When the concept of Internet and later the idea of ecommerce was introduced most companies and market experts believed that these technologies were only meant for the big companies already established with thousands of customers around the world. Several threats and controversies were associated with ecommerce as well that stopped most of the medium scale or small scale businesses to jeopardize their privacy and their finances and stayed away from Internet enabled technologies.
However in the past 10-15 years the trends in adoption of Internet and ecommerce have changed significantly. Today most small businesses prefer utilizing the internet based technologies and tools for their business operations such as their sales, marketing and even human resource hiring. Internet has revolutionized several aspects of these traditional business operations and enhanced them in many ways.
This paper discusses the impacts of Internet and ecommerce on the small scale business and their operations such as their marketing/promotion, sales and HR hiring processes. The application of these technologies and their successful invasion can be exemplified by real world companies already engaged in adopting and experimenting with these revolution technologies, the paper intends to provide an overview of the changes that have embraced small business industry in last decade due to the Internet and Ecommerce and how it stands apart from the traditional small businesses.
Traditional Small Scale Business
Small scale businesses are generally considered as businesses operated within a small office or home with 20 or less employees. The smalls scale business usually have small budget and target a specific demographic as their customer base. The main aim for a small scale business is not much different from any other business that generating sales and increasing customers however small scale businesses spend less amount on promotion, marketing and PR activities, traditionally these businesses followed very limited strategies for marketing and promotion such as brochures, pamphlets and by word of mouth. Opening fancy outlets or branches of business is mostly a farsighted strategy for these businesses in traditional sense. Therefore it can be analyzed that these businesses are characterized by limited budget, limited space outlets & offices and limited customers. The types of small scale businesses are diverse from privately owned restaurants and stores to engineering firms, healthcare clinics, as small as dry cleaners or laundry shops.
According to the statistics of US Census Bureau report small scale businesses cover a big area in US economy, these companies collectively act as providers of 43% high tech jobs, 98% of exports and have 43% of payroll in private sector. Until 2010, there were 27.9 million small scale businesses in USA, out of which 52% are home based ,2% are franchise, 20% are coporations,21.5% are employers, 73% sole proprietorship businesses and 78% are non employers or one man company with no additional employees. Considering these statistics it is understand that these companies have a major impact on the national economy and constitute a big number in the private business sector, thus a change in the industry is bound to reflect on the economy and the market trends.
Impact of Internet On Small Scale Industry
While a very minimal number of small scale businesses utilized Internet and its related technologies fore their business operations until 1990, a huge number of these companies are now turning towards incorporating Internet as their chief ingredient of success. The reason is simple, the success stories all around the world have made these limited scale companies to adopt and leverage the advantages made possible by the Internet technologies.
Though initially most companies used Internet for browsing to research, communication with email and chat, in the recent years Internet has significantly altered and enhanced various business operations. Following are some of those areas of business operations that have revolutionized due to Internet especially for small businesses.
Human Resource Hiring Process
A decade back not many people would have believed that HR processes could be changed with the impact of Internet, however the advent of social media networking and groups that has happened. In a recent article in Forbes the author Meister(2013) suggests that the year 2012 can be regarded as the Social HR era, as several companies are now turning toward social media to recruit, develop and engage employees and consultants. Websites like LinkedIn have played a major role in presenting skilled professionals along with their detailed CVs to the HR managers of different companies to select and coordinate directly without engaging into lengthy processes. For small scale businesses this is a highly useful trend as these companies usually stay away from publishing their job vacancies through popular media and thus have a small pool for resources, publishing jobs through social media and short listing through these websites allow them bigger and better pool of HR resources and costs very less as compared to the traditional means. The HR managers can easily do a background check through these public profiles and hire what they feel best for their company while investing less time and money.
Marketing & Promotion
Marketing and promotion are the among the core operations for a business that wants to excel and grow. However small scale businesses have a limited budget and resources to market or promote their products or services. As most of these companies are now turning towards the online presence, thus Internet has helped several companies to market through the effective medium of internet without investing a huge budget into the activity.
Internet based marketing has several different flavors. Banner ads & exchange, affiliate marketing and newsletter circulation all are different aspects of e marketing. The key to successful marketing strategy lies with the marketing manager and their ability to identify how to reach the potential customers. Internet has enabled these various ways of marketing and promotion that do not involve huge costs but have proven to return profits. One more aspect of e marketing is with the social media networks where small scale companies market themselves through personalized pages and with their fans liking or being linked to the page to get latest updates. Blogs and podcasts are also a new way for businesses to communicate and promote their company’s services and products that is used by various small scale businesses and is among the top trends of online marketing strategies worldwide. The best part of these marketing strategies lies with the fact that the company can reach a much bigger pool of potential customers as compared to any other strategy. Strategic networking along with other tools like that can have huge advantages. The figure below shows the stats os small scale businesses that have strategic social networking for their operations and have found it useful.
The stats shows that marketing and promotion are the most commonly focused business operations that utilize the social media and Internet. Additionally, several small scale businesses have utilized the info and demographics of their customers, collected through their websites, to interact with the customers on one to one basis for announcing sales and discounts as well as inform regarding new promotions etc. The one to one basic interaction creates a more trusted relation between the customer and company that is unachievable for a business in traditional sense.
Sales/Retail & Ecommerce
Probably the most talked about aspect of Internet based technologies is the ecommerce or e-business services. For small scale businesses it is highly important yet expensive to establish and maintain a fancy outlet that attracts its customers and retain them through quality experience. Internet has revolutionized this business operations area through the concept of e-commerce solutions. Ecommerce solutions or websites allow businesses to setup their virtual stores where they could portray the image they want to promote about the business and present their inventory in a more appropriate form as compared to their real outlets. While real outlets need lot of chores related to inventory management and stock operations, a virtual store keeps tracks of the stock and inventory automatically informing the owner what, when and how much may be needed.
More importantly, though some time back maintaining and setting up an ecommerce website was an expensive investment but in recent times several ready made solutions have allowed the companies to set up their virtual stores in no time and at a cost minimal as compared to their real stores or outlets.
One more interesting advantage for small scale businesses is the affordability and competence offered by ecommerce solutions. New small scale businesses have to compete against a huge lot of competitors, by keeping the e-retailing structure only allows business to keep more competitive prices as several other cost factors are not applicable for virtual stores. This difference allows them to keep their process low as compared to what others are offering and can attract more customers.
However to achieve to establish and maintain a virtual store the management of the company need to understand and take certain steps to ensure smooth running and to ensure long-term success for the company.
The customers of the e-stores are much more aware and informed regarding product characteristics, pricing and varieties as compared to traditional products, some ecommerce stores often provide region based dynamic pricing and product varieties to target specific customers. This aspect requires a detailed research and analysis on part of the sales staff to understand the needs and trends of the different markets they focus and to present their inventory accordingly.
Another important aspect of ecommerce is its ubiquity or the availability anytime anywhere. This aspect lowers several costs on part of the supplier as well as for the customers. While a customer might not mind paying a little extra amount in return of saving time and energy to travel to market, a supplier also saves a lot of money from its supply chain process as they do not have to distribute the inventory nor they have to worry about the placement issues. From the customer point of view ubiquity also allows them to purchase a product belonging to some specific region only from the comfort of their homes, it is one of the most appreciated aspects of internet based shopping.
The current era of ecommerce solutions provide several interactive tools to view and render the product before purchasing. The interactive images along with reviews help customers ensure that they have chosen the right product.
Virtual retailing also allows instant and round the clock customer services to interact and communicate with the customers, in comparison to traditional business where a lot of staff is needed along with investment for setting up call center, round the clock customer support and service with virtual stores needs no additional setup or investment.
In addition to the unlimited options for presenting the inventory and the virtual store and personalization for customers and visitors, ecommerce also brings some invaluable reporting and analysis features for small businesses. It is well understood that small businesses have few staff members and often are run by a single person too, in such scenarios it is difficult for the business owner to keep track of sales and finances very closely while connecting and understanding their customers. Most of the ecommerce solutions have reporting mechanisms that provide in depth reporting regarding customers, visitors, sales, demographics, stocks and inventory that facilitate the business owners about the purchasing trends, potential customer profiling and stock related details. These analytical reports assist the owners in making their virtual stores more targeted towards their audience. This also allows the businesses to be more competitive and diverse in terms of pricing and product range and varieties.
The stats and facts as discussed above suggest to the fact that small scale businesses can leverage more advantages through the use of internet as compared to other larger companies. The Internet and its related technologies such as social media and ecommerce all have positive impacts for small business operations as it allows the business to outgrow the traditional obstacles of a small scale business such as limited budget, less staff, small space and limited visibility. Internet provides the right opportunities however the businesses have to utilize these technologies strategically in order to make them work in favor of their business. According to stats, the rate of ecommerce adoption among small business is rising at a persistent rate, while the share of online business in total retail spending in US was 4.6% in 2004 it grew to almost 9% in 2011.
The projected growth rate of ecommerce for small scale businesses is also promising and guarantees better advantages and prosperity for businesses.
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