A company with over 500 products available for sale wants to start
selling on the web. Assuming they elect to establish an electronic
store front, how would you determine whether the company should
outsource the site or run it themselves.

IMHO, they should run it themselves. If they pay a good coder to
design their site as such that they can easily edit the products and
pricing, then it should be a breeze. Try www.rentacoder.com, but have
specs ready. Don't expect a coder to design your website. Design the
site or pick one from www.classythemes.com and then go to rentacoder
and tell them you want a shopping cart with an admin interface so you
can add/change products REALLY easy. Use Paypal to take payments since
they no longer require that you have an account... :)

I meant....use PayPal to take payments since they no longer require
your customers to have a PayPal account.