Micro firms failing to adopt eCommerce: Government Report

Only 29% of micro businesses had a website presence in 2009-10, new data has revealed, yet 31% had a website presence in 2008-09, suggesting start-ups are increasingly shying away from eCommerce.

A new report by the Department of Innovation, Industry, Science and Research, based on figures from the Australian Bureau of Statistics, provides a snapshot of the small business sector.

According to the report, the uptake and prevalence of Australian businesses with internet access has “increased significantly” since data was first collected by the ABS in 2005-06.

“Further, the data reflects a positive shift towards the placing and receiving of orders online as businesses and consumers have become more comfortable with the online environment,” it says.

But not all businesses are comfortable with the shift, the report reveals. Businesses with one to four employees, or micro businesses, don’t appear to be as savvy as their larger counterparts.

In fact, the report shows the number of micro businesses with a website presence is in decline.

“From the period 2008-09 to 2009-10, the proportion of micro businesses with internet access decreased by 0.4 percentage points,” the report says.

“In 2009-10, around 29.2% of micro businesses had a website presence, compared with other small businesses (51.5%) and large businesses (94%).

Only 39.8% of micro businesses placed orders via the internet in 2009-10, the report reveals, compared to 40.6% in 2008-09.

Meanwhile, just 21% of micro businesses received orders via the internet in 2009-10, a 2.5% decrease since 2008-09.

With regard to SMEs’ investment in eCommerce, the report shows 63% of SMEs say they have recovered their investment.

A further 11% who have invested in an eCommerce strategy expect to recover their investment in the following year.

“Forming a business case for eCommerce investments is regarded as important but when asked what the return on investment was, the most frequent response by SMEs (30%) was that they did not know,” the report says.

“Of those SMEs who did know the return on investment, these figures were skewed towards the extremes, with the most frequent response being a return on investment of more than 50%, as reported by 46% of SMEs.”

“Conversely, 20% of SMEs who had calculated their return on investment reported that they had achieved a return of less than 5%.”

Small Business Minster Nick Sherry says eCommerce is only going to get bigger, urging micro businesses to enhance their online offerings.

“ABS data shows Australian businesses received almost $143 billion worth of internet orders in 2009-10, a 15% increase on the previous year,” Sherry said at a conference yesterday.

“Research from the Australian Communications and Media Authority found 60% of household internet users bought something online in the six months to November 2010.”

“The shift to online shopping will continue, especially as the NBN will make it easier for all Australian small businesses to go digital.”

“Our challenge is to ensure SMEs improve their productivity, increase their efficiency and expand their customer base.”

This article first appeared StartupSmart.