Report: Net Still Has Room for Small Biz

A new IDC report indicates that despite a rapid increase in the number of small American businesses climbing aboard the Internet express, a surprisingly small percentage are actually selling their products or services online.

According to the 1999 U.S. Small Business Survey, only 850,000 small businesses are engaged in e-commerce transactions, a figure the company expects to double to 1.6 million this year and leap to 2.9 million by 2003.

“Although more small businesses are experimenting with Web promotion of their products and services, the market is far from saturated and there is still plenty of room to grow,” said Raymond Boggs, IDC vice president of small business research.

Small businesses are defined as those with fewer than 100 employees.

Opportunities for IT Vendors

If small businesses do make the jump from online presence to online store, that will be good news for many companies that provide Web hosting, CRM solutions and such targeting solutions as Internet postage and package handling.

IT Vendors hoping to profit off the growth of e-commerce and the growth of the Internet should also be looking to small businesses, according to IDC. While many small businesses are tech-savvy, the majority still access the Internet through a single PC shared by all users.

Boggs said, “Almost 13 percent of U.S. small businesses have yet to invest in a PC, never mind add Internet capability.”

An earlier IDC report, “The 2000 U.S. Web Spending Model, Version 2.3,” predicts that U.S. companies with fewer than 100 employees will devote more IT dollars to the Web than any other segment except the government. By 2003, IDC predicts, small businesses will spend almost 13 percent more than the next-largest market segment.

In 1999, Web spending represented just over 12 percent of all U.S. IT spending. By 2003, IDC predicts that number will more than double to 27 percent. This year alone, U.S. Web spending will jump almost 39 percent to $119 billion (US$), up from $86 billion last year.

Information Tool

More U.S. businesses than ever are using the Web for research and to search out new markets. In 1999, the percentage of small businesses going online rose to 52 percent, up from 42 percent in 1998 and only 19.7 percent in 1996. IDC expects the percentage of small businesses accessing the Internet to climb to over 70 percent by 2003.

The survey said that some 2.1 million small businesses, or just over a quarter of those that access the Internet, have a Web site or home page. IDC said it expects that number to climb to 2.7 million this year.