Sharperimage.com, like Eddie Bauer, has found that the more catalogs it mails out, the more Internet traffic the company gets. "Our catalog is far from a loss leader," says Greg Alexander, senior vice president for IT at the Sharper Image in San Francisco. "It drives a significant amount of our Web business." (See "Not Paper Tigers," this page.) Alexander says Sharperimage.com has been profitable on its own since it launched in 1995. Sales have grown from $200,000 the first year to $60 million in 2000, or about 14 percent of the company’s total sales. One reason for success, Alexander says, is that it offers more items online than in stores or in the catalog, therein taking advantage of the fact that the amount of shelf space on the Web is, theoretically, infinite.

"We view the Web as just another channel for customers to learn more about Sharper Image products," Alexander says.

A Penny Saved is a Business Preserved

When considering plans to expand overseas, Sharperimage.com thought about building a new platform that would allow consumers in Europe to buy products online in their own currencies. That had a certain logic, but according to Alexander, the new platform would have cost "tens of millions" of dollars. Instead, the company decided to sign up as a merchant with Yahoo, paying the portal a monthly fee (the size of which Sharperimage.com declines to reveal) to host its site in Germany, the United Kingdom and other European Union countries. Yahoo says it will host overseas online stores for a monthly fee that starts at $100 and rises depending on the level of inventory, says Nicole Kennedy, a company spokeswoman. "Getting an online business started in another country doesn’t have to cost a lot," Alexander says.

Now that venture capital has largely dried up for e-commerce, successful sites are looking for ways to feed the bottom line. Venture investment in the e-commerce sector fell from $843.4 million to $68.5 million?more than 90 percent?in the first quarter of 2001 as compared with the first quarter of 2000, according to a survey by PricewaterhouseCoopers and Venture One. "From the technology perspective there are ways to achieve efficiencies," says Ken Wei, vice president of strategy at Mainspring, a Cambridge, Mass., consultancy. In addition to seeking revenue sharing deals with portals such as Yahoo, e-commerce ventures can outsource their websites to offshore software programmers or outside consultancies. And although large companies may need an IBM or an Accenture to help develop their Web strategies and perform their integration work, smaller Web consultancies?such as Scient and Razorfish?that have suffered from the Internet downturn are offering some deep discounts, Wei says. Going with boutique Web consultancies may be risky given their precarious financial situations, but they could save you money, he adds.