Few Minority Firms Use E-Commerce
Only about 13% of the nation’s largest minority-owned firms use the Internet to sell products and services, a fact that has the author of a new study and Commerce Department officials concerned that many business opportunities are being missed.
The report, to be released today by the Tomas Rivera Policy Institute, a Latino studies think tank based in Claremont, also showed that 42% to 56% of the nation’s largest minority-owned firms had Web sites. Similar nonminority firms are at about the same level, according to the report, described as the first to examine the e-savvy quotient of minority-owned firms.
Although 60% of minority business owners said they recognized the general benefits of e-commerce, only 10% to 13% of them conduct it, the report showed. The study’s author said he had expected to see more, considering these are among the top minority-owned firms.
“In general . . . the businesses are moving in the right direction,” said Waldo Lopez-Aqueres, director of economic research for the institute. “But they’re not doing as well as we were expecting, given the fact that these are the largest minority businesses in the country. I certainly would have liked to have seen a smaller gap between those with Web sites and those engaged in e-commerce.”
On average, the firms queried had about $3.5 million in annual sales and 22 to 34 full-time employees, which is small compared with the overall U.S. business community. But it’s large for minority-owned firms, which have, on average, receipts of about $195,000, according to the 1997 economic census released last week by the Census Bureau.
The 10%-to-13% e-commerce participation level was fairly typical for firms with fewer than 100 employees, regardless of ethnicity, said Richard Villares, vice president of Internet and e-commerce research for International Data Corp., a global research firm. He said that among those firms, “only 60% had Web sites, and less than 20%, closer to 10%, do real online e-commerce.”
Generally, said David Weisman of Forrester Research, “larger companies are much more likely to be doing e-commerce than smaller companies.” His figures showed that among the nation’s largest firms--those with more than $1 billion in revenue--75% on average were involved in e-commerce, with the actual level varying by sector.
In the Rivera study, based on more than 1,600 interviews conducted nationwide last summer, business owners gave a variety of reasons for not getting into e-commerce, with 10% to 17% citing a lack of proper software, 4% to 7% citing a lack of expertise and 5% to 9% expressing a concern about too much competition.
In addition, nearly a quarter of the business owners said their products or services do not lend themselves to e-commerce. The Census Bureau study showed that the services sector was among the top three business categories for minority firms. And in the Forrester survey, even among large firms, a lower proportion of service sector firms were involved in e-commerce.
Also, Lopez-Aqueres noted that minority business owners might find themselves staring at their customer base across the so-called digital divide because many of their customers remain unplugged.
“In our analysis, we found that the bigger the minority market that is served, the lower the probability of having a Web site and being engaged in e-commerce,” Lopez-Aqueres said. “Many of these businesses have not added Web sites because the market is limited, so the incentive is not there.”
