Small business slow on e-business uptake

Australian small businesses slow to follow consumers online and potentially missing out on raft of opportunities, according to new report

October 11, 2011

Australian small businesses are slow to follow consumers online and are potentially missing out on a raft of opportunities, according to the annual Sensis e-Business Report released today.

Report author Christena Singh says searching the web using a mobile, connecting with friends through social media and purchasing over the internet has become part of everyday life for many Australians.

"A range of digital activities have hit mainstream levels in Australia, with strong usage now seen beyond the youth market.

"However, the report shows less than one in five Australian small businesses have a formal digital business strategy," she says.

Of those businesses that have a digital plan, most focus on internet (90 percent 2011; 80 percent 2010) and website components (89 percent compared with 80 percent), followed by mobile (54 percent compared with 36 percent) and social media (53 percent compared with 33 percent) components.

"Over the last year, businesses have started to take a broader approach, and we have seen more businesses incorporate mobile and social media strategies into their digital plan," Singh says.

Small business website ownership did increase over the past 12 months, with two in three small businesses now having a dedicated site.

"However, the rate of small businesses selling online is not mirroring the rate of consumers who are purchasing online," she says.

The report suggests 59 percent of small businesses are currently taking orders online, an increase of only one percentage point over the past 12 months.

"On the consumer side, two-thirds of Australians said they make purchases online, with 40 percent increasing their online expenditure over the last 12 months.

"Of course with the high Australian dollar, some of this expenditure is going to overseas sites, with consumers indicting that 29 percent of their online purchases are made with overseas businesses, but the majority is being spent with local businesses," she adds.

Two in 10 small businesses now have a social media presence, up from one in 10 last year. Facebook is the most commonly used social media tool, followed by Twitter, Linkedin, a blog and YouTube.

Female business operators are far more likely to implement social media activities (37 percent compared with 16 percent of males).

"The proportion of small businesses with a social networking presence is low when you consider how pervasive it has become amongst Australians," Singh says.

Fifty-nine percent of Australians now use social networking, with strong usage now seen in the 30-39 (82 percent), 40-49 (47 percent) and 50-64 (45 percent) age groups.

More than half of businesses that use social media believe it has a positive impact on business, with 48 percent saying in has no impact.

One in four business with a social media presence monitor and update it every day, with a further one in four attending to the site once a week. Five percent say they never provide updates. For most businesses, social media activity is carried out by internal resources, while just 9 percent outsource the activity.

The report shows four in 10 small businesses are using the internet to advertise. One quarter of businesses are undertaking unpaid search engine optimisation (SEO), two in 10 are paying for search engine marketing, while two in 10 are advertising on social networking sites and less than one in 10 are undertaking mobile advertising.

The cost and time associated with online advertising activities is the key inhibitor, followed by the lack of expertise or knowledge, and the inability to measure return on investment.

Small businesses have been particularly slow to take advantage of the rise in mobile web usage during the year, with only 5 percent developing a mobile-specific site.

The report suggests there are a range of opportunities for small businesses to interact with customers in the mobile environment, with approximately half of Australians now using a mobile to access the internet. The use of video and mobile applications has also become commonplace, with six in 10 mobile web users downloading a mobile app and four in 10 downloading video content.

"Interestingly, mobile web has transformed beyond a transit medium, with Australians now logging on at home (38 percent) or at work (49 percent), where they are also likely to have access to a computer.

"But one of the most compelling reasons for small businesses to consider mobile activities is that 12 per cent of consumers purchasing online have made purchases using a mobile," Sigh notes.

"It is interesting to note that small businesses are quick to purchase new technology, they are just not as quick to use this technology to market to consumers."

Currently 16 percent of small businesses own a tablet like an iPad compared with 12 percent of consumers.

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