olnwt.org

By TY MCMAHAN

Four years ago, Jared Madsen started a company that makes bicycles built for five. He sold his bikes—which had two wheels and a rear bucket big enough to tote four children—wholesale to shops around the country.

But today, 90% of sales at his small business, Madsen Cycles, in Murray, Utah, come from an online store that took his Web designer half a day to embed within his company’s website.

The company’s bikes are now sold by him directly to consumers for about $1,485 apiece, at what he describes as a “way higher profit.” He declines to specify his markups.

Getty Images

Mr. Madsen says he initially thought the online store would just fill in “holes” where he didn’t have distribution. But the benefit to him in the end, he adds, was that the Web store made it possible for him to dramatically reduce his reliance on third-party shops.

As a result, the online store is now his business’s main source of income.

Have a company website? If you’re not using it to sell your goods or services, then you could be losing out on an opportunity to boost your company’s bottom line.

Forrester Research says online shopping has surged in recent years and is continuing to grow. U.S. online retail sales, which rose 12.6% to $176.2 billion in 2010, are expected to grow at a compound annual rate of 10% through 2015, the research firm reports.

Building an ecommerce platform within your company website doesn’t have to be complex or expensive. A number of new services—such as such as Goodsie, Shopify, Storenvy and Weebly—now make the task easy and affordable. You can use these services to design a store, upload product, create shopping carts, manage fulfillment and more, —all for as little as a few dollars a month.

Older platforms such as eBay and Etsy allow merchants to sell direct to consumers with benefits such as built-in site traffic. But these new services give merchants more control over the look and feel of their online stores.

“I wanted to have some sort of online presence or shop, but I thought it would be too much work and I couldn’t do it on my own,” says Kimberly Lash, who uses Goodsie to sell vintage clothing at ShopAmour.com. “I thought eBay felt like just selling clothes. You couldn’t build a brand or company. There’s tons of traffic and people are already going to the site, but you can’t create a brand.”

The cost to use the new Web-store services ranges from as little as $5 up to $179 a month. Both Storenvy and Weebly are “freemium” services, offering the basic platform for no charge. The services can be free because the platforms make their money selling additional features, such as more storage. Storenvy charges monthly fees of $4.99 to link a store’s own domain name and $2.99 for a discount code feature. Weebly charges $5 to link a domain name. Goodsie offers the first month for free, then a flat $15 each month for all features.

The Shopify platform is the most feature-packed and also the priciest. The company charges $29 a month and a 2% transaction fee for all e-commerce features and up to 100 products. The company says its most popular offering is $99 plus a 1% transaction fee and up to 10,000 products.

We spoke to executives at Goodsie, Shopify, Storenvy and Weebly, as well as Tom Davis, global head of e-commerce at footwear and apparel company Puma.

Based on their suggestions, here are our tips for using these services to create an online store:

1. Invest time, and possibly money, in taking good photos.

Photography is the “dirty little secret” of e-commerce, according to Mr. Davis. “[Customers] can’t touch and feel your wares, so your photography needs to be an important element.”

Merchants should professionally photograph as many details of a product as they can afford.

Goodsie Chief Executive Jonathan Marcus recommends shooting each product individually, as well as while it’s being worn or used by a model, in order to show how big the product is.

2. Use a voice that matches your brand.

“There’s a fine line between cute and strategic,” says Mr. Davis. For example, a flower shop may describe marigolds as “perfect for fall and a favorite for moms,” while an electronics store may provide a more technical description of products. Merchants should also consider how their descriptions might surface in search-engine results, he adds.

3. Experiment with the layout, and mix it up.

The new services, which emerged within the past five years, provide hundreds of templates for the arrangement of products on the page, as well as a wide variety of different colors and fonts. “Change things every two to three weeks over three months and see what drives the best results,” Mr. Davis says.

Goodsie’s Mr. Marcus adds that stores need to be thoughtful about what products fit together on a page. For example, an apparel company may consider arranging items that make up an entire outfit.

4. Figure out the payment gateway.

This is the trickiest part of creating an online store, according to Mr. Davis. Store owners will need to set up a merchant account with a bank to link funds from the credit card company or a third-party processor like PayPal, which lets customers use its merchant account under certain terms, usually with very little setup required. PayPal does not charge a setup fee.

Currently, Weebly stores only accept Paypal or Google Checkout to process payments. Goodsie offers those services, as well as Braintree Inc. and Authorize.net, a Visa Inc. company, to accept credit card payments. Shopify offers dozens of payment options.

PayPal accepts all major credit cards with no setup or monthly fees. The service takes a 2.9% fee per transaction on monthly sales up to $3,000. The rate reduces as monthly sales increase. Google Checkout charges the same. Authorize.net charges a $100 set-up fee, a $20 monthly fee and 10 cents per transaction. Most services charge about $10 per chargeback in the event a refund is issued.

5. Try to make online shopping feel like an experience.

“Do you have the right boxes? Do you have packing foam? How do you want merchandise to be presented when your customer opens the box? Remember, that’s the only one-on-one you’re going to have with a customer,” Mr. Davis says. He suggests offering gift wrapping and sending hand-written thank-you notes to add a more personal touch to the e-commerce experience.

Alternatively, you can outsource fulfillment. Shopify integrates with third-party fulfillment services such as Fulfillment by Amazon, Shipwire and Webgistix. The cost of this can range for tens of dollars into the thousands depending on the product and volume of shipping. Those who choose to outsource fulfillment should do several trial orders with a service before committing to a provider, Mr. Davis suggests.

6. Promote heavily.

With the growth of social media, these e-commerce platforms have baked in Facebook and Twitter integration so the store and individual products can be “Liked” and tweeted across the social networks. This requires registering for those services separately. The e-commerce platforms will ask the usernames and passwords of those separate services to sync the store. Gaining a following on services like Facebook and Twitter is a good way to alert customers to new products or specials, and to gain customer feedback, and potentially evangelism.

Goodsie and Storenvy have tools to “port” an entire store to Facebook, enabling shopping directly through the social network. They say the process is as simple as installing an application and all products are automatically imported into a Facebook store. Store owners lose some control over the look of their store on Facebook, of course, however.

Storenvy also combines all stores built on the platform into one big marketplace. It claims its stores are making almost 15% of their sales through the marketplace rather than through direct traffic. Goodsie also plans to launch a similar marketplace.

A similar version of this story appeared previously in Dow Jones VentureWire.

Write to Ty McMahan at ty.mcmahan@dowjones.com

By RIVA RICHMOND

In July, Matt Blalock’s mind was on massage oils, soft robes and scented candles when he got a rude awakening.

An intruder had accessed a proprietary database of luxury items that Blalock’s fledgling 13-person e-commerce company, Tickle Industries LLC, was considering selling. At that moment, Blalock realized that far too many people, including data-entry clerks and temporary workers, knew the database’s single, shared password. The not-so-secret code? “Password.”

Getty Images

“It scared us. We became very conscious of what we were doing and the security of everything,” says Mr. Blalock, who immediately hired a local IT-services firm, at a cost of less than $5,000, to set up an access-control system. Now, employees must use strong passwords and change them monthly. “We thought it might happen again, but with something more important.”

Passwords are both vital and painful for small companies. A tiny firm’s data can be just as sensitive as that of a large company – and a breach of security just as damaging – but it typically has far less computer-security expertise and money to tackle the problem. Learning how to control insider and outsider access with good password practices is critical.

Doing the basics

Unfortunately, the basics aren’t easy. Employees should use passwords that are hard to guess, are long – at least seven characters – and that include numbers, capital letters and symbols. They ought to have a different password for each company application and for each Web site they use. And they should change these passwords at least every 90 days, if not every 60 or 30 days.

Employees’ lists of regularly changing passwords must not be recorded in documents in their computers, sent around in emails or jotted down on sticky notes and stuck onto their monitors. “Just think about how many people walk into an office” — clients, partners, cleaning people, says Jim Lippie, president of Staples Inc.’s Staples Network Services by Thrive, which provides IT-department services to small companies.

Shared passwords are also a no-no. Each employee needs to have their own, and the whole system needs to be controlled by an administrator. That way you not only cut off former employees, but control which current employees may access what types of data.

“You shouldn’t provide more access to an employee then they need to do their job,” Mr. Lippie says. A non-managerial employee, for instance, doesn’t need access to sensitive financial data. “These are the things that businesses have to think about,” he says.

Finding the tools

Technology can help you manage all this and enforce good habits among your employees. But to choose the right approach, you need to start by taking an in-depth look at your company.

“There is a risk-management process that every business should go through,” says Todd Chambers, an executive at Courion Corp., an access-management company that works primarily with large organizations. Do you have a lot of sensitive data, such as personal information about customers or valuable intellectual property? How badly would your business be hurt if data were stolen?

If your data aren’t sensitive, it can be enough to have a competent IT person set up basic network access controls. Many small businesses bring in a local tech firm that helps them on an as-needed basis or rely on their own tech staff. Some put it in the hands of a managed-service provider that will run their network soup to nuts.

But if you do have sensitive data and a breach could wreck your company, consider hiring experts to help you set up and maintain an appropriate security system. If you’re a retailer that stores personal information about consumers, credit-card companies may require you to meet certain security standards. Health-care and financial-services firms often face federal regulations around data security. And companies with personal data that suffer security breaches may be legally required under state law to notify affected customers.

Verity Credit Union of Seattle, which faces myriad regulatory rules, uses a password-management product from Imprivata Inc. that lets its 110 employees securely log into the corporate applications they’re authorized to use while only having to remember one very strong password. The tool reduced the headache for employees and allowed Verity to shrink its helpdesk staff, offsetting much of the product’s cost, says Jon Wu, a senior engineer at Verity.

Industry analyst Gregg Kreizmann, of Gartner Inc., says small companies are increasingly turning to such “single sign-on” tools, which are also made by TriCipher Inc. and Arcot Systems Inc., to help manage and control access to popular software-as-a-service applications such as Salesforce.com and Google Apps. These single-sign-on tools typically cost $1 to $3 per employee per month, and can make it easier for small companies to move from passwords to stronger access methods, such as one-time codes that are sent to mobile phones, which TriCipher provides using technology from VeriSign Inc.

Write to Riva Richmond at smalltalk@wsj.com

By BEN LEVISOHN

Growth stocks beat value shares for the third straight year in 2011, and might be poised for more outperformance in 2012, experts say. But investors who avoid value altogether could be sorry.

Growth companies are marked by higher-than-average rates of earnings or sales growth, while value companies tend to be slower growing, with high dividend yields and low price/earnings and price/sales ratios.

Last year, the Russell 1000 Growth Index returned 2.6% including dividends, versus 0.4% for the Russell 1000 Value Index. The gap between Standard & Poor’s growth and value indexes was even wider—growth prevailed by 5.1 percentage points.

Many experts expect growth to keep shining. Jeff Applegate, chief investment officer at Morgan Stanley Smith Barney, says the sluggish global economy and the possibility of a European recession mean investors should favor companies that can produce sustainable profits.

“As growth becomes scarce, companies that consistently deliver earnings [tend to] outperform,” Mr. Applegate says.

Yet some experts say last year’s performance gap wasn’t all it might seem. They argue that value stocks’ slump was largely a function of individual sectors more than investors’ preference for growth—and that the distinction between growth and value is less meaningful than in the past.

The financial stocks in the S&P 500-stock index fell 17% in 2011, the worst of any stock sector. That was a problem for value investors because shares of financial companies make up 25% of the S&P Value index by market value, and knocked about 6.5 percentage points off the index’s return last year, according to Craig Lazzara, a senior director for U.S. equities at S&P.

The S&P 500 Growth index has just 4.1% in financials, and took a hit of only 1.2 points.

Strip out the financial sector and the returns were roughly even, Mr. Lazzara says.

The results were even more pronounced in the Russell indices. Remove the financials, and the Russell 1000 Value index gained 7.3% rather than 0.4%.

The upshot: Betting on a value index is largely a wager on financials. Last year, “the performance of the financial sector made value unattractive,” says Sandy Lincoln, chief market strategist at BMO Asset Management U.S in Chicago. “But if you get a spark in financials this year, then value will be the place to be.”

Investors who believe that will happen in 2012 could buy the iShares Russell 1000 Value Index exchange-traded fund, which tracks the index and charges 0.2% annually.

Sector performance also helps explain why 2011 was such a difficult year for growth-fund managers. Only 11% of them beat the Russell 1000 Growth index, according to a BofA Merrill Lynch analysis, and the average fund underperformed the index by 4.5 percentage points.

Value managers fared better: 21% beat the Russell 1000 Value Index, while the average fund trailed by 2.7 points.

Why did growth managers have such a tough time? Because they tend to avoid high-dividend stocks. Dividend yield is considered a value trait, and growth managers generally don’t use dividend strategies.

That hurt their performance in 2011, when the high-dividend sectors were the best performers: Consumer staples, for instance gained 14.4% last year.

The best approach might be to ignore investing categories, analysts say. “Investors should avoid getting hung up on growth and value,” says David Giroux, a portfolio manager at T. Rowe Price Group in Baltimore.

It is taken for granted, for example, that value stocks have low P/E ratios, while growth stocks have high P/E ratios.

That certainly was the case a decade ago: The Russell 1000 Growth Index at the end of 2001 traded at 31 times expected 12-month earnings, while the value index had a forward price/earnings ratio of 19. Today, they have P/Es of 14 and 11, respectively.

Nowadays, the sweet spot might be the place where growth and value meet, says Lubos Pastor, a finance professor at the University of Chicago. Chicago’s Center for Research in Security Prices, long the go-to provider of market returns for academic work, has been launching investible indexes in recent years, and Prof. Pastor has been working on one that will combine stocks that rank highly on both growth and value metrics. “It will allow stocks to be high growth and high value at the same time,” he says. The index could be launched in 2012.

Some funds are already keen on this strategy. The Artisan Value fund’s top holding is Apple—not normally considered a value stock. But with a P/E ratio under 15 and a solid balance sheet, Apple meets the manager’s criteria. Apple gained 26% in 2011 and helped the fund return 5.5% in 2011, counting dividends. That beat the S&P 500 by 3.4 percentage points.

“Apple’s a value stock, despite the fact a value index might not include it,” says the fund’s co-manager, George Sertl. “Growth and value are joined at the hip.”

By JONNELLE MARTE

Feeling under the weather? Try the Web.

More doctors are going digital as a growing number of health insurers cover online medical consultations — where patients get treated for minor ailments via online chats, video conferencing and interactive questionnaires.

“An increasing number of health insurers are either doing this on a more global basis or are conducting” pilot tests, as more doctors find the online approach useful for certain kinds of consultations, says Susan Picano, a spokeswoman for America’s Health Insurance Plans, an association representing nearly 1,300 insurance companies.

Easy Access

Online visits are particularly handy for simple follow-up visits or when patients live far from their doctors, says Mark Schiller, a psychiatrist in San Francisco who sometimes holds follow-up appointments through video chat. And they generally are less expensive than in-person consultations.

Many of the insurers that cover the consultations require that they be conducted through secure online connections and by doctors within their networks.

Insurers Aetna and Cigna are covering digital consultations conducted at RelayHealth.com. In what Atlanta-based RelayHealth calls a webVisit, patients answer detailed written questions about their symptoms and a report is sent to the doctor. The physician then responds within 24 hours through the site with follow-up questions, a suggested treatment, a prescription or a request to see the patient in person.

The online consultation system also automatically sends a prompt telling patients to see a doctor or go to an emergency room if the condition seems serious. Both Aetna and Cigna require that patients hold a webVisit only with doctors with whom they have an established relationship.

The RelayHealth site also offers free services including appointment scheduling, prescription refills and disclosure of test results. More than 20,000 physicians nationwide are using the site, says Jim Bodenbender, RelayHealth’s president.

Boston-based American Well allows people to sign on through their health insurer’s Web site to immediately consult with a doctor through a secure chat or a video or phone conference. Doctors can prescribe treatment or medication or ask the patient to go to the office in person. The company works with insurance companies including OptumHealth and the Blue Cross Blue Shield programs in Minnesota and Hawaii.

Both RelayHealth and American Well give patients the option of sending reports of their digital consultations to other physicians.

What It Costs You

Doctors typically receive between $25 and $35 for online consultations through both RelayHealth and American Well. Patients generally have a co-pay of about $10, though it varies by individual plans.

For patients who are paying for the services out of pocket, the cost could be $25 to $45, though some doctors don’t charge a fee.

Other online medical-consultation services are available. But for now at least, many insurers are still hesitant about covering the cost of online visits that go beyond the structured questionnaire format because of security concerns and lack of demand from patients.

Write to Jonnelle Marte at jonnelle.marte@wsj.com

Large firms see a significant scale advantage when it comes to recruiting costs per new employee, according to a study from Bersin & Associates, a human-resources advisory firm.

Companies with more than 10,000 employees world-wide pay a median figure of $1,949 per hire, compared with midsize companies, which pay $3,632, and small firms, which pay $3,665.

Because small and medium-sized organizations tend to have fewer dedicated recruitment employees, they often have to outsource hiring, which “can be very expensive,” says Josh Bersin, chief executive and president of Bersin & Associates.

Large companies also hire significantly more employees than small and midsize firms relative to the size of the recruitment staff, bringing down the costs.

Of the industries analyzed, manufacturers had the highest recruitment costs per hire, with median spending of $6,443. That’s because those jobs require specialized skills like familiarity with particular types of equipment or software, Bersin says.

Health-care companies had the lowest costs, at $2,127, because the skill and certification requirements for many medical positions, such as nurses, are rigidly defined, which simplifies hiring, Mr. Bersin says.

To calculate the cost per hire, 414 companies added up all their spending on internal recruiting staff, third-party agencies, company career websites, applicant tracking software, job-listing services, college recruiting, employee referral programs plus other recruiting-related expenses—and divided that number by their total hires over the preceding year.

—Lauren Weber

Thirtysomethings Least Happy With Their Work

American workers under the age of 30 experience the highest levels of job satisfaction, according to a study by the Center on Aging and Work at Boston College. Those over 50 are also pretty happy with their jobs.

The least jazzed about their daily grind? Workers between the ages of 30 and 39.

On a scale of one to six, with six being the highest rating, the median job satisfaction levels of the under-30 crowd and the 50+ group came to 4.66 and 4.55, respectively. For the 30-39 group, the rate was 4.33. It was 4.44 for those aged 40-49. A total of 1,156 respondents in the U.S. completed the 30-minute online survey.

The under-30s were the most satisfied with their job security. They and the over-50s were also happiest with their relationships with peers and co-workers. Meanwhile, the over-50s—considered in the study to be at the “late-career” stage of their work lives—trumped most of their mid-career counterparts on measures of satisfaction with their own skills and abilities, the diversity and inclusiveness of their organizations, their benefits, and the sense of accomplishment they derived from work.

More than 40% of the survey respondents, especially those over 30, were dissatisfied with their companies’ efforts to provide opportunities for advancement and promotion, making it the area of greatest frustration among the 13 topics considered.

The findings about age and promotions might be related, says Margaret Morford, president of HR Edge, a consulting and training firm in Brentwood, Tenn. Generation X workers—those between 30 and 49—have been “in the work force for a long time and they keep waiting for Baby Boomers to move out so they can step into those managerial positions, and it’s not happening,” she said.

Instead, Boomers are working for more years to compensate for the hit their 401ks took during the recession, says Ms. Morford.

—Lauren Weber

By RAYMUND FLANDEZ

See Correction & Amplification below.

Franchise restaurants, hit by higher commodities prices and a cutback in consumer spending, are aggressively searching for ways to slash costs.

Many of these businesses can’t pass on the higher costs to customers without losing even more business. So, they’re trying to find alternative ways to save — including changing vendors and packaging, altering delivery schedules, cutting serving portions and even prolonging the life of fryer oil.

Restaurants feel they have no choice, as some chains are posting some of their worst monthly sales declines. Ruth’s Hospitality Group Inc.’s same-store sales at its company-owned Ruth’s Chris Steak House locations fell 15% in October. Ruby Tuesday Inc. experienced a 10.8% drop in same-store sales; California Pizza Kitchen Inc. had a decline of 7.3%; and Red Robin Gourmet Burger Inc. posted an 8% drop.

“These restaurant operators are really operating under a perfect storm, dealing with record [high] commodity prices, higher labor costs with the minimum wage increasing and falling consumer demand,” says Robert Marzo, senior analyst of food service for F&D Reports, a retail consulting firm in Great Neck, N.Y. “Many of [them] can no longer offer the same quality ingredients that they have in years past, so they’re downgrading in any way that they can.”

They’re getting “creative with their recipes, using cheaper ingredients and offering smaller portions in an effort to stay afloat,” he adds.

Here’s a look at a few efforts by chains and their franchisees to save money and draw in customers:

Ruth’s Chris Steak House

Big Steaks Management LLC, a franchisee in Pikesville, Md., operates several Ruth’s Chris Steak Houses in Maryland, North Carolina and New Jersey, and has seen 5% to 10% declines in revenue for the past six months.

So the company recently looked to reduce freight costs for the first time by buying meat from one vendor — and getting just one delivery per week from that vendor — instead of using multiple vendors with various deliveries throughout the week.

In North Carolina alone, Big Steaks’ three Ruth’s Chris Steak House locations will save $22,000 a year on its weekly purchase of 3,500 pounds of meat, says David Sadeghi, chief operating officer of Big Steaks Management.

Meantime, the franchisee hopes to get more business by offering fixed-price holiday-party packages for the first time. “We need to have the holiday parties to keep our employees employed,” Mr. Sadeghi says. Customers “had an open check last year or the year before, [but now] they can’t afford to go up a couple thousand dollars. They need to keep in the budgeted numbers.” He says holiday bookings are up 10% so far from the same period last year.

Church’s Chicken

Church’s Chicken, owned by Cajun Operating Co., is looking to squeeze out savings from the ingredients and other products it uses. For instance, the Atlanta-based franchiser is testing the idea of filtering the shortening for frying in order to stretch a batch’s use to 14 days from the current 10 days. That would save the company $1 million next year. It also is shrinking the scoop size of its biscuits to 2 tablespoons from 3 tablespoons, for a saving of $1.8 million a year.

Another cost-cutting move: It has eliminated the chicken diaper, which is used to absorb some of the liquid in raw-chicken cases — for a savings of $800,000 a year. The company also plans to change its french-fry packaging from cardboard sleeve to paper, which will generate $700,000 in annual savings.

The franchiser says there have been minimal customer complaints about the changes.

IHOP and Applebee’s

DineEquity Inc., the Glendale, Calif., parent company of IHOP and Applebee’s restaurants, is consolidating the vendors the two restaurant chains use — and, in the process, is getting a discount by buying more from the vendors it does keep. DineEquity purchased Applebee’s a year ago and found that there was 75% overlap among IHOP’s and Applebee’s vendors.

The company says the new purchasing plan, which it hopes to have in place by January, would save the company millions of dollars each year. “That’s the biggest opportunity to assist [franchisees] in the cost of goods,” a DineEquity spokesman says.

Marco’s Pizza

At Marco’s Pizza, owned by Marco’s Franchising LLC of Toledo, Ohio, restaurants are looking to save money on their purchasing process.

They are ordering larger amounts less frequently, are working with vendors to lock in transportation costs and are choosing manufacturers that are closer to distribution centers to help reduce freight costs. Marco’s expects these and other changes to save the company a total of $2 million a year.

For example, scaling down to once-a-week deliveries will save a Marco’s franchisee with five stores more than $3,500 per year overall.

The company also is trimming packaging costs. It has eliminated its small pizza boxes at more than 170 stores in 14 states. Instead, it’s now using the box for CheezyBread for both products. That will result in a saving of $164,000 a year.

Tumbleweed Restaurants

Tumbleweed Restaurants Inc., a grill chain based in Louisville, Ky., is showcasing its lower-priced fare. The company has moved higher-priced food, such as red-meat grilled items, to the back of its four-panel menu, while putting lower-cost, more-profitable items, like tacos and burritos, front and center.

The result: Less-expensive items are being ordered more often. So food costs as a percentage of total operating costs have fallen to 33.2% from 34.2% since January at 44 full-service restaurants — a savings of $500,000.

Write to Raymund Flandez at raymund.flandez@wsj.com

Correction & Amplification

Same-store sales rose in the third quarter at the Church’s Chicken, IHOP and Marco’s Pizza chains. This article and headline about cost-cutting strategies at franchise restaurants suggested that the chains’ same-store sales were falling.

Printed in The Wall Street Journal, page B7