E-Commerce: Small v Large Business

When e-commerce was in its early days, it paid dividends to be the first company to make the move online according to Laudon & Traver (2010, p117), whether large or small. However in today’s complex e-commerce world with many companies vying for position in an effort to be found in searches of any kind, technique and marketing play a much greater part.

Wang & Au (2008) suggest that as e-commerce is “a long term commitment”, small businesses are less likely to have the resources required to make such a venture a success. Therefore small and medium-sized enterprises are either less likely to attempt to enter the e-commerce market or be less successful if they do. Whilst I agree that it requires time to establish an e-commerce site’s online presence after it is published, this statement is greatly affected by the subject matter of the e-commerce system and if the subject matter requires a dedicated system. For example, there are systems available that can be joined to allow an individual to enter the e-commerce world (such as eBay, Craig’s List, etc.) quickly and cheaply with an immediate presence and no need for technical skills, small businesses can flourish if these are suitable e-commerce platforms.

Hassim’s (2009) study in Malaysia, a forward thinking country in terms of technology, found that small businesses perceived that the cost of e-commerce systems would not result in sufficient extra sales to justify their spend and that small business felt a “loss of control” in their sales process as many small businesses survived on their customer’s trust, something that would be lost to entirely new e-commerce based customers. As larger businesses are often seen as having less of the individual customer care and trust this rings true; larger businesses worry about brand more than care, something which translates in e-commerce systems (if done correctly). Larger businesses are always looking for new revenue avenues as they are often judged on periodic earnings whereas small businesses are judged by their owners, who often have a hand in the running of the business and may not have a constant growth objective.

To conclude, larger businesses do have an ultimate advantage in the modern e-commerce world as, unlike the early days when the first mover reaped the rewards, it can take a great deal of time and marketing spend to see e-commerce transform into bottom-line profit. One of the e-commerce success stories of the last decade Amazon, was loss making for many years and is now making a profit, a timescale that small business could not have funded.

A small business using a ready-to-go system or a large business with the time and resources to dedicate to seeing profit offer the same relative opportunities however to be somewhere in the middle, in my opinion, presents problems of adverse economies of scale.

References

Hassim, N (2009) E-commerce and SMEs – The Need for Caution [Online] (Accessed 16 August 2010).

Laudon & Traver (2010) E-Commerce: Business. Technology. Society. (6th Edition). Pearson Prentice Hall.

Wang, Tien-Chin & AU-Lin, Ying-Ling (2008) Accurately predicting the success of B2B e-commerce in small and medium enterprises [Online]. Available  at http://www.sciencedirect.com/science/article/B6V03-4RSYC6X-T/2/12c4f20e4786728694752aa98e11faea (Accessed 16 August 2010).