Small business Web site services create nice niche

Providing small companies with easy-to-use Web site services is proving to be quite an opportunity for specialised providers, according to Cahners In-Stat Group. Having evolved dramatically over the last two years, e-business service providers (eBSPs) continue to make advancements in their services platforms and channel structure, leading to consistent growth in revenues, an In-Stat analyst explained.

In-Stat estimates vendor revenues in this segment to have reached more than $US100 million in 2000 and predicts that by 2004, these specialised vendors will to earn more than $US600 million. Given this expected growth, In-Stat sees 2001 as a key year in execution and merchant acquisition for eBSPs, and as a result, providers with effective channel strategies are likely to dominate in the long-term.

The market for Web-enabling services in the small business market has grown quickly over the last 18 months. More than 800,000 small companies have built a Web presence using an e-business service provider. In-Stat expects that by the end of 2001, more than three million small companies will have moved online through an eBSP. The challenge for providers in this market will be acquiring serious, paying customers quickly and cost-effectively, as well as continually provisioning new, useful and relevant services to these customers as they evolve online. Building tightly integrated distribution relationships with larger firms have established relationships with small companies is already showing great promise.

The competitive landscape in this market evolved quickly in 2000 as players began to implement vastly different strategies to acquire and keep customers in the long-term. A clear shift between companies that sell their services direct and those that choose to use two-tier distribution, where they enable others to sell e-business services directly to small businesses, emerged. As a result, a new sub-category of providers that In-Stat has called infrastructure services is gaining traction and changing the dynamics in the small business e-business services market.

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