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ECommerceTimes.com

Mixed Reports on Small Biz E-Commerce

By Paul A. Greenberg
Nov 23, 1999 12:00 AM PT

With major U.S. companies rushing headlong into the world of e-commerce, are small businesses getting left behind?

Mixed Reports on Small Biz E-Commerce

The answer depends upon which statistics are considered.

International Communications Research reports that more than one third of small businesses have a Web presence, compared with 19 percent last year and nine percent the year before. However, 66 percent of small businesses do not believe that the Web offers significant opportunities for local operations.

The survey reviewed 305 businesses that did not have a web presence, all with 100 or fewer employees. Of those polled, 69 percent said that their primary use of the Web would be to promote products and services, while 57 percent said they would participate in e-commerce.

The study also showed that 50 percent of companies with 10 or more employees have a Web site. As for the smallest contenders in the market, only one in four companies with fewer than 10 employees have a Web presence.

In The Shadow Of Giants

Still, with huge national retailers dominating online commerce, small businesses fear getting lost in the shuffle. Outside of the Internet, small businesses are almost equal partners in retailing with a 50 percent share of U.S. retail revenues. However, Forrester Research projects that small retailers will capture only 6 percent, or $6.1 billion (US$), of the $103 billion in online retail sales by 2003.

Those odds will probably not be a good enough risk for a significant number of small businesses, and some are likely to stay put in their brick and mortar settings.

Furthermore, the Forrester report shows that a growing number of offline small retailers could suffer significant losses as online e-tail powerhouses keep growing.

"Many of the Chapter 11 filings will occur in the largest online retail categories with established markets like books, CDs and computers," the report says.

That data means that not only might a small business fare poorly on the Internet, but it could lose its local foothold as well.

How To Beat The Odds

The projections may appear dismal for small businesses, but some industry experts point to several steps that a small business might take to ensure online survival and even a positive bottom line.

First, small businesses have to play upon their strengths. While the online mega-stores have presence and power, the human element is often sacrificed. Smaller operations may have the luxury of establishing customer loyalty and more one-on-one communication with customers.

Also, smaller e-tailers might be able to fill in some of the gaps that the larger concerns neglect. For example, may capture the lion's share of online book sales, but it would take a smaller Web business to deal in rare books or to find out-of-print titles.

Mom and Pop On The World Stage

Small businesses that are already meeting success by filling in these gaps in the traditional market could be the most successful online, especially with their newfound audience of millions of Internet users.

"Small businesses can market to more than just Main Street," said Gary Remy, president of Prodigy Biz Corp., the company that released the International Communications Research study.

Evidently, many small business owners agree with that sentiment. The ICR research indicates that an additional 40 percent of small businesses, or about 2.1 million, will have Web sites within an average of eight months.


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