Small Businesses’ Online Spending Soars

Online spending by small businesses in the United States has surged more than 1,000% since 1998 and is expected to grow to $118 billion by 2001, according to a study released Sunday.

In 1999, small businesses spent more than $25 billion on products and services via the Web, a significant increase from the $2 billion spent in 1998 and further igniting the already popular trend in business-to-business transactions that has taken the Internet by storm over the last several months.

“Clearly, the growth in the small-business market segment, which represents a significant critical mass, is driving the future of ‘B2SB’ e-commerce,” said Andy Bose, president and chief executive at AMI-Partners, a New York-based consulting firm that conducted the study.

The number of small companies that conducted business on the Web increased to 2.8 million in 1999 from 1.8 million in 1998, the study found.

Additionally, an estimated 600,000 small businesses said they were selling their products and services on the Web in 1999, up from 400,000 in 1998, while the value of transactions grew to $25 billion in 1999 from $14 billion in 1998.

Despite this growth, many small businesses remain skeptical when it comes to actually enhancing their own businesses by launching online operations to sell their own products.

“There is evidence of a ‘e-backlash’ among small businesses in launching secure e-commerce sites for selling their wares on the Web,” Bose said.

Concern over high costs, inadequate information technology support, and an overall perception that products and services are not well suited for Web-based sales are the key barriers preventing small businesses from going online, the study found.