All they wanted to do was sell some snowboards on the Internet, but Scott Lake and Tobias Lutke kept wiping out.
It should have been easy for two Ottawa-based guys who both have backgrounds working in information technology. Mr. Lake had been a vice-president of Tomoye Corp., which sells software to help people collaborate, while Mr. Lutke had helped create Typo, a product for setting up blogs. But when they tried to start their own on-line business, Snowdevil, they hit the same obstacles most budding e-commerce entrepreneurs do: All the tools they needed seemed to be designed for Fortune 500 companies.
"We went out and looked at every hosted e-commerce shopping cart, and got frustrated in that they were so complicated," Mr. Lake says. "And we're both technical guys."
Their solution was to create the technology they needed from scratch, and the result is a service called Shopify. It's one of a small but growing number of indicators that show the IT industry is finally beginning to tailor e-commerce to the needs of smaller businesses.
Released in beta earlier this month, there probably won't be a big splashy launch party for Shopify, or even a press conference. Instead, Jaded Pixel (the development firm Mr. Lake and Mr. Lutke formed to create Shopify) has been using blogs and word of mouth to generate buzz. This includes a contest that invited website designers to create templates that Shopify customers could use to easily set up their own purchasing portals.
"Usually, someone goes to a designer to build a front end of an e-commerce store, then the designer has to get it hosted on his own Web server and build the design," Mr. Lake says. "There's not a lot of designers that jump on that kind of work any more."
Setting up a small-business e-commerce site doesn't end with the user interface, of course. The biggest issues, Mr. Lake says, are hosting and security. Businesses need to go out and find their own hosting provider, ensure the networks and servers are secure, meet whatever requirements are necessary to work with credit card companies, and then integrate everything with the website. Shopify simplifies the process by integrating the payment gateway, and handling the hosting itself. It takes a commission from the small business's on-line sales.
This was a model that appealed to Martha Campbell, who offers professional organizing services from Halifax. Last September, Ms. Campbell launched her own site, called Reorganize.ca, which sells bags, containers and shelving units, among other things. Besides the usual hurdles, the first e-commerce provider she turned to generated an unexpected problem: A language barrier.
"They were based in Russia, so communication was very tough," she says. "For a small business starting out, a lot of these companies also want a large deposit up front, which could be anywhere from $3,000 and up. That's not always feasible, because it means you're tying up capital."
The first wave of e-commerce technology was aimed at companies large enough to risk the kind of investment it required. If there isn't a plethora of tools and products available to small and medium-sized businesses (SMBs) that want to get into the game today, it may be because the economies of scale don't work as well for this segment of the market. To be successful selling e-commerce to SMBs means selling in volume, but SMB customers often don't have extensive IT resources in-house, so they tend to require more time and attention from their IT supplier than most will want to give.
"It's a completely different game," says Paul Dube, general manager of Montreal-based Clic.net, which offers a set of e-commerce software development products and services. "Maybe it is a lot of work to please everyone. When you have a few large customers, you just focus on a few of them."
Clic.net's roster of clients includes giants like Canada Post and Mattel Canada, but Mr. Dube says about 80 per cent of his revenue comes from small businesses. These firms want to feel in control of their on-line sales strategy, he says, and to create a unique e-commerce experience for their customers. "One of the most important things is to have a website that shows confidence to the customer."
The problem for smaller businesses that will become apparent in the coming months is that while services such as Shopify and Clic.net might be able to make e-commerce easier, they won't necessarily make business itself easier. As it becomes relatively inexpensive to quickly set up a payment gateway and hosted website, they could see a lot more small businesses on-line, all pitching similar products and services. This is the Internet's Catch-22: While it means small businesses can potentially reach the same vast audience as their larger counterparts, it becomes harder and harder to stand out.
A lot of companies try to meet this challenge by getting placed on search engines, but some enterprise firms have expanded their notion of what "e-commerce" really means. Look at Bell Canada, which recently revamped its website around what it thinks customers want to do, not just what it can offer them. The three most popular tasks include looking up information on products and checking account information. Making purchases is just one of those three.
"As was typical with most websites, it was [originally] set up the way the organization was set up: We had a wireless section, an ISP section, a wireline section," says Gary Anderson, vice-president of consumer Internet services. Now, Mr. Anderson says a big part of Bell.ca's latest incarnation is driving offline sales and reducing calls to its contact centre. Small businesses, which often lack marketing and support resources, need to start thinking the same way.
It's like the snowboarding business the makers of Shopify originally envisaged: You can sell someone a board, but it takes training and practice to navigate the bumps on the slope. As the technology and tools mature, on-line entrepreneurs need to start thinking about creating a long-term strategy that uses their sites to engage customers, increase sales and enhance relationships.
Because if they wipe out on-line, a lot of small businesses won't be able to get back up again.
Shane Schick is editor of ITBusiness.ca.
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