SMEs and e-commerce portals

SMEs and e-commerce portals

By Beni Sindhunata

JAKARTA (JP): More foreign companies that have allied
themselves with local firms in the service industry are setting
up e-commerce portals.

At last count, there were 24 trade sites, ranging from those
established by private ventures such as www.meetdagang2000.com
and www.globalsources.com to the U.S. Trade Office's
www.buyusa.com, whose targeted market is small and medium
enterprises (SMEs).

The focus of the targeted market of the sites vary, from SMEs
to exporting companies, to specialists in certain products or
sectors that offer a range of services and incentives at various
fees.

This is of course a positive trend, and benefits both the
portal owners and the business circle, especially SMEs whose
access to foreign markets is usually limited.

This is a fact, not a "virtual" benefit, though of course the
practice has its limitations and is still going through
adjustment here and there. Certainly it would be unfair to
compare SMEs with large national companies or subsidiaries of
conglomerates that have a long record in the global market.

The result of a survey titled Prospects of Small and Medium
Enterprises in Indonesia, which was carried out between February
and April 2001 on the potentials of SMEs, reflects the optimism
in current trends.

Conducted by the Business Intelligence Report (Biro) in
cooperation with Indosatcom, the survey involved 421 companies
across Indonesia.

The survey covered aspects such as the companies' finance,
products, export, human resources and IT application as well as
basic e-commerce.

A total of 127 of the SMEs (30 percent) had launched and made
use of websites, mainly to promote their products. Out of that
figure, as many as 105 have their own websites while the other 22
are members of e-commerce portals.

Out of the 127 companies, 87 are located in Greater Jakarta
while the remaining 40 are located in Yogyakarta, Central Java,
West Java, and East Java.

As many as 253 companies, or 60 percent of the total
respondents, have access and have made use of the Internet; this
group consisted of 165 companies in Greater Jakarta and 88 in
other regions. What is interesting is that all of the respondents
stated a readiness to conduct online transactions.

Of the 421 surveyed, 208 (49 percent) companies are located in
Greater Jakarta while the remaining 213 companies (51 percent)
are located in other regions, such as Yogyakarta, West Java,
Central Java and East Java.

The readiness of SMEs, especially those in the outer regions,
to make use of the Internet for promotional and marketing
activities is indeed important for their entrance into global
trade.

This is because the Internet can prove to be the most
effective, unlimited means of promotion and communication.

Today is indeed the right time for companies to develop online
business promotion and marketing in order to net buyers and
prepare themselves for the international free market.

Certainly there is no longer any need to debate the importance
of the international export market for, especially SMEs, the
remaining question would be how to partake and equip oneself with
the right weapons, and IT technology is one of those weapons.

The majority (409 companies or 97 percent) are already
exporting while the remaining 12 companies have yet to export
their products but have started preparations to do so. From the
group of exporting companies, as many as 320 have done so on
their own, while the remaining 89 export their products through
trading companies.

As many as 99 exporting SMEs surveyed were actually newcomers
as they were established between 1997 and 2001 -- this is despite
the fact that many subsidiaries of large conglomerates collapsed
over the same three-year period.

As many as 58 percent of the total companies surveyed (or 244
companies) had an export trade ratio exceeding 40 percent while
28 percent (118 companies) had an export ratio exceeding 86
percent.

The aforementioned results show that IT service companies
should now turn toward SMEs as one of their potential markets.
They should offer SMEs various products and services of
effective, down-to-earth technology management.

They should not consider SMEs small-fry just because they do
not have large capitals at their disposal; rather, IT service
companies should consider SMEs as potential partners and
consumers that should be developed.

Because when those small companies grow and expand, IT
companies will then also enjoy bigger, long-term benefits. SMEs
are the superior "seeds" of business in the future.

Certainly, IT companies should offer applicable programs that
are most suitable to their basic needs, such as ones that help
them access the marketing world or ones on financial management.

Unfortunately, one of the lessons that has often gone
unlearned is the inability of e-commerce portals to offer
integrated business solutions and bring them to fruition.

A website should not be merely a promotional space, but also a
tool to achieve regular business transactions such as a payment
system, delivery and quality control as well as to seek out
potential buyers. The online programs offered should not only
create business transactions, but also finish the process in a
real and integrated way.

The attractive potential business that is SMEs is certainly a
cause for competition among portal managers -- they basically
have to fight one another for a portion in the same market and
for customers.

This is why some companies make use of more than one website
for market access -- a practice that reflects democracy in
marketing where everyone is free to enter or exit in accordance
to the rules.

So, how to determine which trade website has the most
prospects and can yield real profits for SMEs? The answer is:
those that are the most serious in keeping their commitment and
give real solutions to normal business transactions. Such IT
services companies will win and prove to be a favorite among
their customers, which is the business circle of the SMEs.

Getting new members and the highest hits on a website,
however, is not a guarantee for continued survival for portal
managers as business institutions.

A number of giants among international e-commerce portals are
at the moment facing uncertainty, as they have had to jump from
one investor to another.

Despite the optimism accompanying descriptions about SMEs, it
is important to note that this group of business ventures is not
the most superior.

In a number of regions, many SMEs have collapsed or are in
financial difficulties, just as their bigger counterparts are.

The fate of 170,000 SMEs with bad debts below Rp 5 billion --
and who have been put under the management of the Indonesian Bank
Restructuring Agency -- should serve as a lesson for potential
SMEs so that they are better able to withstand either
conventional or universal business obstacles.

The writer is the research director of Business Intelligence
Report (Biro) (www.biro2000.com).