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NY firms place bets on Web, but payoffs remain uncertain New York Habitat Featured in Crain's

CBS 2 News at 5:30 - WCBS-TV (New York)
Sean Hennessey Reporting
November 30, 2007

Crain's
September 1999
Section: Small Business Report

Varied reasons, varied results for on-line ventures
BY MARILYN ALVA

Across the city, small business owners are venturing on-line. For some, the aim is to expand their market reach. For others, the Net simply offers a means to cut marketing costs. Their results to date have been as varied as their ambitions, as the following examples suggest:

THE SLOW GRIND

As a neighborhood coffee merchant with deep roots in the community, Frank D'Amico Jr. was reluctant to plunge into the vast space of electronic commerce, where he could easily just get lost in the global shadows.

So when a Web designer in his own Carroll Gardens neighborhood approached Mr. D'Amico earlier this year about joining a new on-line service targeted to the area --located at www.south-brooklyn.net-- he jumped at the chance.

Still, Mr. D'Amico, the third generation of his family to run D'Amico Foods, is not expecting overnight miracles. After all, while mail-order today constitutes nearly 40% of sales, the merchant well recalls how slow that business was to take off when his father launched it 20 years ago.

Mr. D'Amico hopes to broaden his reach still further via the Internet. In his first month in cyberspace, he garnered five orders.

With revenues of only $90,000 a year and bills ranging from $1,000 to set up www.damicofoods.com to monthly server charges of $70, he notes that he can't afford to wait too long for his Net bet to pay off.

To hasten success, Mr. D'Amico is advertising the Web site in local papers and has emblazoned his electronic address on catalogs, bags and business cards. He has also just tweaked the home page, adding atmospheric photos of the specialty food store, which roasts its own coffees on the premises.

Mr. D'Amico is confident that this is the time to be on the Net. "If you're not on it now, there's going to be too many people on it later (to have an impact)," he observes.

MIXED MEANS

Search engines and top placements in listings might be a preoccupation for a lot of entrepreneurs who conduct business on-line, but not for Marie-Reine Jezequel. For her, what works best is a decidedly more old-fashioned avenue: word-of-mouth, with a few print ads thrown in for good measure.

And work it does. Today, nearly 80% of busi-ness for New York Habitat, Ms. Jezequel's Chelsea-based real estate agency, flows in via the Web. Most of her Internet clients find www.nyhabitat.com directly, from personal referrals and modest, targeted print ads in newspapers such as The Village Voice, rather than through on-line searches.

Word-of-mouth has been the driving force behind Ms. Jezequel's niche firm, which specializes in short-term rentals, from the time she launched the company in her huge loft on West 14th Street a decade ago.

Early in 1997, New York Habitat became one of the first real estate agencies in the city to set up an interactive Web site.

After several expansions, it now carries a daily update of all available apartments--upward of 900. The listings feature digitized photographs and detailed neighborhood maps.

THE ONLY ALTERNATIVE

Four years ago, after a careful calculation of the costs of opening a storefront business in Manhattan that would sell tools to help children with learning disabilities, Julie Azuma nearly gave up.

"There was no way I could afford it," confesses Ms. Azuma, whose motivation for the business stemmed from her frustration over the paucity of teaching tools available for her autistic daughter.

Then, during a class sponsored by an Asian women's business group on how to start a small business, she heard about entrepreneurs finding success on-line. A few months later, she had set up a Web site, www.difflearn.com, in the back corner of her family's Manhattan loft. She then hunkered down at her keyboard, ready to field orders.

While her costs -- including $2,000 for her Web site -- were modest, so too were her results. Rather than place an electronic order, the first customer of Ms. Azuma's Different Roads to Learning requested an old-fashioned, hard-copy catalog.

She dutifully had one printed up, listing all the flash cards, notebooks and videotapes that by then rose in neat piles on shelves around her home office. She also posted a copy of the catalog on-line. There, her customers can and do make purchases with their credit cards.

In the four years since its found-ing, Ms. Azuma's business has grown to revenues of $270,000 last year from $200 the first year. By late summer, she was closing in on what promises to be a $400,000 year in 1999.

As for her "rent" -- the cost that drove her out of a storefront and onto the Internet in the first place -- she notes that her only overhead is "the $75 a month it costs to keep my page up with a server."

THE HARD SELL

In the textile manufacturing industry, where traditional methods of doing business endure as stubbornly as classic fabrics like worsteds and linens, Cyrus Clark III stands out as an anomaly of sorts.

While many of his customers and most members of his sales force don't even own computers, Mr. Clark has embraced the Internet in a big way.

As president of Cyrus Clark Co., the Manhattan-based fabric manufacturing company his grandfather founded in 1925, Mr. Clark has transferred images of his entire line of printed fabrics -- some 900 patterns in all -- onto a new interactive Web site. There, they are categorized and cross-referenced by style, pattern, cloth type and name.

By picking up his sample books and putting them on-line, Mr. Clark figured he could cut down on the number of costly books he has to send out. His trade customers are given security codes and passwords, thus barring the way to curious competitors or unscrupulous imitators.

So far, though, his $15,000 Web investment has brought little benefit to the company's bottom line. Of the firm's 1,500 customers, only 100 have used the site.

"It's still a looky-feely industry," shrugs Mr. Clark.