Australian small and medium businesses (SMEs) are struggling to capitalise on the internet’s global nature and are still far more likely to make an online sale to a customer located just around the corner than to someone interstate or overseas.

According to the annual Sensis e-Business Report released today, the opportunity to reach international markets with e-commerce is failing to translate to overseas sales for Australian small businesses.

The report found most online sales by Australian small businesses were made to customers in the same city or town, and the likelihood of a sale diminished as the distance between a business and potential customers increased.

Eighty-seven per cent of SMEs with an online presence successfully sold goods and services to local customers, a figure unchanged from the previous year. Two thirds (66 per cent) of businesses selling online said the bulk of their online sales came from local customers, an increase of 6 per cent on the previous year.

Overseas customers were identified by just 5 per cent of SMEs as their main e-commerce customer group, a 2 per cent increase on the previous year, while 27 per cent of SMEs reported at least some sales to overseas customers, unchanged from the previous year.

Report author Christena Singh said the report clearly showed that Australian small business were still grappling with how to use the internet to target overseas customers.

“E-commerce offers SMEs the opportunity to reach a potentially global market, so it is interesting to note most sales made using e-commerce are still relatively close to home,” Ms Singh said.

“If small businesses want to make the most of the new world of mobile and internet-enabled customers they really need to think strategically and put in place a strong digital business plan.”

Although 62 per cent of SMEs have a website for their business, and 27 per cent use social media for business purposes, only 15 per cent have an actual digital business strategy, according to the report.

This is despite 55 per cent of SMEs reporting that they had recovered their initial investment in e-commerce, with a further 17 per cent saying they expect to recover their investment in the next year.

When asked what concerned them about e-commerce, Australian small businesses nominated internet security as the number one issue.
Some 46 per cent of online businesses identified security problems relating to hacking as their biggest worry, an increase of two percentage points from last year. 

More than one in four SMEs (27 per cent) said a lack of computer expertise and knowledge was a major burden, an increase of 5 per cent over the past year.

A lack of personal contact with customers; the cost and time to introduce new technologies and the cost of hardware and software were issues raised by at least one in five SMEs. The full report is available online at www.about.sensis.com.au.