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Net Drives Profits to Small Biz

  |  March 25, 2004   |  Comments

The Internet has not only become a powerful business tool for small companies, a portion relies on the medium for survival.

The Internet equals profits for more than half of the 400 small businesses (SBs) that participated in an eBay-commissioned survey, conducted by ACNielsen, and a small portion reported that without the Web, they wouldn't have a business.

While 51 percent of the respondents indicated that the Internet has improved their profitability, 58 percent said the medium has helped their businesses grow or expand. Fully one-third of the survey participants, which included merchants who have used eBay, sell goods and services online, and 15 percent said the Internet is essential to their survival.

The Internet's Impact on Small Businesses
Helped business grow or expand 58% 82% 57%
Helped business become more profitable 51% 79% 49%
Helped business reduce costs 49% 78% 45%
Business relies on the Internet to survive 15% 31% 14%
Internet has had no impact on business 33% 15% 24%
Base: Businesses with Internet access. General SB = 168; eBay SB = 211;
non-eBay SB = 138
Source: AC Nielsen for eBay

The survey results clearly suggest that both the Internet and eBay have enriched the opportunities for small business success, even for the large majority who have long-established organizations. "Of all the small businesses surveyed, 28 percent have been operating between 10 and 19 years; 35 percent have been operating more than 20 years. Therefore, 63 percent of all the small businesses surveyed existed before eBay," said Jordan Glazier, general manager of eBay Business.

Glazier noted that eBay provides simple tools that inspire entrepreneurship: "...many of our sellers started their businesses specifically as a result of the ability to use eBay as their e-commerce platform. For thousands and thousands of our sellers, they chose to start a business selling on eBay as an alternative to their previous job. Also, we see many who start out as casual sellers on eBay and find the experience (and income) so compelling that they turn it into their livelihood."

Survey participants themselves have exercised their e-commerce savvy, with 54 percent saying that they've purchased computers and office technology online, 48 percent have bought capital equipment and supplies, and 21 percent bought office furnishings. One-third buy inventory for online resale, and 59 percent use the Internet to purchase other business-related goods.

The survey found that eBay businesses had a higher propensity (77 percent) toward purchasing capital equipment, computers, and inventory for resale online than the sampling of general small businesses (41 percent) and non-eBay small businesses (37 percent). The higher incidence of online purchases may be largely due to the fact that more eBay businesses (69 percent) reported that all their employees had Internet access, compared to non-eBay small businesses (57 percent) and the general small business participants (60 percent).

"We hear from small business owners all the time who tell us that without eBay, they would not have been able to launch their enterprise. For example, Randy Will, a pizzeria owner in Utah, came to eBay to equip his restaurant. He has said that without eBay, he would still be dreaming of his business, rather than running it," said Glazier.

More than three-quarters of the surveyed small business owners predict stronger revenue in 2004, and 74 percent of the respondents expect a growth in their customer base. Despite the growth predictions, the survey reveals a moderate outlook on hiring with only 27 percent anticipating that they will add full-time employees in 2004.

The telephone survey of companies with less than 100 full time employees consisted of two sampling components: a random sample of 200 businesses that fit the target criteria, and a random sample of 200 businesses that fit the target criteria and had used eBay for purchasing in the past 12 months.

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