Web communities offer shopping options for users

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It's not enough to create and manage a Web site anymore. Progressive home-page owners want to make money.

Heeding their members' demands, most online communities earlier this year started offering low-cost e-commerce programs. Sites offering e-commerce capabilities to their members include Tripod, GeoCities and theglobe.com, which is in a quiet period prior to an initial public offering. Many of these sites have adjusted their original goals as they learned how to run a network of virtual storefronts.


For instance, Tripod was developing a low-cost e-commerce service last spring that it intended to sell to its members. Yet it shelved the idea when it determined a network of affiliate programs would be easier to implement and could be offered free of charge.

"Affiliates have definitely occupied our time for now," says Rebecca Foisy, product manager of e-commerce at Tripod. "Our members are pretty excited about this and we're looking for other ways to promote our members in their stores."

Ms. Foisy says members still can take the do-it-yourself route by using transaction software they've purchased on their own. So far affiliate stores outnumber the do-it-yourself stores on Tripod, with 25,000 Tripod members signing up for programs such as CDnow's Cosmic Credit Program and barnesandnoble.com's affiliates sales network. (Last month, CDnow reported Cosmic Credit Program had 100,000 members. It's locked down exclusive music retailer relationships with GeoCities as well.)


Affiliates receive a percentage of every sale they refer to a major e-commerce site. The rates usually start at 5% and go up to 10%, depending on the amount of sales generated. Members can get credit on their credit cards, online store credit or be paid in cash.

Another affiliate program in the offing is one with iPrint, which sells personalized items such as coffee cups and stationery. It recently built a co-branded store on Tripod.

Other possible categories for affiliates include computer hardware and software, videos, movies, nutrition and clothing, Ms. Foisy says.

Tripod supports members' stores by making Buy/Sell one of four major categories on its home page in a recent redesign. Buy/Sell highlights and categorizes users' retail stores.

There are other ways to earn money on Tripod. In an advertising deal with recruitment site Headhunter.net, for instance, Tripod home-page owners are encouraged to post a Head

Hunter.net affiliate button on their sites, linking traffic to the recruiter. In exchange for every referral, home-page owners receive cash or credit, redeemed at a cost per thousand ad rate.


Tripod also recently signed a deal for free banner exchange with SmartAge, a San Francisco start-up that provides Web publishing services, including search engine submittal and ad tracking. Tripod members who join SmartAge's SmartClicks program receive free ad space on the SmartAge network of sites in exchange for accepting banners on their sites.

While the affiliate program is popular, some users want a more comprehensive solution.

GeoCities tries to provide a full e-commerce service with its GeoShops program, which launched in March and has about 1,000 online stores.

"The shopping community is starting to be populated," says Drew Bouldin, director-business development at GeoCities. "We're transitioning from trying to build the back-end infrastructure to getting live people in the program. We need to focus our energies on the directory listings and advertising packages."


Since launching, GeoShops has changed several things about its program. What remains the same is the $24.95 price for a basic GeoShop site without credit-card transactions.

For credit-card processing, though, GeoCities originally charged a $120 one-time setup fee, and a monthly fee of either $80 or $40 plus 5% of transactions. In September it changed it to a $195 one-time setup fee, plus $75 a month plus 55 cents a transaction.

Another obstacle was getting people to adopt online transactions on their sites. Currently only 3% to 5% of its members are using the transaction software


"Getting a merchant account can be a bottleneck," says Mr. Bouldin, explaining that many users were stymied trying to get a business account at banks that required some proof of a viable business and didn't understand online stores.

To solve that problem, GeoCities is about to announce a deal with a bank that establishes merchant accounts, which will guarantee it can approve these accounts in 24 to 48 hours.

Mr. Bouldin says GeoCities is also working to adopt an ad network program for its users, either developed in-house or by licensing existing software. It's also having discussions with companies to provide Web site tracking services for its members to be able to discern which products are selling the best. Catalogs and ways for its members to sell across GeoCities are other services in the works, he says, as well as building out its affiliate programs.


"The e-commerce application is not easy," Mr. Bouldin says. "We believe the micromerchant e-commerce model is underserved. . . . We're determined on pulling it together.

"I think a lot of people out there are going after the small-business merchant," he says. But "one of the things lacking in that model is traffic. We want to provide functionality, ease of use and leverage traffic."

Some merchants maintain a page presence in GeoShops only to link interested shoppers to a specialty mall site maintained on another server.

Yahoo! is another site actively pushing e-commerce for its members, yet it's gone after small- and mid-size businesses rather than consumers who want to sell merchandise from their home pages.


Yahoo! purchased e-commerce software company Viaweb in early June and established Yahoo! Store, which after three weeks already had 1,100 merchants signed up for the service. It won't disclose how many merchants it currently has on the service.

Yahoo! Store claims to take about 15 minutes to create an e-commerce site. It charges $100 a month for a store selling up to 50 items and $300 a month for up to 1,000 items. For every additional 1,000 items, it's $100 more a month. It also has complete tracking capabilities so users can see which Web site links are directing the most traffic, and how many of those visitors resulted in Web sales.

The store is promoted off the front page of Yahoo! and through Yahoo! Auctions, and sites are cataloged in a directory format.


While "there have been some good standalone services," says Jeff Mallett, chief operating officer at Yahoo!, "there hasn't been an offering where you can get secure turnkey e-commerce and traffic."

Tim Brady, VP-production, says in the coming months Yahoo! plans to provide additional promotional support for its e-commerce stores. Part of that support will likely come from Yoyodyne Entertainment, an online promotions company which Yahoo! bought earlier this month with Yahoo! stock valued at $29.6 million.

Yahoo!'s other promotion services include free search engine sign-up, a program to create links and another to manage e-mail lists.

While the primary target is small-business owners, marketers such as gourmet food store Dean & DuLuca and Frederick's of Hollywood also maintain storefronts through the site.

Mr. Brady says some stores use the site just for their e-commerce capabilities. For example, global record store chain Virgin has a promotional site and a separate commerce section on Yahoo! Store.

"It feels like just another piece of the Virgin store," Mr. Brady says. "From their main site you wouldn't know."

Currently, there are no advertising capabilities for the stores, which Mr. Brady says hasn't been a No. 1 issue with its members.


"What they've been clamoring for is, the more traffic the better--any way we can deliver it. They don't really care. If a banner exchange would help them do that, we'd consider it."

Mr. Brady says Yahoo! would also consider giving merchants unused inventory to promote themselves.

E-commerce on online communities has "become quite widespread," says Kate Delhagen, senior analyst at Forrester Research. America Online, for instance, has been a forerunner in establishing an online mall for its members, she says.


"The first pass at commerce was to put a lot of merchandise in front of consumers with hopes that they would buy. That resulted in a wave of portal shelf-space deals," Ms. Delhagen says.

"We're now seeing the online communities take on a very person-to-person commerce focus as well," she says.

"At the end of the day this means any online visitor will be pitched or be pitching a product and that will change the tone of the Internet, particularly within larger portal sites."

Copyright October 1998, Crain Communications Inc.

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