Does E-Commerce Have Anything to Offer Small Business?

There is still a large e-commerce nut left to crack on the Internet: Small to medium-sized business.

While it has become the fastest-growing business group, its involvement in e-commerce has been spotty at best. How do small companies buy online? How do small companies sell online? Do small companies even go online?

Lately, quite few Web sites have been trying to lure small companies online to buy (HotOffice, BizBuyer.com), sell (Affinia) or simply get information (Inc.com, Digital Work).

So far, these attempts are widely varied and scattered in their approaches, belying the lack of a clear model for small business e-commerce.

Does Small Business Sell Online?

Most small business Web sites are brochure sites, static pages that explain services, list products and offer contact information. In small business terms, it takes an enormous amount of capital, time and focus to move beyond a Web brochure into real e-commerce.

Most of the active e-commerce sites run by small companies fall into a specialized group of Net-only start-ups that are funded way beyond the reach of ordinary small business.

One Net operator, Affinia, is trying to lure small business clients by creating free Web sites stocked with products collected from a pool of affiliates.

Affinia can create a snazzy boutique site filled with a collection of related consumer products, but the heavy lifting of promotion and advertising still falls on the busy shoulders of the small business owner. The arrangement does nothing to alleviate the familiar problem of capital, time and focus.

Does Small Business Buy Online?

Big business online procurement has taken off in high style. IBM took a savings in excess of $1 billion (US$) in 1999 alone, simply by moving a large chunk of its procurement online. Corporate Net procurement skyrocketed for one reason: The rewards in savings were almost instantaneous. This model does not fit for small companies that cannot see large instant savings through online procurement.

The first stage of most e-commerce is the launch of an offline model on the Net. For small business buying, that means Staples, Office Depot and OfficeMax. Before small business owners get into the fancy work of online buying groups and Net quotes from multiple vendors, they will likely test the waters by purchasing paper clips from an office supply site.

So, with the low prices and convenient instant-access of the offline giant stores, what’s the incentive for online purchases? Not price. Not convenience. Not timeliness.

Undoubtedly, many small business owners shop online to get the best price for hard items such as computers, printers and copy machines. However, knowing small business owners, they probably do this shopping at home in the evening and become indistinguishable from home office consumers.

Do Small Companies Need Online Information?

The answer to the question of whether small business owners go to the Net for information is certainly yes. But are they willing to pay for it? Small company owners are accustomed to getting business information online at no cost, whether it is a template for a business plan or a list of potential clients in their own hometown.

Will they pay for reports or press release writing services? Inc.com believes they will pay for proprietary reports containing information that is superior to the free information online. Digital Work believes they will pay for help with writing and sending press releases.

Inconclusive Evidence

The jury is not back with an answer on paid information. But if the answer is yes, you can bet the three giants of office supplies will quickly add an online aisle of information services to go along with their paper clips and copy paper.

Keep watching. The model for small business online buying, selling or information dissemination has not yet formed. However, clearly, the spotlight has moved onto this big, uncracked nut.