by Michael Grebb
Adrive through the rolling hills of wine country in Northern California has its perks: the picturesque mountains, the uncongested roadways, and the quaint villages and towns scattered throughout. As you cruise through Napa Valley on the way to Calistoga, each side of the road becomes an endless canvas of geometric beauty — rows and rows of grape vines wrapping themselves snugly against fences that rise from the grassy dirt. The air is cool and crisp. The breeze is light and floral.
Of course, that’s driving outside. More difficult to romanticize is standing in a frigid warehouse. There are no windows and no floral breezes, just cardboard cases of wine arranged in imperfect rows across the concrete floor. “This one is popular with young, well-to-do dot-comers,” says Stefan Blicker, director of operations at wine broker NextWine, as he lifts a magnum of 1997 Harlan Estate out of a wooden case. “It’s about thirteen-fifty.” That’s not $13.50 — it’s $1,350. And it’s not just rich Silicon Valley types who put down that kind of money on fermented grape juice. The market for high-end wines is thriving and global. “We have customers who buy $20,000 worth of wine per month,” says NextWine president Dain Dunston. “You’d be surprised how few boxes $20,000 worth of wine can be. It’s pretty scary.”
Even more scary for NextWine is tapping that global market without breaking its small bank. It’s a four-person operation with little capital. And even if setting up a good e-commerce Web site were easy (it’s not) and the wine business weren’t a spider web of conflicting regulations in every country (it is), the Internet is still a tough market judging from the corpses of those who have tried and failed (Wine.com, where art thou?). Like many small businesses trying to sell their products beyond U.S. borders, NextWine knows that it’s folly to assume any company can slap up a Web site and become a global player overnight.
The Internet may have created a worldwide networking standard, freeing businesses from the chains of enterprise computing software, but language and cultural barriers still exist, not only with customers but also with far-flung partners and branch-office employees. NextWine, for example, has been trying to partner with two French companies that would enable the company to set up offices in France and Geneva. Because of the regulations, keeping offices in those countries would make it easier for NextWine to sell its inventory in Europe. “But it’s the little things,” explains Dunston, “like someone sends you a document in Microsoft Word for France, and suddenly the spellchecker doesn’t work. Other little things, like working with people who are nine hours ahead of us. They’ve already gone home when we get into the office.” Welcome to the global economy.
NextWine is decidedly efficient. It rents only about 1,000 square feet of office space in a Napa, Calif., business park (with an additional 5,000 in the back for inventory). Founder Dunston sits in a small, windowless office in the back corner. Blicker and two other employees — assistant general manager Brent Pierce and Lisa Gordon, manager of information systems — sit at desks across from the “lobby,” which consists of a tiny conference table set up in the middle of a converted kitchen. Bottles of re-corked wine sit on the counter (the constant tastings are a hardship Pierce and Blicker know well: Both are former “sommeliers,” or wine buyers, at fancy restaurants). A dishwasher whirs in the background as Dunston and company sit around the conference table trying to explain the intricacies of the global wine business. Every time the phone rings, Gordon bolts out of her seat to answer it. Pierce gets up every few minutes to check his e-mail.
In other words, NextWine might as well be the polar opposite of all the bloated dot-coms of yesterday. No advertising budget. No fancy office perks. Dunston bristles at the suggestion that he runs an Internet company. “We consider ourselves a wine company,” he says. “We’re not a dot-com. We’re a company selling wine on the Internet.” Indeed, Dunston decided even back in 1998 not to add the “.com” to the corporate masthead. In every sense, NextWine is going global on a budget.
“We’re not quite big enough to be able to buy a back-end system that can manage both inventory on the Web and what’s being sold here, so we have to enter a lot of that manually,” Dunston says. “It takes a lot of discipline.” It gets even hairier when NextWine customers try to buy from different countries in the same online transaction. “How do you make a sale when someone is literally picking a bottle from France, a bottle from Canada, and a bottle from the U.S.?” he asks. “Should we segregate it on the Web site and make it very clear to them that they’re looking at French inventory? And if they’re looking at the French inventory, what does that mean? Can we ship it to them? The answer is yes, probably, but we’ve got a lot of regulatory issues we have to look at.” The site must clarify, for example, that international restrictions sometimes mean wine can’t always ship together, “so the guy doesn’t get a box and say, ‘Where the hell is my Dom Perignon?'” Gordon explains. He notes that tweaking the software isn’t nearly as hard as ensuring that the customer understands the shipping issues. “We set certain expectations that we have to meet,” she says.
GLOBALIZATION ON THE CHEAP
Consulting firms abound, ready and willing to sell small businesses e-commerce software and support. The only problem is that they are usually expensive. NextWine turned to IBM Software Solutions and a basic (i.e., cheap) version of its WebSphere commerce suite product, e-commerce software that specializes in the kind of complicated issues that arise during a globalization push. “In some countries like France, you’re not even allowed to set a cookie,” notes Sandra Carter, IBM Software Solutions’ vice president of electronic commerce. “Software helps you with some of those cultural differences.” Using new advances, she says, a company can automatically maintain Web content in several different languages, setting different rules for each version of its site. That’s important to NextWine, whose reputation depends on having a community of like-minded wine enthusiasts believe that they are buying from a credible source. “They’re not only selling wine,” she says. “They’re creating a community. They’re providing assistance for high-end buyers of wine.”
IBM sells various levels of the WebSphere product priced from $10,000 up to millions of dollars for its most high-end version. NextWine took the cheapest software option, which is limited in its ability to merge databases (and why NextWine’s small staff must manually enter database changes). Carter notes, however, that small businesses can upgrade as their global expansion grows into new markets.
“You want to make sure you have software that will grow with you,” she says. Dunston says NextWine’s entire online launch cost about $85,000, including $15,000 that went to an outside Web site designer. “For 85K, we got real-time inventory, speed, and a very versatile database — all the WebSphere bells and whistles — and we’re up and running,” he says.
Allentown, Pa.-based Trifecta, an e-commerce integrator that works specifically with WebSphere products, helped trim costs as well. While $500,000 contracts aren’t uncommon for its comprehensive services, Trifecta’s stripped-down “Rapid Start” program cherry picks specific software functionality for small businesses. “We just worked with them to build a solution at a much lower cost,” said Trifecta president Doug Pelletier. “We also gave NextWine a nice payment plan that allowed them to spread the cost out over nine or ten months.”
As a result, Dunston says NextWine now claims a tidy (although undisclosed) profit, and the company isn’t putting itself underwater as it grows. Even with the global expansion underway, he doesn’t foresee having to upgrade his software for a long while. “We’ve talked about upgrading, but, frankly, what we’ve got is working so well for now that we don’t think it’s worth the extra investment yet,” he says. That, of course, doesn’t mean NextWine won’t outgrow its current ware. “It’s not just a function of costs,” says Pierce. “There are certain things that Websphere just cannot do. With all of the international laws and shipping issues, we still do a lot of manual stuff we don’t want to do.” Pierce smiles as he looks into the distance. “If we were just selling widgets, this would be so much easier.”
THE LANGUAGE BARRIER
Beyond the logistical issues involved with running international branch offices and trying to reach foreign consumers, perhaps the most basic and vexing problem is language. English has become common for much of the world’s global business transactions. But don’t let that fool you: Small businesses often miss out on opportunities because they can’t converse with foreign associates in their native dialects. And while many companies are happy to sell you translation services, they are often too pricey for smaller players. Most small entrepreneurs, meanwhile, can’t even fathom the cost of hiring a private interpreter.
As with many other globalization headaches, however, the Internet is starting to make it easier (and cheaper) to surmount language hurdles. SDL International offers translation services for those on a budget using software and, of course, the Internet. For one cent per word, a business owner can log onto www.plustranslation.com and upload an entire document in, say, German. Within minutes, it is roughly translated into English. It may not be as good as a real-live translation, but it’s usually comprehensible. For 12 cents per word, SDL will run the translated document past a real person so “a human translator can clean it up,” he says. And for 22 to 39 cents per word (depending on the obscurity of the language), you can get a full human translation that even takes into account cultural nuances. In a pinch, such services can help small businesses respond more quickly when faced with business negotiations or contract changes. (For a free demo, go to www.freetranslation.com and enter a few sentences in English. The site will translate them immediately to French, Spanish, Italian, Norwegian, German, or Portuguese.)
Cooper Labs, a pharmaceutical skin-care company, uses SDL’s products to reach Spanish-speaking consumers in the U.S. and around the world. The six-employee shop didn’t have money for research, so it relied on anecdotal evidence that its products were in demand from the Spanish-speaking market. The company has since updated its site to sell to French and Italian-speaking consumers.
At the same time, some experts warn that it often makes sense to spend money on translation services rather than always taking the cheapest route. “You can’t have everything in English and then ship it over to your Japanese subsidiary and say, ‘Translate this to Japanese,'” says Tony Freeman, co-founder and executive VP of DeepBridge Content Solutions. “It doesn’t work. You have to have a more global view.”
In the case of Cooper Labs, the company paid SDL to translate the documents, but it also sent them over to its foreign branch office employees (all two of them) to finesse the prose. “We have Dominique in France and John in Italy,” says Joni Freedman, Cooper’s director of professional services. “There are just a few of us. It’s like a grassroots political campaign.” Partly because of that dual approach, she says, Cooper has spent only about $8,000 to translate its e-commerce site into three different languages — even if it did take eight weeks rather than the six to eight days originally planned. “I think we always knew that was unrealistic,” she says.
For small businesses trying to expand globally, surmounting the many IT roadblocks thrown in their paths can also seem impossible but with the help of the Internet and some innovative software, it can be done. “Supplemental software, combined with the expertise of a company’s IT staff, can prevent common network problems and bring cost efficiencies to companies that need them,” says Omar Maden, CEO of Enlighten Software Solutions, which sells scaleable server software. The truth is that a little bit of shopping around and innovation can take any company, of any size, global. Back at NextWine, in the heart of Napa Valley, Stefan Blicker picks up a $250 bottle of Pride Reserve. “Most of the people we sell to are really passionate about wine,” he says. “It’s not just the people with money who want the Faberge Eggs of the world.”
When it comes to going global, passion doesn’t necessarily translate into extravagance.
THE REMOTE SERVER ISSUE
THE STARK REALITY for small businesses is that globalization always presents challenges, whether the product of choice is high-end wine or, well, widgets. It obviously isn’t always about communicating with customers. Digital Design, a Las Vegas-based IT consulting firm, has lately encountered more clients who want to link employees in branch offices without spending big. For small businesses, this can seem an impossible dream. “To link them together with the usual data lines would cost $600 to $700 per month per branch,” notes Digital Design owner Fred McCormick. To surmount that cost, McCormick purchased a Digi International PortServer II terminal server product from DTR Nett, which uses the Internet to link offices without installing separate servers at each location. “If the server is at our location, we can fix it ourselves,” he says. “If it’s somewhere else, then we have a logistical problem.” Digi’s terminal server product also allows businesses to connect serial devices without changing any software code, which can often be expensive. “The application doesn’t have to change at all,” says Burk Murray, Digi International’s VP of product management. “You don’t have to open the server box out in the field. Everything is right here.”
While none of Digital Design’s current clients maintain offices overseas, McCormick says the logistical costs of keeping servers at each foreign location could be enormous. Not only do language and distance barriers complicate on-site technical support, but each server would have to dial in separately to the central hub to retrieve company information through an Intranet. If that hub were in the U.S., international long-distance charges that can climb to several dollars per minute would apply. “That could be two or three hours a day to update the remote servers,” he says. “And that’s on top of the server costs.” Digital Design’s clients get up to 768 kilobits per second of bandwidth from its central hub, which companies can parcel out among their branch offices. “At each site, it can be a $20 per month Internet dial-up versus $600 or $700 per month,” McCormick says. “One customer saved $36,000 over a three-year period.”