MPR: Making Distance Insignificant

Making Distance Insignificant
By Tom Robertson
December, 1999
Part of MPR Online's "Minnesota in the Dot-Com Age" special.

RealAudio 3.0

While the rapidly rising popularity of electronic commerce is helping to invigorate the economies of rural Minnesota, some Main Street businesses still face obstacles to taking full advantage of what the Internet has to offer.

JUST OFF MAIN STREET in the small northwest Minnesota town of Warren, a trio of parrots chatter away, keeping Jason Mischel company. For five years, Mischel and his family have run Great Companions, a mail-order pet-supply business that began selling bird seed out of his parents' home. A few weeks ago, Mischel unveiled a Web site he hopes will lower his costs and expand his market.

Mischel: We've been very happy. Our average orders have been higher on the Internet than they are over the phone. But for us, the cost of taking an Internet order is lower. We're not paying a phone bill, we're not paying for the labor of taking the order. Essentially, the customer is doing that work for us.

Mischel says his Web site probably won't ever completely replace the company's mail-order catalog, but he predicts that within five years, half of all orders will be received electronically.

Mischel: The Web has the opportunity to really change business in rural Minnesota, because it will make distance insignificant. It will make location insignificant, and it will really bring out the fact about our low cost of having a business here.

But first you have to be able to log on. Andrew Lucero, director of information technology and services for Minnesota Power in Duluth, says while most Minnesotans have access to basic dial-up Internet service, many regions can't access high speed and high-capacity lines.

Lucero: The infrastructure in outstate Minnesota isn't really growing as rapidly as it is in the large metropolitan areas. And the reason for that is because your major telecommunications providers are focusing on the major metropolitan areas.

Still, the technology access gap is shrinking. Over the past few years, telecom firms have buried thousands of miles of fiber-optic and other high-capacity cable across the state. One of those lines runs right to the warehouse door of Indian Harvest, a mail order business in Bemidji.

Holleman: Right here we have the Kansas Medley. Now we're getting into some of the beans, the heirloom beans, chestnut lima beans, snowcap beans.

Mike Holleman is in charge of Indian Harvest's Internet services. The 21-year-old business sells wild rice and other specialty foods. It now uses a high speed T-1 Internet connection to sell its products online, and Web sales account for nearly 15 percent of the company's business.

Holleman: The first year we had online sales, we were pretty much guessing at what we were going to get. And we did a fair amount, but there was nothing to measure against from previous years. But the fact that the second year we made it into the six-figure range; we plan on doubling that this year.

For every successful rural online business, there are many others who lag behind. Jane Leonard is a community strategies manager for Minneapolis-based Envoy, a telecommunications firm. She says some companies are either fearful or unaware of the web technology available. Leonard says education has to go hand in hand with infrastructure development.

Leonard: I think education is almost more important, because once people understand that it's there, they don't always know what they need to know. That there are tools out there that people can't even imagine yet, but that exist. And so education is really key.

There are, so far, few statistics available as to how many rural Minnesota businesses are jumping on the Web. Nationally, statistics show that 97 percent of large companies are connected to the Internet, but only about a third of small businesses have a Web presence. Observers say widespread growth of electronic commerce in rural Minnesota will hinge on whether telecommunications companies are willing to put in the infrastructure, and whether rural communities can overcome a shortage of trained information technology workers.

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