Survey: SME's make money online

Small to medium enterprises are increasingly using the Internet to raise revenue, according to an new Australian study. However, other studies show there is still a long way to go for Australian SMEs if they are to keep up with the dotcom world.

The Australia SME Internet User Profile by IDC Australia found that just over a quarter of businesses employing 1–499 people expect more than 20 per cent of their revenue to come from the Internet in 2004.

Two in three companies surveyed expect to make revenue online.

The remainder did not expect any revenue from the Internet, but this was down on last year’s figures.

“SME’s are continuing to adopt the Internet and use it in their day-to-day business operations, in particularly businesses employing more than 20 people," IDC analyst, Brad Hill, said. More of them are looking to the Internet as an additional source of revenue, and this is expected to grow as time goes on, both in terms of adoption rates and revenue gained."

Despite these positive figures, other analysts and researchers are not so optimistic.

A recent report by the Australian Bureau of Statistics showed that there was still a strong correlation between business size and Internet use. For example, during the year ended June 2003, all large businesses (100 or more persons) used computers. Of these 99 per cent used the Internet, while 80 per cent had a Web presence.

Micro-businesses (with less than 5 people employed) had a much lower level of IT adoption: 78 per cent used computers, 65 per cent used the Internet, and only 15 per cent had a Web presence.

The ABS report also shows that small businesses are using the Internet for purchasing activities more than for selling purposes. For example, 45 per cent of businesses with 20–99 employees used the Internet for purchasing online, and only 25 per cent used it for selling.

Leijla Vrazalic, from the Department of Information Services at the University of Wollongong, said Australian SMEs still had a number of hurdles to get over before they truly embrace e-commerce.

“From our extensive research in regional NSW small businesses, all the figures indicate that we are falling way behind the rest of the world as far as SM’s embracing e-commerce,” Vrazalic said.

She said that the Australian government standard definition of SME’s was a business employing 1 to 250 people.

“If you define SME’s as being made up 1–400 people, it is no wonder you will get more positive results,” Vrazalic said.

Vrazalic’s research has shown the main areas holding Australian small businesses back from embracing e-commerce are a lack of resources and a belief that it is not suitable to their business.

“This is largely an attitude and lack of knowledge," she said. "If people, both businesses and customers, were more educated about e-commerce, they may be more willing to make that big jump.”

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More about: ABS, Australian Bureau of Statistics, Department of Information Services, IDC, University of Wollongong, University of Wollongong
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