The Odd Couple: Small Biz and E-Commerce

Small business seems to have a split personality when it comes to the Internet. Although nearly three quarters of U.S. small businesses have found it prudent to set up Web sites, most of them are strangely noncommittal. It is as though they neither want to miss the party nor have too much fun and end up hugging the porcelain.

A survey last week from National Small Business United and consulting firm Arthur Andersen found that 71 percent of small companies have or are planning Web sites. But it also revealed that 42 percent expect e-commerce to have no impact whatsoever on the way they do business. More than half currently have no e-commerce activities and do not plan to add any within the next year.

Is small business missing out on the greatest technological revolution in a half-century? Maybe. But it is also possible that a conservative approach will pay off in the long run and translate into an important lesson for the giants already fighting for online turf.

Provincial Attitude?

Many small businesses simply do not have the resources to sink into major Web projects, and something — lack of know-how, lack of conviction or fear — keeps them from going out and soliciting the kind of heavy-duty capital investments that full-fledged e-commerce efforts require.

But the fact that many firms are still reluctant to take on even such a modest project as building a basic “brochure” type Web site shows that there is a sizable small biz population that thinks of the Internet as neither a threat nor an opportunity.

What accounts for this seemingly backward attitude? Many small businesses operate locally, drawing customers from a fairly tight geographical circle. Why should a company move to the World Wide Web when everyone it wants to reach is within shouting distance of the local radio or newspaper?

Close to the Vest

Most small businesses are built brick-by-brick, customer-by-customer, while large corporations fight for industry dominance through mass marketing and global branding efforts.

Entrepreneurs may fantasize about facing off with the big shots, but in reality, most of them are privately held companies that keep their financial cards close to the vest and do not even think in the quarter-to-quarter financial time frames that define the parameters of big business competition.

Because they all operate in essentially the same way, small companies are not scrambling as hard to keep up with one another. Shareholders would quickly abandon any global corporation that even hinted at a strategy of taking a similarly laid back approach.

Huge initial investments, competitive zeal and shareholder impatience have driven e-commerce to become what it is today — a fiercely competitive environment where what is at stake is not merely success, but survival.

It is not yet clear that the e-business climate is amenable for long-term success for any size company. Numerous studies of online customer behavior point to customer satisfaction as the major fissure in the e-commerce front — the weak spot where brick-and-mortar retail giants can attack and win back their lost customers.

Which is exactly why a more tempered, if not plodding, approach to the information superhighway may pay greater long-term dividends. If a small firm takes baby steps while a larger corporation moves ahead in leaps and bounds, the big company will arrive first. But will it find a breathable atmosphere?

Some Nasty Weather Ahead blaming Web site builders for poor customer service and frustrating outages and dead links. But the cause — or the blame — is much less important than the fact that these problems have been so widespread.

Corporations often cite the high cost of attracting and retaining online customers as motivation for investing in expensive customer relationship management (CRM) software. Otherwise, they are convinced, their multi-million dollar marketing efforts and brand-building exercises will be wasted.

Smaller businesses have a different mindset. They have worked too hard and too long to attract customers to ever risk losing them to a faulty server or a confusing home page.

Right or wrong — and maybe this is a Romantic notion — the image that many consumers have of small businesses is that they really like them. And that real people — not amazing software programs — are doing the work it takes to keep them satisfied long into the future.

Slow and Steady Wins the Race

The culture clash between business styles could ironically be the influencing factor that will help small business become a significant force on the Web — someday. By taking slow, careful steps, entrepreneurs get to weigh the ramifications of each move they make in a way that big-name Internet players cannot.

Instead of rushing headlong into the fray, small firms can ponder each move carefully. Set up servers or co-locate? What is the best type of security software? What type of customer management interface is required? All of their costly questions can be considered fully, and decisions made deliberately.

That is what will save small businesses from suffering the same fate that has befallen so many of the online heavyweights. If small businesses combine their conservative leanings with some well-planned investments in necessary technology, they can ward off the raids launched by e-commerce firms interested in their customers mainly as numbers on a balance sheet.

But neither can small business owners smugly sit back and wait for the Internet to reach across their desks and shake hands. Those who think the Web is a technology that does not apply to them — or who are secretly hoping that it will one day fade away — have really got it wrong.

One Click Away

No matter the trade or specialty, the Web is going to have an impact on every business in the future. A dry cleaner? Supplies can be ordered online; corporate accounts wooed over the Web. The corner pizzeria? When interactive TV hits full-force — or when net appliances take off — the happiest pizza joints will be the ones that are “one click away.”

The day is going to arrive when every small business that wants to continue to exist will have to enter the battlefield of the Internet. But given that the fight for Web survival is looking more and more like a frenzied bloodbath, the warriors who are hanging back and building better suits of armor may be the ones left standing in the end.

What do you think? Let’s talk about it.

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