'Selling the Internet' can be likened to selling technology. How much of it can you sell when there are so many side issues?
For resellers, the best question to ask is, "How can I make money out of the Internet?" Rather than trying to provide an entire solution to all the markets, address the areas with which you're familiar. Then, to expand your offerings, work with other companies that have expertise in related and complementary areas. There can be very few resellers, for example, who can function as Internet Service Providers (ISPs). Yet there exist many opportunities for resellers to work with ISPs.
Working with ISPs
One of Australia's most prominent ISPs, OzEmail, works with resellers in a number of ways. The company's managing director, David Spence, said: "While we don't have resellers functioning in an ISP role, we often work closely with a number of them who are able to handle corporate installations such as firewall implementation."
When Australian Reseller News asked Spence whether selling Internet access through the channel represented viable business, he responded by saying that there was not a lot of profit for resellers in registrations: "All they're really going to get is a percentage of the registration."
According to Spence, the company has held back from selling retail products such as Internet software products and modems. "We prefer to leave that to the resellers," he said. "Our customers tend to ask us for solutions. When it comes to the hardware and software application sides of the solution, we recommend them to one of the resellers we work with."
With 75,000 customers in Australia and 6,000 in New Zealand, OzEmail represents a potentially strong ally for resellers wishing to increase their Internet product sales. "If a reseller would like to be on our list for recommendations to customers," said Spence, "they should contact our support department."
One ISP which has realised the importance and advantages of working with the channel is Sydney-based RealNet Access. The company's marketing director, Jeremy Barnett, told ARN that when the company commenced operations about 12 months ago, there were only about 40 ISPs in Australia. "Like a lot of other ISPs," he said, "we started off with a shoestring budget. Now, with over 130 service providers in Australia, there's a great deal of competition."
According to Barnett, working with the channel is one of his company's strongest weapons in succeeding in this increasingly competitive market.
Apart from helping to increase the company's sales force, Barnett sees working with resellers as the ideal relationship. "Customers often come to us to purchase their modems and software applications - products we don't sell. Then, quite often, they will approach the resellers to purchase an Internet account - something which most resellers also don't sell. By providing resellers with the ability to sell access accounts, we're increasing their chances of making a sale and ensuring a higher profile for our service.
"When a reseller starts working with us," said Barnett, "We first of all visit their store and set them up with a free Internet account. We spend time working with them to familiarise the staff with what they will be selling, and then provide them with the access software and registration forms. All they need to do then is get the customer to fill in the registration form which is faxed to us, and we take over from then on. RealNet will invoice the reseller at the end of the month for 90 per cent of the registration cost, leaving them with ten per cent."
According to Barnett, about 25 per cent of his company's registrations are currently sold through the channel, a figure he is looking to substantially increase. The company provides its services exclusively in the Sydney area, and is looking for any number of resellers to work with. To provide further channel support, Barnett informed ARN that the company is building its internal sales force to keep its resellers better informed of point-of-purchase material and sales opportunities.
The issue of firewalls is one which has typically confused resellers and customers alike. Stephen Frede, a senior Internet consultant with Softway, told ARN that firewalls are usually only relevant where the "body" connecting to the Internet has a local network, and it's that network which needs to be connected. "In the case of small businesses," said Frede, "you'd typically find they would just connect a couple of stand-alone PCs to the Internet and make those available to the workforce."
As an increasing number of corporates are looking to establish themselves on the Internet, so too is the issue of security increasing. With many ISPs trying to capture as much of this market as possible, most are establishing relationships with companies that are able to provide firewall installations.
For resellers, working with companies such as Softway ensures they can pursue corporate Internet business. "If a reseller is only going to play in the low end of the market, then they won't need to worry about security issues," said Frede. "But if they want to service medium to large businesses, they're going to need to either sell firewalls themselves, or work with partners to provide these security solutions.
"Some ISPs have firewalls at their end, and some of the more naive businesses are going along with that as their total firewall solution. Resellers should be warning their customers that they can't really trust a third party for their total security. The firewall should be on-site! No-one else will have the motivation to provide the level of security that the corporate customer needs and wants."
Another company offering firewall security solutions is ComTech, the company which also holds exclusive Australian distribution rights for the Netscape Web browser. "One of the things we do is sell our technical services through the reseller channel," said Paul Wilkinson, a ComTech pre-sales engineer. "We look at firewalls as just another product, so we're able to work with resellers in providing them with the ability to sell total solutions to their customers."
Resellers on the Net
OzEmail's Spence believes that while most resellers are "using the Net", very few have actually worked on setting up their own Web sites. "I think it's still very early days," he said. "Once commerce services are implemented and resellers can be assured of security for both themselves and their customers, we'll see more of them getting involved in this area."
Barnett is another one who believes resellers are slow in taking advantage of the Web. "It's an environment ideally suited to selling computer products. By default, everyone on the Web has a computer, and everyone on the Web will need hardware upgrades and software. It's a captive audience!"
Another point is brought up by The Internet Shop's Wilfred Wong. "The main sticking point when it comes to the uptake of selling over the Web is within the Australian culture," he said. "In the US everyone is familiar with the mail- order process and there's really no difference between the two. In Australia, where we're not as comfortable with mail-order purchasing, things are obviously much slower."
According to Wong, even though he believes the uptake of purchasing over the Web will occur, the biggest problem is getting those potential customers who are using the Web to visit the reseller's page.
A company which has made a name for itself in designing Web sites is Wide West Media, an electronic publishing and media consulting organisation. The company's managing director, Geoff Ebbs, told ARN: "In terms of using the Web as a selling tool, the most important thing for resellers to realise is that the real market you're addressing is not as big as that outside your front door.
"Sure, you might get people from all around the world visiting your Web page, but it's highly unlikely that someone in Finland is going to purchase a 100 dollar product from an Australian reseller."
On the issue of security, Ebbs believes that while it is a major concern at the present time, it will change significantly in the near future. "Now that Visa and MasterCard have decided to co-operate on establishing a secure transaction technology, Microsoft and Netscape are being forced to adopt it as well. What we'll soon see then, is a stable and well-respected transaction platform."
Even without the emerging transaction standard, Ebbs points to security issues which relate to the general use of credit cards. "There's no doubt that people are concerned about providing their bankcard details over the Internet, but how secure do you think your card details are when you place it on a plate in a restaurant and it's taken out of view?"
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A success story: The Internet Shop
Situated in the Sydney suburb of Crows Nest, The Internet Shop has been operating for just on six months. The company's operations manager, Wilfred Wong, and two other partners joined forces 12 months ago to exploit the potential of the Internet.
"Initially, we explored the option of becoming a service provider," said Wong. "When we had a look at the market though, we saw ISPs popping up all over the place, so we looked at what service we could provide which would see us as the link between the ISPs and the customer."
With almost 20 years of combined Internet experience, the three partners - one each from Apple, PC and Unix backgrounds - established The Internet Shop to provide that link. Now, reaping the rewards of an entrepreneurial adventure gone right, the Shop offers its customers everything from modems, software products, cameras, books and magazines, to training and consultation. "We're a one-stop shop," said Wong. "All our products are Internet-related. While we sell PCs, they're all Internet-ready PCs. We're not in the business of selling memory upgrades and the occasional hard drive - that's not our area!"
One of The Internet Shop's greatest advantages is that customers see it as providing totally impartial advice when it comes to setting up accounts. "We're not a service provider, that's important for our customers," said Wong. "What we do provide our customers with is a selection of ISPs to choose from, depending on what their requirements and budgets are." Currently, The Internet Shop represents 14 ISPs, including OzEmail, Magnadata, Enternet, RealNet Access and Microplex.
Internet books are another lucrative item the Shop offers customers. "We probably have more Internet titles than any of the large book retailers," said Wong. His advice for resellers when it comes to selling books is to identify the most recent trends within the industry. "Right now, for example, some of the big sellers are Java books - Hooked On Java, Teach Yourself Java in 21 Days, and Java!."