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8/22/2003
10:24 AM
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The Right Stuff

Savvy small companies use technology to position themselves for growth.

In a Google search for "jogging strollers," the first site on the list is Niche Retail LLC's JoggingStroller.com. In a search of "jogging stroller" --singular--the search engine ranks the tiny company just one spot behind its much-larger rival, Amazon .com Inc. It's not by chance the company ranks so well. Niche Retail has only 13 employees, but one of them is a search-engine optimizer who knows tricks such as getting links from running-club sites to help boost JoggingStroller's ranking on Google.

Niche Retail, at www.nicheretail.com, performs a similar trick with eight other boutique retail sites, selling such specialized items as athletes' Suunto watches, inflatables that serve as spare beds, and high-end children's car seats. "We're just this little flea, and we're ahead of Amazon," marvels CEO Tyler Smith, who says jogging strollers account for 20% of his business, and sales are up 400% from a year ago.

Niche Retail is an example of how some small businesses are using an increasingly rich and surprisingly low-cost set of business-technology tools to survive and compete--tools that in the past were often available only to far-larger businesses.

These small businesses seldom have big IT staffs, but they often have people at the top who are either technically adept or willing to employ new technology that advances the business. They're geared to react to change and use the Internet, collaborative software, business intelligence, and cheap broadband communications. Most of all, they understand the Web and how it changes the rules of the game.

Niche Retail sure does. When it comes to jogging strollers, the company competes with the biggest marketers, including Baby Jogging Co., the largest U.S. manufacturer, as well as Amazon. One reason is the staff-generated commentaries on all the models sold, and also because CEO Smith understands the importance of search engines. Smith's team negotiated for 38 running clubs to link to JoggingStroller. When Google and other search engines inspect Niche Retail's site, they see the noncommercial links generating traffic, a point that counts heavily in its ratings, Smith explains.

Niche Retail's success depends on keeping costs down, so Smith relies on his know-how, some contract programming, and open-source software to ensure his site's technological advantages. Staff and customer reviews are a key content feature of the site, and Smith posts the reviews using Magpie, a $216 package from Random Mouse Software. Magpie is based on the open-source code database MySQL and automatically tallies site visitors' responses to the reviews.

In addition, Smith is building an auction feature into the sites using Auction-Script, a $69 piece of software from the T2 Web Group, a supplier of open-source-based Perl scripting programs. He also combs through the CGI Resource Index (www.cgiresourceindex.com), a Web site that contains thousands of business-script programs that programmers hope to resell; most are priced at less than $100. "There are all these great resources out there that help us compete," he says.

Niche Retail also cuts software costs in its back office. For the general-ledger and accounting programs it can't live without, the company subscribes to an online service provider instead of buying $65,000 or $70,000 packages, such as those from Lawson Software Inc. or Ex-Cel Solutions Inc. The vendor, NetLedger Inc., offers both a Web-store-building capability and a set of integrated accounting applications that captures transactions directly off Smith's Web sites. Without that capability, he says, he would have needed to hire additional personnel to provide data entry into multiple accounting applications. Instead, he pays $3,000 a year for the service.

Online service providers such as NetLedger are an increasingly powerful force in small-business IT. Most are survivors in some form from the dot-com bust. They offer applications as a networked service on a monthly subscription basis, such as sales-force automation and customer relationship management from Salesforce.com; Web-site statistical analytics from Coremetrics; human-resource management from Employease; and online integration of business partners from Hubspan and Viacore. Paying by subscription reduces the capital costs of enterprise applications by linking the price to the number of users. An online service called ClickTime Inc. started out in San Francisco in 1997 keeping time records online for employees at Bay-area companies. Now it's doing the same for companies in Canada, China, Europe, India, New Zealand, Thailand, and all over the United States--29 countries in all, ClickTime CEO Alex Mann says.

A necessary ingredient for this hosted approach to prosper is cheap and reliable broadband. The rapid spread of DSL, cable, and fractional T1 line communications, where both the price and capacity of a T1 line are subdivided among several customers, is a force that helps many small businesses compete.

Moving Comfort Inc. started out as a boutique women's sportswear firm, based on one designer and a manufacturer with a home sewing machine. The company now employs 23 people, and its designs are sent to manufacturers in China, Costa Rica, and Taiwan. It also sends text and graphics related to its product-line changes to 300 retailers.

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