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Why you need a website

New data indicates that more small businesses than ever are moving online – and they expect to be more profitable as a result.

According to an April 2004 survey by Harris Interactive, 70 percent of small businesses in the U.S. have an online presence, or will have one by the end of the year. That's double the 35 percent of American small businesses that had their own Internet site at the end of 2002, based on a report by the U.S. Small Business Administration's Advocacy Office.

The newest survey polled more than 1,000 U.S. businesses employing fewer than 100 people, and was sponsored by Yahoo! Small Business.

The survey found that 35 percent of small business owners feel that having a website is the most important tool to expand their business. Small business owners rate websites more highly than a dedicated e-mail presence or online advertising efforts, both of which garnered support from about 30 percent of the respondents.

Small business owners surveyed by Harris also believe that having a website is even more critical for growth than hiring more employees – which received only 19 percent of the votes.

Most small businesses polled by Harris anticipate sales growth during 2004. Businesses with an online presence, however, are more optimistic. Some 66 percent of the survey's participants expect their annual revenue will rise during the coming year; the vast majority of these, 75 percent, were companies who also reported having an online presence currently.

In March, ACNielsen and eBay released a survey of 400 small businesses that found 51 percent of respondents using the Internet believe that it has helped their business increase profits. Further, 58 percent of small businesses polled report using the Internet has helped their them grow or expand, and 15 percent feel that using the Internet is critical to the survival of their business.

That study also indicates that 33 percent of small business owners use the Internet to sell goods and services online, and 43 percent find sales prospects online.

"Clearly, small businesses realize the importance of establishing an online presence and leveraging the Internet as a way to reach new customers," said Rich Riley, vice president and general manager, Yahoo! Small Business.

About users

The latest data from the Pew Internet and American Life Project two-thirds of U.S. adult Internet users are online shoppers, totaling roughly 134 million purchasers.

In 2000, only about 47.8 percent of those online had made a purchase, according to Washington, D.C.-based Pew.

The group's February study also indicates that 78 percent of online Americans use the Internet to research a product or service before making a purchase.

"E-commerce is completely mainstream now," said Lee Rainie, director of the Pew Internet Project. It's a reality in the lives of two-thirds of all adult Internet users."

According to Pew, 76 percent of Americans 18 to 49 years old are online, and 58 percent of Americans age 50-64 are, as well.

Rainie said the implications are far-reaching. "That is not only important because of the economic consequences it suggests, but also because it represents such a vote of confidence in the online world," he said. "People clearly have found e-retail sites they trust. The worst players in online commerce have either vanished or cleaned up their act."

Rainie points out that e-commerce remains "a drop in the bucket" compared to the overall U.S. retailing market. "Trillions of dollars are spent by U.S. retail consumers each year, and the best estimate is that e-commerce amounts to $100 billion to $130 billion," he said. "E-commerce is certainly less than 5 percent of all U.S. retailing. The 'good news' in that, of course, is that there is still plenty of room to grow."

Online impact

In a nationwide survey of small businesses by Interland in October 2003, 78% of respondents indicated their company benefits from having a website. Credibility (51%), marketing (33%), and sales (28%) are the areas small and mid-size businesses said are most impacted by having a website.

Other statistics:

• 38% say they are unlikely to do business with companies that do not have a website
• 56% of those surveyed attribute some portion of their annual sales to their online presence
• 68% of small and mid-sized businesses use e-mail on a regular basis for customer communications
• 37% say they update their website more than once a month

e-Commerce

According to the Census Bureau of the Department of Commerce, the estimate of U.S. retail e-commerce sales for the first quarter of 2004, not adjusted for seasonal, holiday, and trading-day differences, was $15.5 billion, an increase of 28.1 percent (±2.9%) from the first quarter of 2003. Total retail sales for the first quarter of 2004 were estimated at $834.8 billion, an increase of 8.8 percent (±0.6%) from the same period a year ago.

E-Commerce sales in the first quarter of 2004 accounted for 1.9 percent of total sales, while in the first quarter of 2003 e-commerce sales were 1.6 percent of total sales.