Small firms less likely to innovate online: ABS

Large businesses are twice as likely to undertake innovative online activity as micro businesses, according to new data from the Australian Bureau of Statistics.

The ABS recorded the level of innovation within Australian businesses, saying 44% of businesses recorded at least some type of innovation, which is defined as introducing new or improved goods, services, processes or methods.

The report found the proportion of innovation-active businesses increased with employment size.

While the number of businesses with up to four employees innovating was 30.5%, that increased to 49.5% for businesses with between 5-19 employees, to 56.6% for up to 60 employees and up to 69.7% for 200 or more employees.

The proportion of businesses placing orders online also increased with employment size. For businesses with up to four employees, 40% placed online orders, compared to 73% of businesses with more than 200 employees.

Peter Strong, executive director of the Council of Small Business of Australia, says many small businesses can’t see the value in developing an online presence.

“One of the problems [small businesses face] is that they know big business is online, so they don’t see it as worthwhile,” Strong says.

But as eCommerce continues to grow, it could become too difficult for small firms to ignore. According to the ABS data, Australian businesses received almost $143 billion worth of internet orders in 2009-10, up 15% on the previous year.

Wholesale trade and manufacturing industries continued their lead as the main businesses receiving online orders, both at more than 40%, while the retail industry came in at fifth place.

Not surprisingly, the agriculture, forestry & fishing sector was least likely to place online orders, with only 26% using the internet to make purchases.

Wholesale trade was also found to the most innovative industry, with 60% of businesses recording some type of innovation, followed by the arts & recreation, manufacturing and retail industries.

The transport, postal & warehousing and the agriculture, forestry & fishing industries were judged to be the least innovative.

According to Russell Zimmerman, executive director of the Australian Retailers Association, operating online is no longer an option; it is an “absolute necessity”.

“Savvy retailers must bring their business online to increase productivity and expand across multiple markets,” Zimmerman says.

Telsyte senior research manager Sam Yip says the information shows that eCommerce expands far beyond retail, and that all industries need to examine how they can start incorporating more aspects of their business online.