Most of these merchants also seem reluctant to ask consumers directly for marketing/demographic information. Clearly, they want help from independent sources in finding such data.

Many merchants feel that they lack control when it comes to the Internet. Some are worried it will take over the business. Others are worried that they will be left behind if they do not have a Web presence. In addition, it is technically possible for any user to create links to one’s Web page. Merchants seem anxious about not being able to control where their names and brands are being displayed.

There is also a feeling that the power lies with the buyers who use the knowledge they gain via the Web as a negotiating tool to get better prices for the goods they purchase. Many small merchants cannot compete on price and need to find other ways to add value to their products and services.

There is also a perceived lack of security, particularly by those who are less knowledgeable about the Internet. This is the strongest obstacle among consumers. They are very reluctant to give credit card numbers without strong guarantees that such numbers will not be stolen. The media’s focus on such stories has exaggerated such fears. As a result, most consumers use the Internet as an information tool that aids subsequent purchases made through traditional means.

Inexperienced users are uncertain of standards and boundaries. Rarely do they trust that transactions have been completed. One merchant spoke of chaos with orders because customers who did not believe their orders had gone through sent them additional times. Perhaps electronic "signs" confirming completion of a transaction would provide needed reassurance for the inexperienced. This is one example of the difficulties that merchants need to anticipate and resolve.

There is a very low tolerance for mistakes and delays. Users, especially inexperienced ones, expect Web interactions to run very smoothly and quickly all the time. When such experiences are not smooth, frustration sets in immediately.

Cost

Cost is another factor inhibiting growth of Internet commerce, particularly for the small business entrepreneur. Because it is still uncharted territory, many merchants have no sense of the initial investment or the subsequent costs of maintaining an Internet presence.

Often there are initial costs in terms of hardware, software, and network connections both within an organization/business and to the Internet via an Internet Service Provider (ISP). An IT specialist or consultant is required to help integrate the Internet software with company software and systems.

There are also hidden costs such as fees paid to maintain and upgrade software and systems. If Web site capabilities are limited to a static home page, costs can be contained. However, in such a dynamic medium, consumers and other users have come to expect continual updates so that information remains fresh and new. They also expect the "extras," e.g., graphics and clever links, etc. This requires upgrades to better software and memory, bigger machines, and more sophisticated network links, e.g., using a T-1 line rather than a modem.

Business telephone rates are also considered a prohibitive hidden cost. One expert has recommended that every business with an Internet presence needs at least three business lines. This can become very expensive for the small business owner.

Web consultants’ time does not come cheap either. It can add up if there is need for such specialists to visit regularly to make upgrades and solve computer glitches.

With sales growth, there are inevitable cost increases when it is required to hire extra staff and perhaps restructure one’s business.

There is a strong feeling among the merchants who participated in this research that lending institutions fail to give adequate support, both financial and emotional, to businesses wanting to develop their Web capabilities. They desire bankers to more openly embrace Internet business opportunities. Time

Linked closely with costs is the obstacle of time.

Time becomes a significant barrier when merchants cannot afford Web consultants. They must put in the time themselves to learn how to utilize the Internet, develop Web pages, maintain sites, make upgrades, and solve problems. Time is also needed to stay abreast of developments and changes in Internet technology. Rarely can small merchants devote adequate time to understanding the Internet and maintaining their Web presence.

Speed becomes an issue if the current hardware and software cannot cope with the latest technological developments. Also, there is less tolerance for delayed access to the Internet when the ISP is busy.

The sheer mass of information can become a barrier as well. Users are experiencing information overload. Many desire more efficient means of conducting customized searches and accessing specific information. In today’s fast-moving world, using one’s time efficiently is critical. No one wants to feel that they are wasting valuable time with unproductive searches.

Issues Regarding the Infrastructure

Most of the consumers and merchants who participated in the focus group research have scant knowledge about the details of Internet infrastructure or what potential it currently has in Vermont. Many assume that it needs further investment without having any concrete evidence to support such notions. Often, these individuals who lack knowledge also demonstrate fears that perhaps Vermont is relying solely on one cable network that could paralyze Internet access in the state if it breaks down.

The experts had more to say on the subject. Most agree that the fiber optics in place are sufficient, and developments are moving at a very fast pace. However, they believe that the low penetration of dial-up connections is the result of the high cost of bandwidth access.

Many believe that telephone companies, which are notoriously slow and bureaucratic, make growth difficult. They are thought to be too restrictive and to charge prices that are too high.

Both experts and many merchants agree that Vermont needs to make greater commitments to Internet use and growth. There is a desire for the State to drive Internet adoption and growth by making it attractive for "clean" Internet-linked businesses to settle in Vermont. For example, the State has been successful in attracting and fostering the growth of other clean businesses to the point where Vermont has now become a leader in certain areas. Reference was made in one of the merchants’ groups to the success of certain aspects of the insurance industry in Vermont. It was felt that the State was very forward-thinking in passing laws 15 years ago that made it easier for insurance companies to conduct business in Vermont.

Cultivating a more competitive and less costly environment, especially in terms of access, is also desired. In addition, users want the State to continue to provide support and reserve more funds that will foster acceptance through education. They want to see the Internet made more widely available in schools and in communities to all members, especially teachers. This includes providing the subsequent training and support that acceptance requires.

Perceived Benefits of Internet Commerce

Although barriers to Internet commerce exist, users, especially those who have more fully embraced the medium, can see clear benefits to having a Web presence.

It allows for greater exposure and opportunities to expand one’s customer base in a relatively inexpensive way. Some of the smaller merchants have found their investments in the Internet key to their survival, especially if local market growth is saturated.

The Internet allows for more efficient and responsive means of communication between merchants and their suppliers, customers, and other contacts.

Customers are often allowed to visualize a greater range of products a company has to offer than they could through traditional marketing methods. For example, virtual catalogs can be more dynamic in their presentation.

There are opportunities for cost savings in operational and marketing expenses if the Internet’s role is well planned out and incorporated in overall long-term business strategies.

Types of Businesses Benefiting Most from the Internet

There is a general feeling among the participants in this research that opportunities for growth and prosperity clearly exist for merchants conducting business over the Internet. They include the following:

Businesses that have carved out niche product lines or services, especially those that cater to enthusiasts, e.g., toys/collector’s items, cars/motorbikes, gardening, etc. Consumers can find special items that are not available locally. Also included in this group are those businesses that sell products or services that require research and consideration prior to purchase on the part of the consumer, such as cars, outdoor sports equipment, etc.

Tourism and its related businesses, e.g., Bed & Breakfast/accommodations, airlines, etc. Consumers are given the opportunity to visualize specific destinations in the dynamic environment of cyberspace.

Well-known and strong brands. Their identities are already well established, and as a result, they tend to have more credibility in cyberspace.

Computer companies, as it is a natural medium for them to use to conduct commerce.

Other Observations

The businesses that seem to be most successful on the Internet are the ones that project a friendly and approachable personality via their Web sites. Some merchants mentioned showing images of their stores and family members to help convey human warmth and make a personal connection.

In addition, it appears that merchants, especially small independents, have a greater competitive advantage if they can join a larger site or virtual shopping mall that conveys a common theme, such as "Select Vermont." Such sites can give them needed visibility and credibility.

Many believe that using established "security seals" for credit card transactions helps to build user confidence and trust in the Internet as a commerce tool. One merchant spoke of orders increasing and fraud decreasing after one such seal was added to her Web site.

The Next Step

In order for Internet commerce to flourish, users need to have positive and productive experiences on the Web. Education and training of both consumers and merchants are critical in triggering trial and acceptance. The specific roles that government can take to cultivate a more competitive and user-friendly environment will need to be explored in more depth. It will also be interesting to explore the potential of government-supported Web page development and marketing, as well as the idea of subsidized consulting. These and other possibilities are discussed in more depth in the Recommendations chapter.