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The proof is in the pudding: Boston Consulting Group finds “high-web” SMEs are reaping the benefits of the internet

A surprising number of small and medium-sized companies across the world's top 20 economies have failed to embrace the opportunities of the internet, but "high-web" firms are reaping the benefits, a report by Boston Consulting Group has found.

BCG conducted an 18-month study of workers at more than 15,000 companies that operate in the world's biggest economies and employ fewer than 250 people (500 in the US).

Its report divides the companies into four categories: high-web, medium-web, low-web and no-web.

The consulting group says across 11 of the G-20 countries, high-web SMEs have experienced revenue growth that was up to 22% higher than that achieved by SMEs with low or no use of the web over the last three years.

"In many developed and developing markets, high-web companies are twice as likely as their low- or no-web counterparts to have a national and international customer base, as opposed to selling only locally," BCG says.

The study also finds that high- and medium-web SMEs generate more jobs.

"In Germany, 93% of high-web and 82% of medium-web companies increased employment over the past three years, compared with only 50% of the no-web firms," it says.

Japan experienced similar results, the report says, and in the UK, high-web firms recorded growth that was six times as fast as those with no web presence.

High-web companies use a wide range of internet tools to market, sell and support customers, interact with suppliers and empower employees.

By contrast, medium-web businesses market or sell goods or services online, low-web businesses have a website or social networking site, and no-web businesses don't have a website.

The 57-page report, titled "The $4.2 Trillion Opportunity: The Internet Economy in the G20", says the G-20 internet economy is being fuelled by more users and faster, more ubiquitous access, and will reach $4.2 trillion by 2016.

"If it were a national economy, the internet economy would rank in the world's top five, behind only the US, China, Japan and India, and ahead of Germany."

"It has reached a scale and level of impact that no business, industry or government can ignore."

"And like any technological phenomenon with its scale and speed, it presents a myriad of opportunities, which consumers have been quick and enthusiastic to grasp."

By contrast, the report says that businesses across the G-20 have been more wary, with a "surprising number" of SMEs not embracing it as an "important vehicle for revenue growth and job creation".

"Businesses, particularly SMEs – the growth engine of most economies – have been uneven in their uptake, but they are moving online in increasing numbers and with an increasingly intense commitment."

The study finds that with the internet currently accounting for 4.1% of GDP in the G-20 countries, Australia's number of 3.3% is slightly under the market average, valuing the local internet economy at $44 billion.

The internet economy is expected to reach 3.7% of GPD, or $67 billion, by 2016.

In 2010, online retail in Australia was estimated at 5.8% of total retail, but this will rise to 8.9% by 2016 - above the developed market average.

And by 2016, online is tipped to account for 34% of advertising - the highest single medium, and almost double its 2010 percentage of 18.4%.

According to the report, there are five "value levers" that explain the advantage for high-web SMEs:

  • Geographic expansion.
  • Enhanced marketing.
  • Improved customer interactions.
  • Leveraging the cloud.
  • Easier and quicker staff recruitment.

By contrast, the barriers stopping SMEs are:

  • Poor access to technology.
  • Lack of capability.
  • Lack of resources.
  • Doubt over the potential returns.
  • Unfavourable business environment.
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