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eSmall Business

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SBA is currently developing an eCommerce education and outreach strategy designed to help small businesses compete in the new digital economy.

WHAT IS eCOMMERCE?
The term "electronic commerce" (eCommerce) has evolved from meaning electronic shopping to representing all aspects of business and market processes enabled by the Internet and other digital technologies.

eCommerce embodies the total business process. It fundamentally changes the way firms do business. When engaged in eCommerce, an organization is applying today's technologies to streamline and enhance business interactions. Such technologies include the Internet, but also include hand-held digital appliances, interactive TVs, self-service kiosks, smart cards, and a whole host of emerging technologies. All of these customer-facing technologies are supported behind the scenes by integrated customer databases, call centers, streamlined work-flows and secure transactional systems.

THE NEW ECONOMY
On-line interactions are driving the new economy. The Internet is not just a network of connected computers, but a vehicle for a new market economy --- one that is global, continuously operating and increasingly automating the process of buying, selling, and distributing. In the new digital economy, smaller firms will be tied together, not by ownership & bureaucracy, but by bandwidth data and communication links.

Time, distance and organizational barriers between people are being eliminated, organizational structures are becoming flatter and eCommerce is altering economic value chains and creating new business models. The buzz words in the new economy are speed, connectivity and adaptability.

Key Factors Influencing Small Business

• Internet traffic doubles every 100 days and somewhere between 50-70 million people are on the Internet at any given point.(1)
• eCommerce between businesses is five times as much as consumer eCommerce, or about $43 billion last year. By 2003 business to business eCommerce will balloon to $1.3 trillion. That's ten times consumer eCommerce, constituting 9% of all U.S. business trade.(2)
• About 65% of all small and medium size businesses use the Internet and about 41% have a web site.(3) Of all businesses that use the Internet, it is estimated that one third use it to engage in on-line sales.(4)
• As markets become more efficient because of greater connectivity, the size and organizational complexity of traditional businesses become uneconomic. Firms are becoming smaller.
• Web-scaled economies can generate near-infinite returns. Once an Internet-based initiative is operating, the marginal costs of serving additional users falls toward zero.

SMALL BUSINESS NEEDS & OPPORTUNITIES
Small firms can not afford to overlook or not take advantage of eCommerce opportunities. In just three years, the Internet has evolved from a playground for "nerds" into a vast communications and trading network where some 90 million people swap information or do deals around the world.

eCommerce -- or ebusiness -- offers significant opportunities for firms to extend their reach and do business with a global audience. It also offers opportunities to strengthen business relationships with customers, partners, vendors and even the government. At the same time, small firms that do not adopt electronic techniques run the risk of losing market share and customers from missed opportunities. In particular, the prospect of small businesses losing their markets to large firms selling through the Internet is quickly becoming a real threat. In fact, small firms may have more to gain than large firms from the successful transformation to eCommerce and more to lose from failing to adapt quickly to this new medium.

Available Now

• Review the robust content in SBA's Small Business Classroom.

Coming Soon

• On-Line eCommerce Courses
• eCommerce Information and Search Tools
• eCommerce Success Stories

~FOOTNOTES~ 1-U.S. Commerce Department 2-Forrester Research 3-1998 Survey of Small and Mid-Sized Businesses conducted by Arthur Anderson's Enterprise Group. 4-1999 CDB Research & Consulting Inc.