Small businesses to get more from Yahoo in Q3

When Yahoo rolls out a new e-commerce offering in the third quarter of 2003, small-business owner Lynne Bingham predicts that at least one of the promised enhancements is going to be "huge" for customers like her.

The as-yet unnamed product, which merges Yahoo's Web hosting and store products in a major new release, will allow customers to build their e-commerce sites not only with the Yahoo Pagebuilder templates as in the past, but also with Microsoft Corp.'s FrontPage tool, according to Rich Riley, vice president and general manager of Yahoo's Small Business group.

Bingham, owner of The Stork Delivers, a Pittsburgh-based online retailer of baby gifts and accessories (, sees freedom from the limitations of Pagebuilder's templates as a boon. Initially, she said, Pagebuilder was a win for small businesses like hers without much Web savvy, allowing them to easily construct a storefront on Yahoo. Then her store was chosen for a Web makeover by BusinessWeek Online, during which the Web design gurus who worked on her site design came up with some great ideas.

"And we said, yeah! Try doing that on a Yahoo template!" she recounted recently, laughing. Opening up to a tool like FrontPage is a good move for Yahoo that will allow its users greater flexibility in designing their sites, she said.

Helen Chan, a senior analyst at the Yankee Group in Boston, is also positive about the upcoming product release from Yahoo. "There's a good-sized population of small-business sites that are not built with templates, and this gives Yahoo the ability to target a wider audience," she said.

The enhanced Web hosting and store product, which Riley referred to as "basically Hosting and Store 2.0" is going to be offered in three differently priced packages rather than in a one-size-fits-all configuration. Variables would include factors such as how many items a retailer can list, storage capacity and bandwidth, he said.

Also due from the Sunnyvale, California, company in the third quarter of this year is a substantially enhanced Business Center Web site, with a unified control panel for small business customers, Riley said. Coming this quarter is a major new version of the SiteBuilder tool, which will be offered free with hosting services, he said.

Overall, according to Yankee Group's Chan, Yahoo's direction is "quite interesting" and positions it strategically for targeting the critical mass of small and medium-size businesses going online. "In the past, Yahoo had taken a more technology-oriented angle. Now, small businesses are going to be offered a solution, rather than just a Web site," she said. In addition, integrating the Web hosting and store into a single offering will give users a greater ability to use the storefront to convey who they are to their customers.

The Small Business Group at Yahoo is also looking to extend its reach internationally, and is currently doing research to identify economies where small businesses play a significant role as they do in the U.S., Riley said. Likely candidates include the U.K., Taiwan, South Korea and Germany, he said.

Ultimately, Yahoo also aims to extend its offerings to small businesses to include the ability to manage accounting, recruitment and payroll online, but Riley acknowledged that there is not yet substantial customer demand for those services. "The demand is not really pushing us there, but we're starting conversations, and identifying leading providers of those services," he said.

Online retailer Bingham agrees that as a small business owner, she's not necessarily ready to put those eggs in Yahoo's basket. What she'd like to see most is a return to some of the marketing and advertising support that Yahoo offered small businesses in the early days, before the Internet bubble burst and resources became more constrained. Acknowledging that "Yahoo has been wonderful with me as a merchant," she said that affordable marketing opportunities for the "little guys" who have built up Yahoo into what she calls a "wonderful shopping community" is number one on her wish list for Riley's group.

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Elizabeth Heichler

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