Small business frozen out

ELECTRONIC commerce is emerging as one of the biggest challenges facing small businesses.

Many big businesses are moving to online trading and small businesses not e-commerce ready risk being left behind.

Wesfarmers has taken two steps into the Internet world – the most recent a marketing portal for farmers in partnership with Rural Press.

It has also joined 13 companies, including Telstra, BHP, Coles Myer and Fosters, in corProcure, an ambitious attempt to create Australia’s first multiple-industry, business-to-business electronic marketplace.

corProcure plans to spend more than $8 billion on indirect goods and services over the next two years. The total value of indirect expenditure in Australia is more than $300 billion a year.

BHP has also joined Rio Tinto and 12 other mining giants to

create an online mining equipment purchasing facility. Each year, the mining industry spends about US$200 billion on equipment.

The WA Government, through the Department of Contract and Management Services, now posts all its tenders online.

The message for small businesses is simple. If you want a share of the big boys’ business, you had better be online.

Small Business Development Corporation managing director George Etrelezis said buying consortiums such as corProcure provided an opportunity for small businesses – especially if they were preferred providers to the group.

“However, it could squeeze out some suppliers,” Mr Etrelezis said.

“It also gives a lot of buying power to one group and that could squeeze margins.

“I would advise small businesses to find out as much as they can about corProcure.

“It’s like being a panel supplier to government.

“It may mean small businesses need to band together to meet the needs of the contract.”

Former Business News Online Economy columnist Mal Bryce said large corporations and government agencies were driving e-commerce.

“Those organisations have found huge cost savings can come through e-commerce,” Mr Bryce said.

Following the rush to become GST-ready, small businesses are better positioned for electronic commerce than they have ever been.

Many small businesses have invested heavily in computer systems to deal with the new tax. A lot of their accountants are pushing them to send their books in online so the tools for establishing an Internet presence are there.

Establishing an Internet presence is easy. The hard part is trading online.

Mr Etrelezis said even the big players found e-commerce difficult.

“We’re trying to encourage small businesses away from just having a presence on the Net to actually transacting – both through electronic commerce and business-to-business,” Mr Etrelezis said.

“Some small businesses are getting caught with the security of payments on the net.

“There have been situations where overseas people have made payments with false credit cards. The first the small business knows about it is when the bank debits their account for the amount.”

Mr Etrelezis said businesses had to make sure consumers received goods bought online to their satisfaction.

“Returns of unsatisfactory goods have to be taken into account,” he said.

Mr Bryce believes small to medium-sized enterprises are ‘dragging the chain’ in terms of e-commerce.

“It is an undeniable truth that there is a serious learning curve but many small business owners feel they can’t find the time to learn about e-commerce,” he said.

“You get to the nub when you realise most small businesses will stay in their old comfort zone until they receive a prod to their bottom line.”

Mr Bryce said small businesses also had to come to terms with the need for a different approach to selling online.

“They have to deal with their existing offline customers plus their growing base of online customers,” he said.

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