BOSTON (08/21/2000) - Small businesses' urgent need for Net assistance to help them in areas such as research and decision making will lead to a boom in online business center revenue, according to the findings of a recent study.
The centers cater to companies employing less than 20 staff.
"Small businesses don't have the luxury of a lot of peers in the same office to bounce ideas off," said Kneko Burney, director of e-business infrastructure and services for IT market research firm Cahners In-Stat Group. Sheer size often provides larger companies with a deep pool of intellectual capital and experience with different business models, she said.
In the recent study, Cahners market researchers estimate annual revenue from online business centers will top US$1 billion in 2003 -- more than five times the under $200 million earnings expected this year. The market for such centers is wide-open, with no single Web site having achieved a dominant market position as yet, although one may soon, Burney said. Cahners polled around 30 online business center users to help in forecasting trends in the market.
Online business centers serve as a surrogate office expert in a wide range of fields, providing information on business law, advertising, recruiting and other issues. "We like to call ourselves a one-stop shop for small businesses," said Bob Llewellyn, senior marketing manager for inc.com, recently acquired by Bertelsmann AG. Inc.com draws on the experience of professionals from 15 or more business areas and can also provider customers with access to online market research which small companies on their own could hardly afford to undertake, he added. "It's a means for people to come in and ask specific questions and get advice," Llewellyn said.
Profit, however, won't come from content, Cahners' Burney said. "Content is a hook, it's attractive, it's interesting, but it's not always easy to deliver.
The way to make money in the service is by facilitating commerce." Cahners estimates that online business centers will mediate more than $2 billion in commerce in 2004 as long as the centers are able to establish themselves as key providers of products and services for small businesses.
Online business centers must broaden their offerings to include electronic-commerce services such as adding ASP (application service provider) functions, selling products online and becoming a central place for small businesses to work on the Web in order to take advantage of the coming shift in small business spending, Burney said. She notes that the two companies in the field Cahners ranks as market leaders -- inc.com and Office.com Inc. -- have already begun to make such moves.
Small companies' Web use "is growing rapidly. We're right at the forefront of a crush of movement toward the Internet," said Rick Pretsfelder, group vice president for sales and marketing at Office.com. "It's a question of how profoundly they integrate the Web into their business operations." In addition to providing business advice in several fields, Office.com offers business software tools and office products, is tied into auctions, and has e-mail and online calendar functions. "It's a comprehensive aggregation of content and tools," Pretsfelder said.
Much larger players than inc.com and Office.com like IBM Corp. and Xerox Corp. have also made significant moves toward courting small businesses, but Burney said there's a downside to being a top corporation in the online business center market. "They're online business, but they're not small business. They carry a lot of baggage," she said. "There's a sense that they're only (offering small business services) to sell you their stuff, and small businesses don't want to think about technology." Llewellyn agreed, noting that inc.com, focuses on small business issues without pounding on the information technology drum all the time. "We all had this anticipation that small businesses would jump on the Web and run their businesses on the Web. While it's going to be the future, I think it's becoming clear that it wasn't going to be the immediate future," he said. "On the one hand, we have to evolve as the users evolve, and on the other we have to evolve the user."Cahners In-Stat, in Newton, Massachusetts, can be reached at +1-617-630-3900 or http://www.instat.com/. Office.com, in New York, can be contacted at +1-212-995-7700 or at http://www.office.com. Inc.com, in Charlestown, Massachusetts, can be contacted at http://www.inc.com/.