One Year Ago: Mixed Reports on Small Biz E-Commerce

Originally published on November 23, 1999 and brought to you today as a time capsule.

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

The answer depends upon which statistics are considered.

InternationalCommunications Research reports that more than one third of smallbusinesses have aWeb presence, compared with 19 percent last year and nine percent the yearbefore. However, 66 percent of small businesses do not believe that the Weboffers significant opportunities for local operations.

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

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

In The Shadow Of Giants

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

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

Furthermore, the Forrester report shows that a growing number ofoffline small retailers could suffer significant losses as online e-tailpowerhouseskeep growing.

“Many of the Chapter 11 filings will occur in the largest online retailcategories with established markets like books, CDs and computers,” thereport says.

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

How To Beat The Odds

The projections may appear dismal for small businesses, but some industryexpertspoint to several steps that a small business might take to ensure onlinesurvivaland even a positive bottom line.

First, small businesses have to play upon their strengths. While the onlinemega-stores have presence and power, the human element is often sacrificed.Smaller operations may have the luxury ofestablishing customer loyalty and more one-on-one communication withcustomers.

Also, smaller e-tailers might be able to fill in some of the gaps that thelargerconcerns neglect. For example, may capture the lion’s share ofonline book sales, but it would take a smaller Web business to deal in rarebooks 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 gapsin thetraditional market could be the most successful online, especially withtheir 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., thecompany that released the International Communications Research study.

Evidently, many small business owners agree with that sentiment. The ICRresearch indicates that an additional 40 percent of small businesses, orabout 2.1 million, willhave Web sites within an average of eight months.

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