opportunistically from market to market without penalty. Veloso, the sports card seller, jumped into the Beanie Babies market before it peaked, made a killing, and then jumped out when it flattened and on into the then-nascent PokÃ©mon market. “The online world gives the little guys the flexibility to change their entire inventory overnight,” says Robert Robicheaux, a professor of retail marketing at the University of Alabama. As for marketing, microbusinesses gain intimate, precisely targeted access to the largest aggregation of shoppers in the history of humankind, and at virtually no cost. On the online auctions or in the cyberboutiques, sellers are essentially guaranteed that their product listings will pop up in front of interested buyers on a more or less equal basis with those of larger businesses with large overheads. It doesn’t take much photography or copywriting expertise to create maximum appeal within a listing. There’s one other marketing edge a microbusiness can exploit, and from the point of view of conventional small businesses it might be considered an especially insidious one. That’s the ability to penetrate the Internet’s somewhat guarded network of virtual communities — the message boards, chat rooms, and e-mail lists that millions of people use to make friends, swap information, and let off steam. Nick Mannarino, president of Modern Performance Inc., in West Long Branch, N.J., has found himself up against that edge. Mannarino has been a longtime contributor to an e-mail list of 800 enthusiasts of Merkur, a German-made sports sedan imported to the United States in small numbers by Ford in the mid to late 1980s. Modern Performance provides custom components for Merkur. Last year a rather heated debate on the merits of one of the components all but took over the list for several days, but Mannarino, who not surprisingly knows more about the workings of the component than any other human on the planet, was utterly silent. He had to be; according to the list’s rules, he says, businesses aren’t allowed to plug their products in any way. That’s a standard rule of most electronic communities — and he knew from personal experience that the Merkur list’s moderator applies the rule strictly. So he kept his mouth shut. That enforced silence was particularly frustrating, notes Mannarino, because several of the people who had weighed in against the component — or against other components sold by Modern Performance and other specialty manufacturers — sell competing products. Some of those enterprising list members scavenge and recondition parts from junkyards, others make their own, and some buy them from manufacturers. Not only can the resulting products be found on Web sites, on online auctions, and in cyberboutiques, but in many cases they are openly advertised in messages on the mail list. Those people are running microbusinesses, of course, but because they don’t wrap themselves in the formal trappings of a real business, they slip in under the community’s radar and get to market directly to the most highly select audience imaginable, at zero cost. Microbusinesses are using such marketing ploys in virtual communities Internet wide. Says Robicheaux: “A business has to spend a few thousand dollars getting a mailing out, while others can spend a few hours in a chat room reaching thousands of people for free.” The entire world of online auctions and related microbusinesses is still rather small, accounting for perhaps 1% of annual U.S. retail sales. Relatively few owners of conventional businesses perceive their existence to be imperiled by online microbusinesses. But that will change if online auctions and cyberboutiques continue to grow explosively. The popularity of microbusinesses may have already begun to tilt the playing field away from even Web-savvy small businesses by rendering irrelevant many of their competitive advantages, turning their cost structures against them, and excluding them from the powerful new forms of online marketing wide open to microbusinesses. We may increasingly find ourselves living in a sort of “eBay economy,” in which small businesses face tremendous pressure either to invest heavily in sharply distinguishing themselves or to dramatically shed costs and switch competencies to beat microbusinesses at their own game. David H. Freedman is a contributor to Inc. Online Auctions: A Shopper’s Delight Like many shoppers, I’m willing to pay at least a small premium for the opportunity to buy locally. But occasionally, certain advantages of shopping online prove irresistible. For example, my wife and I recently bought a sleeper sofa from an online retailer because the delivered price was several hundred dollars lower than the price of any similar sofa we found in brick-and-mortar stores. We also do most of our grocery shopping online, saving us an hour or so of hassle every week. Another advantage of online shopping can be selection. That was the lure recently when I became interested in a particular diving watch, a Citizen product called the Aqualand. Though it’s not a rare or an exotic watch, it’s apparently specialized enough to fail to warrant shelf space at any retailer within striking distance of my home. So I hit the Internet. Surprisingly, an “Aqualand” search on AltaVista turned up only one slick comprehensive watch site of the sort that might reasonably be called a dot-com operation. The price at that site for the particular model of Aqualand I was interested in was $446.25. However, the search also turned up a few listings for boutique-type online shops, all of which had Yahoo addresses. Taking the hint, I went to Yahoo and searched its own internal shopping listings. Up popped 89 listings among Yahoo’s “cyber-boutiques” — low-cost sites on which anyone can list products at fixed prices — where prices for the watch dipped as low as $300. But Yahoo also alerted me that Aqualands were being offered at its online auctions. I checked out their listings and similar listings at the other major online auctions. I immediately discovered that among all the purchasing channels available to me, the real deals in Aqualand watches lay with those auctions. EBay had 19 of them for sale; Yahoo, 3; Amazon.com, 5. A few of the listed watches were used, but most were described as brand-new, in-the-box, warrantied merchandise, and some were going for less than $250. Some of the sellers seemed to be brick-and-mortar shops, whereas others seemed to be storeless individuals, but in most cases it was hard to tell exactly who or what the sellers were. All the listings had the same basic format, so that one from the Sharper Image wouldn’t necessarily have been any more prominent or slicker than one from an enterprising retired grandmother in South Bend, Ind. Retail Holdouts — But at What Price? “I hate the online world,” says Don True, the amiable owner of Country City Store, a cluttered shop tucked away on a quiet, mostly residential street in Manhattan’s trendy East Village. “It’s impersonal. Some of my customers talk about buying antiques online, but most of them come back to me. I think the prices aren’t that good on eBay, and people are afraid of ending up with a piece that’s chipped.” Down the block is Bernd Goeckler Antiques, a more spacious store where the antique-furniture prices run into the tens of thousands of dollars. No aversion to technology here: two large thin-screen monitors hooked up to state-of-the-art Macintosh computers are perched close to the entrance, and the shop has maintained a Web site for more than two years. But sell on eBay? No way, says the prim, bespectacled Bernd Goeckler. “That sort of thing happens at a lower level of the business,” he explains. Things look more promising at Howard Kaplan Antiques, a dark, expansive shop around the corner on a busy street, where I’m greeted by a youngish, gaunt man encased in black, who looks smirkily hip enough to be CEO of one of the Silicon Alley start-ups only blocks away. But the question of online auctioning gets me brusquely turned away. A morning spent hopping around this domain of $35-a-square-foot storefronts sheltering million-dollar inventories fails to turn up a single antiques shop owner professing interest in selling on eBay or its competitors. Something else that fails to turn up in my presence: a single walk-in customer. Meanwhile, on this same morning, bids are pouring in on well over 5,000 antiques listed on eBay alone, items ranging from a piano stool (minimum bid: $5.50) to a Maxfield Parrish architectural panel (minimum bid: $35,000 — so much for the “lower-level” theory). It seems a strange disconnect, but in fact it’s par for the course, according to Dave Brennan, director of the Small Business Institute at the University of St. Thomas in St. Paul, Minn. “Most brick-and-mortar businesses just don’t get it,” he says. According to the U.S. Small Business Administration, 70% of small businesses have no Web sales capabilities whatsoever. No Inventory? No Problem Some microbusinesses operate successfully with no inventory, thanks to the fact that online-auction customers are reconciled to a lag of a week or more between placing a winning bid and receiving the item. A seller can wait until an order is in before actually purchasing the item that he or she has just sold, adding perhaps a harmless extra day or two to the lag time. Tony Surtees, general manager of the Commerce Group at Yahoo, told me about one seller who looks for low-priced items in antiques shops, puts holds on them, snaps pictures of them with a digital camera, and throws them up at auction online. If he gets his minimum price on an item, then he goes back to the store and buys it; otherwise he cancels the hold. Or here’s what one watch seller states on its Yahoo cyberboutique: “AAA Jewelers … is not an authorized representative of all the manufacturers whose watches and jewelry are offered for sale. … To keep costs down, AAA Jewelers maintains a limited inventory and often obtains an item from its dealer network once an order is placed. In the vast majority of cases the item is shipped within 3-5 business days. … Some items may not be available.” I’m sure my local jeweler would be able to keep his costs down, too, if he could get away with telling customers that their watches would be in the store a mere five business days after they were paid for.