THE BEST ONLINE SOFTWARE STORES OF 1999.

Who does the best job of selling software on the Web? With almost every software company trying to develop a fast-track Internet strategy, the search for "best practices" has become increasingly urgent. Demand for online software delivery is ramping up quickly across nearly all major consumer and business market segments, and those who react slowly run a genuine risk of losing markets to fast-track competitors.

And it turns out that building a successful Web store is a far more complicated job than it once seemed. Store designers have to get a lot of things right--traffic generation, merchandising, site design, physical and electronic fulfillment, real-time credit card processing, competitive positioning, navigation, and much more. Most of these elements seem almost trivial--until the little glitches are measured against lost sales and painfully expensive order-handling costs.

Fortunately, the software industry has already learned a great deal about the details of Web store creation. To share some of this experience, we put together an awards campaign for "The Ten Best Online Software Stores of 1999." We invited Web store managers to submit their sites to a panel of Soft-letter subscribers (see page 8), along with background essays that explained the site's positioning strategy and promotional efforts.

Our judges scored each store according to five criteria--site design, merchandising, order processing, positioning, and promotion--that we felt have the greatest impact on the customer's experience and the overall performance of the site as a sales channel. Our ten winning sites (listed on page 2) include five software resellers and five publishers. They range in size and complexity from some of the Web's largest stores to a few relatively small sites. Some, like Beyond.com, are among the Web's oldest stores, but newcomers like KBkids.com also show up among the "best" sites. Clearly, there's no textbook formula yet for creating a great Web store.

At very least, these ten stores are good sites to browse for ideas and models. In this special issue, we've also tried to identify a few trends that our winning stores reflect:

* DESIGN: CREATING A RETAIL LOOK AND FEEL

Web store design has come a long way in the last year or so. Almost everywhere, layout, artwork, and typography have become far more sophisticated and consistent than ever before. Site navigation is now reasonably predictable, even on deep and complex sites. And only the most retrograde sites still waste our time with huge, slow-to-load images.

The toughest Web store design challenges, however, deal with the challenge of creating a customer-friendly environment (a problem that brick-and-mortar retailers are still trying to solve). Because Web stores ask for money, their look and feel has to convey a compelling sense of trustworthiness and value. And because customers expect stores to be constantly refreshed, even a zippy makeover quickly becomes stale. In the end, retail is a blend of theater and commerce; the best stores deliver an emotional experience as well as tangible merchandise.

When we look at our ten award-winning stores, several design trends show up remarkably often:

* Top-level store placement: Increasingly, Web stores are no longer buried two and three clicks deep on a generic corporate site: Company Web stores are now likely to be either part of the top level of the site itself itself, or they've acquired a separate "store" URL. In fact, most of the best publisher sites in this year's competition-- Corel (shop.corel.com), Hewlett Packard (www.software.hp.com), Symantec (www.symantecstore. com), and Ulead Systems (www.webutilities.com)-- have left the corporate nest and now have a Web address and a personality of their own. Top-level placement sends an unambiguous message: Direct customers are important enough to get their own site.

* Visual density: Real-world retail environments are usually rich and chaotic, full of attractive merchandise and a cacophony of sales messages. Lately, online retailers have begun to imitate this classic retail busy-ness: The most successful sites now cram a remarkable array of products and promotions into a few square inches of screen real estate. The SmarterKids.com home page offers buyers a "Hot Picks" section (gift suggestions, monthly recommendations, and 20 titles under $20), a contest, free software, a survey, a newsletter, an activities center, and navigation links to thousands of products grouped by age- level, brand, and character. Similarly, Beyond.com's home page showcases three different clusters of related titles, as well as bestseller lists, buyers guides, articles, a sweepstakes, and long lists of links to deeper parts of the site. Individual publishers rarely have enough titles or new promotions to sustain an equivalent level of visual excitement, but a few--notably Symantec and Corel--come close, often by highlighting services, forums, rebate offers, and links to other sites.

* Multi-path navigation: The downside to visual density is that finding anything on a rich site can become a problem. Clickstream analysis suggests that about half of Web buyers know what they want when they get to the site (even though they may not find it), while the rest are browsers and impulse shoppers who come to explore product categories, read reviews, and check out demos. Good sites manage to pack each page with navigation options that offer multiple points of access to products. Chumbo.com's store, for example, includes a search engine, product category tabs, hierarchical menus, publisher sub-sites, and topic-related clusters (Y2K, anti-virus, Linux, etc.)--all of which function at almost all levels of the site.