PRESS RELEASE

6th June 2001

Small Business Embracing Net Procurement

is4profit study shows 37 per cent of SMEs use Internet procurement.

But no penetration of the sector by electronic marketplaces

More than a third - 37 per cent - of Britain's small and medium-sized enterprises (up to 250 employees) is using the Internet to purchase goods or services, according to a study commissioned by internet-based small business information resource, is4profit.com

Most likely goods to be purchased online by SMEs are IT hardware and software, travel and insurance. However, the is4profit research shows that there is virtually no acceptance of electronic marketplaces or e-procurement sites by the SME sector.

"This surprisingly high penetration of Internet purchasing amongst smaller businesses masks a variety of usage patterns," comments Brian Jack, managing director of is4profit.com. "Many are using it to buy only hard-to-find items, others primarily for international purchasing."

"But our research also indicates that a significant number - 8 per cent - are enthusiastic adopters with 75-100 per cent of their business' procurement transacted online."

Those actively using the Internet were likely to purchase from 28 suppliers on average, according to is4profit.com. Companies have a greater bias towards e-procurement if they have a nominated purchasing executive. but although larger companies were more likely to buy online the single biggest category of users was businesses with 26-50 employees.

Security no barrier

To date, says Mr. Jack, SMEs' use of the Internet to aid procurement has not been driven by the need to deliver process efficiencies. A sizeable proportion use it to find new suppliers and then deal with them via a traditional business model. Use of the web to benchmark prices is also widespread

"A surprising feature of the research," adds Mr. Jack, "is that security concerns, often cited as an inhibitor of e-commerce growth, appear not to be a major worry for smaller businesses. Ease of use and the availability of technical product details were far more important factors than secure purchasing in the use of e-procurement.

"A much greater barrier was SME inertia. Thirty-two per cent of interviewees were not inclined to change their existing supplier at all, while a further 17 per cent had a policy of using only local suppliers, which they felt ruled out use of the Internet."

END

For further information contact:

Brian Jack
is4profit Ltd
10 Shieling House,
Invincible Road,
Farnborough,
Hampshire.
GU14 7QU

Telephone: 01252 37 66 50
Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

or

David Evans
GEA Public Relations Ltd
89 Great Eastern Street
London
EC2A 3HX

Telephone: 020 7729 0586
Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

NOTE TO EDITORS:

The is4profit.com research was conducted by independent market researchers Dynamic Markets Ltd under the supervision of Principal Consultant Dr Cherry Taylor.

Three hundred and fifty interviews were conducted with senior managers and directors of SMEs - businesses up to 250 employees - weighted to cover approximately equal proportions of companies of different sizes. The companies, randomly drawn from Dun & Bradstreet's business database, had an average turnover of £3.5 million.

is4profit is a new, independent, Internet-based business information and advisory service for the small and medium-sized enterprise sector.

The service aims to provide smaller businesses - from sole traders to 250 employee companies - with a virtual corporate infrastructure, a one-stop web resource encompassing such areas as expert, practical guidance on business planning legal and personnel issues, group purchasing facilities, cashflow protection and first steps in e-commerce as well as a comprehensive B2B business directory.

The company conducts continuing research to ensure its site content matches the sector's requirements and members are consulted through regular forums which are also attended by other representatives of the business community focused on helping SMEs. Amongst recent initiatives is the production of a downloadable, independent free guide to the practical demands on small businesses resulting from Stakeholder Pensions legislation.