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Small businesses are desperate to get online. New hosting companies will build their sites free. But there’s a catch.

For about 10 minutes in the mid-’90s, browser functionality was so limited it really was true that no one could tell how big your business was on the Web. It didn’t matter if you were a Fortune 500 behemoth or a one-man, kitchen-table startup-if you were using David Siegel’s single-pixel GIF trick to transcend the formatting limitations of early HTML and a Perl script to process your customer feedback, you were state-of-the-art to your ecommerce customer.

Then things got complicated. Sponsorships and banner ads began to replace Justin Hall’s Links from the Underground as the primary means of driving traffic, Netscape Communications introduced Secure Sockets Layers in the fall of 1995, and suddenly the Web’s much-vaunted “level playing field” tilted substantially toward those who could afford to hire a squadron of professional Web developers.

Today, top-flight sites can easily cost $1 million to develop, with the 100 leading ecommerce sites spending an average of $8.6 million a year on marketing. The little guys sit around wondering how long it will be until Jeff Bezos turns them into another notch on his desk. To allay their fears-or at least make a quick buck off them-Yahoo!, AT&T, Microsoft, IBM, Intel, MindSpring, and many others have begun to offer (or will soon be offering) low-cost hosting services and browser-based authoring tools that allow small businesses to point and click their way to a full-fledged ecommerce site.

While such programs can easily run upwards of $300 a month, a new group of players is trying to drive prices down to a level with which Internet consumers feel more comfortable: namely, free. A startup based in Emeryville, Calif., freemerchant.com, pioneered the trend in December 1998. According to freemerchant.com’s CEO, Serge Wilson, the company grew out of his previous business, a systems integration house that started doing more and more Internet-related work in the early ’90s. “After the third ecommerce store we built, we said, ‘Let’s not keep making doughnuts, let’s make a doughnut machine,’” Wilson explains. But after creating DataBass, a set of commerce templates designed for music stores, Wilson found that the small businesses he was targeting were interested in the product but reluctant to pay for it. “It didn’t matter how low you made the price, people would not pull the trigger,” he says. “Even at $29 a month, it was still a huge barrier to small business, especially since the Internet was such a great unknown to them.”

The solution? Wilson founded a new company, de-verticalized his product, and started giving it away. Following suit, San Francisco startup Bigstep.com launched its free-commerce site in July. Flowing from the Silicon Valley jungle of Los Gatos, Calif., eCongo.com plans to go live with its free-commerce site in late September. Bigstep.com was founded by NetObjects alum Andrew Beebe with $12 million in funding from U.S. Venture Partners, Mayfield Fund, Partech International, Draper Richards, and several other venture capitalists. eCongo.com is the product of CEO Rick Asturias and CTO Eugene Engelgau, both of whom also founded the Web application service provider SuperBusiness NET.

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