Wind Up Here Toy Store in Olympia doesn’t expect to see much of the estimated $9 billion in on-line Christmas sales forecast for this year. But its owners are not discouraged.

“Our website hasn’t paid for itself yet,” says co-owner Joan Machlis, “but we’re content to consider it a customer service rather than rely on it as a revenue generator.”

That’s a enlightened attitude, according to Robert Grothe of TCM (Technology and Company Management) in Federal Way. TCM develops commercial websites and operates one of its own.

“Small companies should look upon the opportunity to establish a commercial website as an opportunity to augment their existing businesses,” says Grothe. “Think of it as a marketing tool rather than a direct source of revenue.”

Yet Edie Richey, project manager and web designer at Virtual Web Design in Graham, feels there’s an opportunity for Wind Up Here to take advantage of the dramatic increase in e-commerce.

It’s too bad the toy store can’t get the word out that it’s website is accessible because there are a lot of frustrated shoppers who’ve come up empty everytime they’ve tried to reach the Toys R Us website, she says.

“She’s right that customer service and presenting the store’s image are good things to use the website for,” Richey says of Machlis, “but it’s a waste of the resource not to get everything possible out of its e-commerce potential.”

Getting the most out of that potential requires new approaches to core issues such as advertising, says Grothe. Since establishing websites, he says, some of his customers have opted to reduce the size of their ads in the Yellow Pages and cut back in direct mail advertising.

“They have smaller ads in the phone book,” he says, “but their web address is prominently displayed. They haven’t cut back in newspaper advertising because they’ve still got to attract eyeballs—but there, as well, they emphasize the web address.”

A company that’s entirely web-based must be successful from the outset, Grothe says. Companies that already are established have the luxury of introducing a website that is at the brochure level. For some businesses, it may remain at that level forever, he adds. For others, it may grow into an international business.

Machlis says she’s not convinced exclusively web-based companies must be successful from the outset. In fact, she says, success seems to be the last thing on their minds.

“What’s going to happen to all these virtual sites that continue to lose enormous amounts of money,” she wonders. “It sometimes seems that the market has shifted to the point that you don’t ever have to make a profit to be successful. It’s odd to me that you can sustain a business that way.”

Some of them may soon be making money despite themselves, says Grothe. . E-commerce is said to have produced $3 billion in sales last Christmas.

This year, it is estimated that 20 percent of the Christmas gifts that are given will be the result of web-shopping and that reportedly is making some mall owners nervous. Some have gone so far as to ask stores within their boundaries to remove web addresses from their windows and promotional materials.

David Montevideo, manager of the South Hill Mall, finds such efforts pointless and perhaps even counterproductive: “Competition is at the heart of commercial enterprise. Besides which, people aren’t going to stop going shopping.”

Activity at Wind Up Here seems to bear that out, says Machlis.

“There’s no guarantee,” she says, “but I’m buying into the notion that catalogs are still just a small part of the market. People still want to touch and feel the products they buy, perhaps even talk about them with someone who knows what they’re talking about.”

There’s no denying, however, that website activity is increasing. Or that merchants are scrambling to launch or improve websites.

“We have noticed a substantial increase in activity just since September,” says Grothe. “We’ve had more business than we can handle. The volume of business has tripled just since the end of summer.”

Machlis concedes that the same can be said of traffic at the Windup Up Here website—but, she adds, that only adds up to an increase from five to 12 online sales.

“Well,” she adds thoughtfully, “maybe more than that. I think we got six orders last week alone.”

The website itself gets substantially more hits than that, says Machlis, mostly from what she refers to as pre-shoppers. The store makes 300 to 400 sales a year to customers who found what they were looking for on the website but opted to make their purchases at the store or place orders by calling Wind Up Here’s 1-800-number.

Machlis says she and partners Christine Gowdey, Paul Seabert and Jean Pettit launched Wind Up Here’s first website in 1998, then updated it last summer—in Machlis’s words, basically improving the underlying software and graphics—before relaunching it this fall.

“We didn’t have big goals,” she says. “We’re not in a position to invest the millions of dollars just in development and advertising. Our goals were to make our website an extension of our services to our customer base.”

She says she would advise businesses looking into establishing a website to budget $10,000 to $15,000.

“Keep in mind that it’s deductible,” says Richey.

“I don’t think a small business like ours should put a lot of stake in e-commerce just yet,” says Machlis, “but we need to be trying it out, learning. And we need to provide every service we can to our customers.”

By Kamilla K. McClelland, Business Examiner staff