By the numbers: small business pulls back on e-business

According to Sensis, the proportion of small businesses that are buying and selling online in Australia has dropped from 59 to 50 per cent.

There is a very strange finding in the latest Sensis e-Business Report, released last week. The survey, compiled by Sweeney and Associates, shows that the proportion of small businesses (under 20 employees) that are buying and selling online has been steadily increasing, until now.

(Credit: Phil Dobbie/ZDNet)

Figures show that those taking orders online has fallen from 59 per cent to 50 per cent in the last year. Those receiving payments over the internet have fallen still further — from 71 per cent, down to 62 per cent. And we've seen a slide in the number of SMEs with their own website — from 67 per cent, down to 62 per cent.

If the figures are correct, it is hard to fathom, though there are a few possible explanations. First, there's the collapse of our manufacturing base — the sector most likely to buy and sell online. As our high dollar and subdued overseas demand means that more of these businesses have hit the wall, we're left with a higher ratio of other sectors, including building and construction, who have a lesser need for online engagement.

Social media could also be having an influence, 27 per cent of businesses now use it, with most having a Facebook page and little else. As time-poor businesses shift efforts to these channels, their own websites become a casualty. And many probably can't figure out how to sell products from a Facebook page.

There also seems to be a growing mistrust of online as a reliable sales channel. Whilst some earlier concerns have dissipated, such as the lack of personal contact with customers, fears of being hacked have increased, from 34 per cent in 2001 to 46 per cent today.

The other issue could simply be that lots of businesses just don't know how to use the internet for anything beyond basic emailing, internet banking and web browsing. More than a quarter cite a lack of expertise as a concern, and only 15 per cent in the Sensis report have a digital business strategy.

There's also a big question mark over the benefits that are being derived. From the report, 37 per cent of respondents didn't know whether they had recovered their investment in e-business, and almost half of the remainder were yet to fully recover costs. Hearing mediocre results from other SMEs might be making a few shy away from the expense, particularly when the economy is so shaky.

All of this sounds like good news for Sensis. If their direction now is to help businesses get online and achieve more, there's clearly a lot of companies in need of help.