Enterprises, large or small, tend to develop their Web presence in stages. Once a Web presence is created, then the enterprise wants to use that site to enhance customer service and to produce revenue. It is at the latter stage that electronic commerce comes into play.

A service provider's hosting customers will go through the same evolution described in the preceding module. It is not enough just to pick off the high-end client who represents the highest per-client revenue; there simply are not enough of them. Furthermore, the future opportunity is to provide a platform that can move a client along the range from low- to high-function as client sophistication and needs evolve.

Many small- and medium-sized businesses are struggling with the high cost of entry to electronic commerce. Creating a complete on-line selling environment can require considerable time, money, and technical expertise. Many businesses are stalled at the first or second of the three steps to building an effective electronic-commerce Internet presence. The three steps include the following.

Step One

Develop a content site (i.e., as opposed to a database-driven catalog) and handle transactions off-line.

• advantages—Simple Web sites can be developed easily and quickly at low cost.
• disadvantages—This limits Internet function to promotion; no revenue opportunity is involved.

Step Two

Develop an on-line catalog and handle transactions off-line.

• advantages—No need for sophisticated technology is involved; the catalog can manage large product assortment.
• disadvantages—Catalog building adds expense, without the possibility of reducing expense through on-line transactions.

Step Three

Develop an on-line catalog and handle transactions on-line.

• advantages—This can manage large product assortment and complete sales at lower cost.
• disadvantages—Catalog building is expensive, and on-line transaction management requires sophisticated technology.

The Transaction Server

Service providers must provide a solution for businesses that do not have the budget or technical expertise to progress to step three themselves. The transaction-server aspect of the electronic system enables electronic-directory publishers and ISPs to become full electronic-commerce providers, offering complete outsourcing of electronic transactions and security technology. It can include software for easy site creation, using templates and simple point-click-and-drag method, as well as commerce capability to complete sales for a large set of changing prices and items.

With an electronic commerce–transaction server, service providers can process transactions for multiple sellers from distributed content. Easy-to-use Web site–construction tools help nontechnical businesses create Web sites and catalog pages.

Service providers are likely to configure their offerings in any combination of the following models for their hosted clients on an electronic-commerce platform:

• single Web site—The client owns a Web site on a shared Web server and could have a unique uniform resource locator (URL). There are no on-line transactions, but there is e-mail capability.

• single storefront—The client owns a single store on a single merchant server at the host. The storefront has unique URL, database, and checkout process.

• mall—The customer offers (or client contracts for) multiple storefronts in a mall environment on the same URL and database, with shared registration, shopping cart, checkout, etc.

• multihome—Multiple single storefronts reside on one server, but each has its own URL, database, shopping and order forms, etc.

• on-site content and transaction server—Nondatabase storefronts are hosted in a multihome configuration with back-end transactions handled by a host merchant server. These selling Web sites are created with a buy button feature to enable product and transaction information to be sent to the separate (but same environment) host merchant server.

• off-site content and on-site transaction server—Nondatabase storefronts are hosted outside the service provider–hosting environment. Back-end transactions are handled by the remote host-merchant server on the service-provider premises. These selling sites are created with a buy button feature to enable product and transaction information to be sent to the remote host merchant server. Figures 4 through 7 illustrate various hosting models.

Figure 4. Basic Storefront Hosting Model

Figure 5. Simple Electronic-Commerce Hosting Model

Figure 6. Commerce Hosting Model

Figure 7. Advanced Electronic-Commerce Hosting Model