SMEs Are Flocking To Buy And Sell Via The Internet

Survey commissioned by SME champion, mondus.co.uk, reveals 80% of SMEs would trade-unions online if there was a simple way to do it.

mondus.co.uk, the UK's leading online business-to-business marketplace, and champion of the SME market, today announced the launch of a major survey into the online buying and selling habits of small and medium-sized enterprises. Conducted by MORI, the survey is the first of its kind to look at the issues facing SMEs trading online, and of suppliers trying to reach SME customers using the Web.

It revealed that most SME businesses see the Internet as a unique opportunity to gain and retain customers, with time and cost savings playing a major role in the drive to trade-unions online.

Rouzbeh Pirouz, CEO and founder of mondus.co.uk comments, "At one stage it was feared that SMEs were being left behind by the Web revolution. The results clearly illustrate that SMEs are acutely aware of the benefits that trading online can deliver, and keen to take advantage of this channel. Indeed they show that more than 50% of suppliers, and a similar percentage of buyers are already trading online in some form."

"The opportunity for businesses to use the Internet as a tool for growth is the driving factor. The main reasons for this are cost, opportunity to compete against 'big players' and access to serious, reputable buyers and suppliers - all key factors that were taken into consideration when developing mondus.co.uk. By trading through mondus.co.uk, companies have the ability to exploit new markets without the expense of a bricks and mortar presence, or even a Web site. It presents the opportunity for small businesses to compete in new markets, against more established organisations," he added.

Pirouz said: "It is worth noting that whilst management enthusiasm is recognised by over half of companies as being a critical factor in the adoption of the Internet as a business tool, the influence of the Government is obviously not yet being felt. Indeed nearly half of buyers and suppliers believe the Government is not doing enough to encourage businesses such as their own to buy and sell on the Internet."

Concerns about Internet security and a lack of understanding and technical skills stand above other factors in terms of barriers to developing e-commerce solutions: 45% of buyers and 40% of suppliers cited security as the main barrier.

The global nature of business means that significant new markets are opening up to SMEs. Whilst supplier companies appear to have progressed the furthest in developing online business, the MORI research shows that a growing number of buyers are also now recognising the benefits of Internet trading, particularly in terms of reducing purchasing timescales and costs.

Buyers:

• Three-quarters(74%) already have a web site
• On average, SMEs have had a web site for just over two and a half years
• Only 57% have a centralised buying function
• Four out of five (80%) would shop around on the Internet for more goods and services if there was a simple way to do it!
• More than a quarter (28%) often fail to get competitive quotes
• Half (51%) often look on the Web before looking in Yellow Pages or other directory
• Only a third (32%) have bought online BUT
• more than two-thirds (69%) recognise that online trading is a good way of developing competitive edge
• Three-quarters (74%) identify new business as the main driver for online trading
• Security concerns are the main barrier (45%) BUT
• more than a third cite lack of expertise/understanding
• a .co.uk address gives reassurance to three quarters (75%) and using local suppliers is very important to two-thirds (65%) BUT half (52%) would buy from foreign suppliers if British companies do not offer the facility to buy online
• Two-thirds are more willing to change suppliers than they used to be
• More than one in five (22%) find it difficult to reach new customers
• Almost half (48%) say the Government does not do enough. One in four (24%) identify this as a main barrier to online trading

Suppliers to SMEs

• Two-thirds (65%) of suppliers have a web site
• On average, suppliers have had a web site for just over two and a half years
• Half (52%) are already trading online
• More than half (55%) would like to sell more online
• Half (51%) would sell more online if there was a simple way to do it
• Competitive advantage (64%) and access to a larger customer base (63%) come just behind a more modern image (73%) and increased visibility (67%) as benefits obtained, AND
• almost three out of four (72%) Internet users recognise that online trading is a good way of developing competitive edge
• More than half (54%) have gained customers they would otherwise not have had
• almost half (47%) have obtained access to new markets
• almost four in ten (38%) have generated sales which would not have been made
• Access to a larger customer base (71%) is the biggest anticipated business benefit. More than one in three (34%) currently finds reaching new customers difficult
• New business (77%) is the biggest driver. Only 7% cite Government support. Almost half (46%) say the Government is not doing enough!
• Security concerns (40%) is the main barrier, just ahead of a lack of potential benefits (35%) and lack of necessary skills (35%)
• Six out of ten say online trading means they can compete with the big boys!
• almost one in three (31%) say it is more efficient because there is less chance of personal conflict
• BUT one in six (16%) Internet users do not agree that selling online is cheaper
• Almost half (46%) often look on the Web before looking in the Yellow Pages or other directory
• The average supplier spends:
• 16310,250 on advertising to business customers
• 1638,671 on other sales generating activities

Technical details

MORI conducted telephone research of 200 SMEs and 201 suppliers to SMEs in January 2000.