1Mby1M Deal Radar 2010: 3dcart, Tamarac, Florida

Deal Radar continues its coverage of all things e-commerce with 3dcart, a software provider that supplies programming, technical support, templates, SSI certificates, and other products and services needed to sell products online. The software is integrated with all major shipping carriers (USPS, UPS, FedEx, DHL) and several major accounting packages (QuickBooks, Mas90, Peachtree).

CEO and president Gonzalo Gil started the Tamarac, Florida–based company in 1997 to build custom e-commerce solutions for businesses. After the stock market crash in 2000, few companies wanted to spend a large amount of money to build online stores. Gil saw an opportunity to build a solution that was more dynamic and would work for many businesses. 3dcart was born, giving small businesses the opportunity to run an online store with the same functionality that large multimillion-dollar websites had for less than $20 a month.

The company calculates TAM based on active websites that accept payment online (i.e., have some form of shopping cart). With about 80 million active websites, about 8% of which have some type of shopping cart/payment system attached, the total market is 6.4 million websites. Considering that about 50% of these are small businesses (less than $100,000 in sales a year), 3dcart estimates the addressable market to be about 3.2 million websites or users. It concentrates on small businesses with Web stores selling less than $100,00 a year. Additionally, it targets webmasters and marketing agencies that deal with a large number of small businesses that will need or are looking for an online presence.

The main product is the shopping cart software package, which includes the cart itself; website statistics reporting; integration with shipping services and the U.S. and Canadian post offices; integration with PayPal, Amazon, and Google Checkout; training videos, secure hosting with daily backups; and 365/24/7 phone, e-mail, and chat support, among other features. Other products include additional templates; mobile store packages for Twitter, Facebook, and blogs; and merchant services and accounts.

At the time of 3dcart’s founding, there were a few competitors. Part of 3dcart’s strategy was to undercut them. The closest competitor was charging $100 a month and a $100 setup fee. 3dcart’s starting price was $65.99 a month with no setup fee. At present, 3dcart has a $99 setup fee and online store packages ranging from $19.99 a month for clients with up to fifty products, fewer than 2,000 visitors a month, and 1GB of data transfer to $199.99 a month for clients with an unlimited number of products, 120,000 visitors a month or more, and around 60GB of data transfer. In comparison, competitor Volusion’s packages range from $24.99 a month to $159.99 a month, with slightly different configurations. 3dcart competes with Volusion, BigCommerce, Yahoo! Stores, ProStores, and many others on price, ease of use, comprehensiveness of the offering, and PCI compliance. See the recommended reading below for coverage of Volusion and BigCommerce. The website Zippycart has extensive coverage of 3dcart and other e-commerce solutions.

The company was funded entirely by Gil. While there were opportunities to seek additional capital, Gil wanted to keep things under his control. At times, funding the company meant Gil could not have a salary, but fortunately that was not for a period longer than a couple of months. 3dcart has no plans to seek investors at this time.

3dcart has been profitable since its founding and has grown from a single employee to more than thirty. As of July 29, 2010, projected sales for 2010 are $5 million, which is a 67% increase from 2009.

3dcart averages about 3,000 unique visitors to its website daily. About 4,000 demo accounts (leads) are created each month. Most clients are new businesses with less than $100,000 in sales. The company has a network of 1,000 affiliates and plans to expand this network to include marketing agencies and webmasters worldwide.

As it grows, 3dcart will continue to target small businesses; find Web designers and marketing agencies that can resell its services; create additional products for the existing client base (such as fraud protection, which is in the works); and expand its current affiliate program to reach a wider set of affiliates by joining larger affiliate networks such as Commission Junction.

As the company grew, management thought about exiting when it reached 1,000 clients, then 3,000, then 5,000. It has had several offers along the way from competitors, but owing to rapid growth over the past two years, 3dcart decided that it would be best to focus on continuing to build its client base and to make a decision at a later date.

Recommended Readings
Child Entrepreneur Kevin Sproles: CEO Of Volusion
Deal Radar 2010: Volusion
Deal Radar 2010: BigCommerce

This segment is a part in the series : 1Mby1M Deal Radar 2010