Net euphoria has given way to Net-phobia. According to a report released Wednesday by The Conference Board, fear of e-commerce is preventing many small and mid-sized companies from selling online.
“For all the cyberspace ballyhoo, many small and mid-sized firms are still scared to death of the Internet,” said Howard Muson, author of the report, “Managing Growth: Smart Strategies for Smaller and Mid-Sized Companies.”
The research firm found that 10 percent of small to mid-sized companies surveyed said they expected Internet sales to be a key source of revenue growth in the next five years.
Also, 10 percent of those surveyed believe that they need to grow their Internet business quickly or face erosion of profits, leaving 90 percent of small to mid-sized companies either afraid to launch e-business initiatives — or apathetic about doing so.
Despite the low level of interest, Muson believes that many companies will be forced to adopt e-business strategies.
“Most companies better damn well become Internet savvy,” Muson said. “I would say that companies that don’t investigate doing business online are not really looking ahead.”
Fear and Coping
Many small businesses are worried about the costs and complexities of doing business online, the study found.
Additionally, many companies are afraid to launch Internet-based sales because of the risk that they will alienate trusted distributors, who account for a large portion of their sales.
Other companies are avoiding e-commerce because they are accustomed to serving local and regional markets and are not prepared to deliver products to a broader geographic area, according to the study.
Changes in Attitudes
Small and mid-sized companies will begin to make the shift toward e-commerce sales, Muson said, when a “newer generation of leaders succeeds to the top levels of management.”
Muson said that younger people are generally more Internet savvy and more willing to accept the Net as a business channel. Older, more traditional leaders, on the other hand, see the Web as a totally separate way of doing business, instead of another avenue for improving the way they currently do things.
The Conference Board found that instead of launching e-commerce initiatives, many companies plan to grow their businesses through acquisitions and alliances.
The survey found that 40 percent of small and mid-sized companies plan to acquire another company, and almost a quarter of the responding companies said that alliances will be the principal way they will finance their growth.
Whether or not small-business executives are ready for the Web, a number of high-tech giants are working overtime to encourage them to adopt e-commerce initiatives.
For example, America Online (NYSE: AOL) and PurchasePro (Nasdaq: PPRO) recently unveiled 10 new Internet-related services directed at the small-biz market. Their services will be offered through several of AOL’s strategic partners, including Homestore.com and Hewlett-Packard.
Other AOL partners include BroadVisionwhich will sell personalized e-commerce software through the portal to small businesses. Bigstep.com also has signed on to provide Web-building tools to AOL-Netbusiness customers.
In a similar move last week, Microsoft (Nasdaq: MSFT) announced a new alliance with Partner America designed to help small businesses venture into the world of e-commerce. The two companies said they will co-sponsor a series of Microsoft “Big Day” seminars and workshops across the United States to teach small businesses how to succeed online.