Beware of taking shortcuts on the information super highway

Businesses who spend the time, money and imagination to establish a presence on the Internet are the ones who succeed in selling their products in the world of cyberspace

It will come as no surprise to read that small companies in the UK are selling books and holidays over the Internet. But to stumble across a Web site retailing motorcycle tyres, rugby shirts or rare music manuscripts is rather more illuminating as to the state of electronic commerce from Britain's small businesses and home offices. These three net retailers succeed because they have identified a niche and exploited it. For what is becoming clear is that the Web needs to be handled carefully in order to avoid burnt fingers.

The Independent Holiday Shop (www.holidays.co.uk) is a good case to consider, having been selling online since February 1995, and making a profit. The Internet represent up to 10 per cent of the company's sales volume, and is a highly profitable part of the business: typically a customer off the street spends around pounds 300 per head whereas an Internet client spends pounds 1,000 per head. But this example of electronic commerce thrives only because it reflects a proper understanding of the channel. Brain Parker, a partner in the enterprise, explains, "It is important to appeal to real net users and not to construct a site simply because it looks good to the marketing director.

"Demographically, this means that products promoted on the Web should appeal to the kinds of people who use the net, and in terms of the sales experience, whizzy pages that take an age to download will not deliver the service these individuals want." Parker also comments on the need to think through how to sell anonymously to a global audience.

"On the Internet you cannot put a smile in your voice, and a pun understood in the UK may not do the trick in the US, let alone in other cultures," he says.

One of the main attractions of the Web is that the medium is a great leveller when it comes to image. No one is a dog on the Internet, they say. Though cheap, this does not mean that an effective presence can be established with little or no cost.

Neal Gandy, of Web designers Explora, tells of a direct mail company he recently dealt with that was too ashamed to put its Internet address on publicity. "The printed catalogue looks great and disguises the fact they work out of warehouse in London. But they need a Web site to match. Cheap and cheerful is no good. And neither is someone sitting down with an html editor when they haven't the design or IT skills to back it up." As customers become more experienced in the ways of the Web, factors such as prompt email responses, user-friendly site navigation and comprehensive online services will distinguish the wheat from the chaff.

Beyond being able to `do it' online, the Internet can have a significant impact upon the nature of small business too. In the business-to-business environment, dynamic communications technology feeds fruitful business relationships with the Internet bringing small organisations closer to their larger clients and vice versa. "We see the Internet improving relationships in this area, making the one more accessible to the other," says Sean King, a director with specialist consultants Pagoda. "Large companies tend to rely on fewer small suppliers, that almost become an external layer to the corporate. To capitalise on this small enterprises need to see themselves as solvers of business problems rather than just as delivers of products."

However not all is rosy in this brave new connected world. Though the technology and the support services that surround it, which offer everything from complete online deals, through global shipping arrangements to international payment options, mean that small companies can offer great service very cheaply, Scott Pollard, Director of BusinessNet the specialist Internet Service Provider, has been deeply disappointed by the lack of imagination small enterprises are bringing to these new opportunities. His own business which started in this space is having to migrate to larger clients as a result. "People are missing the trick," he says. "It is mad when they won't spend on IT though will cheerfully stand around at a show that costs far more." He believes there are cultural hurdles, including IT ignorance, skills know-how and even fear, and suggests that the government become more engaged or that banks offer incentives.

This is surprising when small businesses and home workers are traditionally early adopters of new technology. But undifferentiated hype still surrounds the Internet. Marketing publicity, according to one research group, The Upstart Consultancy, has customers, "up to their ears in mailshots and telesales calls". Information overload may no be the best way to begin a project that requires precise goals and careful planning.