Digital Agenda for Europe
A Europe 2020 Initiative

How to encourage eCommerce for SMEs

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The Digital Agenda for Europe sets a target of 33% of EU online purchases/sales for small and medium enterprises by 2015. Today, we are at the level of 18% for online purchases and 12% for online sales of SME's. What are the key issues that, in your opinion, should be tackled and what are the leverages that could be used to reach the target?

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Hi Annalisa, We see that it are skills/capabilities gaps that prohibit SMEs fully leverage the Internet for sales in relation to large organizations who next to the resourcing aspects also have a economy-of-scale-advantage, resulting in -probably- competitive pricings.
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The most challenging part is the transition of the old value chain from Manufacturer>Distributor>Consumer with many countries, regions and cities being locked down in a framework which protected the distributor with competitive advantage due to rights. While brick and mortar SMEs hold those rights in many cases today, manufacturers are moving more towards offering their own wares themselves, or opening up to other Internet Entrepreneurs who understand eCommerce much better than the 'old school' retailer with a shop on the high street. The key is educating the brick and mortar crowd on eCommerce and being competitive not only on the high street but also online. There are far too many "mom and pop" and smaller retail operations closing down in the cities across Europe due to advent of the Internet and large transnational chains coming in. Inner cities are becoming ghost towns in many cases, losing charm and turning business owners into service employees for retail chains. My two cents. Stem the tide. Educate. Richard.
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The key issues for SMEs is that it is very hard for them to understand the benefit of going online compared to the huge effort required. Logistics appear as unbearable and immediataly they start thinking about how many more people they will have to hire to be able to handle it and difficulties and related costs for promotion, payments, etc. To SMEs, especially the ones still coming from the old economy and with seniors in the family running the business the perceived costs are way higher than the perceived benefits.
Solution is probably on the one hand the creation of platforms that can be used by SMEs and on the other hand some awareness and education about the benefits of global markets (how many would suffer less in this crisis?) and the opportunities of the digital economy.

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Fully agree with the comments above.

We have found here in Connemara where:
1) the biggest business employs just 30 people
2) the economy is VERY seasonal
3) The local market is core for 37 weeks a year
4) Business skills are poor and becoming worse as new techniques are adopted outside the region

We have found that geographic areas, business communities or sectiors who are unprepared or ill prepared to adopt ecommerce and Internet tools suffer invisibly (they dont recognise in their business responses ecommerce is eroding their markets).
It is inaction, "business as comfortable", lack of business skills, inability to access funding that causes the disadvantage more than lack of economies of scale.

Here we have found that:
A) Most businesses ONLY seek to service local markets
B) Cross border = Sales to tourists who physically visit (There is a 1.2 million person diaspora available as a market)
C) 43 out of 1800 businesses have an ecommerve presence
D) One of those makes 50% of their revenue online
E) Local ecommerce "platform" suppliers are ripping businesses off and delivering abysmal quality.
F) People are shopping online to the tune of an average of €860 a year. Net loss (with 5 x cycle multiplier is calculated at €18 million a year to the economy here
G) 75% of that ecommerce is with non Irish firms (Cross border in Ireland cost the Irish economy €2.6 billion and €600 million in VAT a year ) .

So there is a lot of opportuity BUT a lack of ambition or willingness to engage in the activities needed to realise them. Consequently we are slipping further behind. In effect creating our own digital divide.

National competitivness is built on local excellence. The digital economy is really showing up gaps in that excellence here in Ireland

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The first step in this process is to identify the company’s attitude to growth. Next, the SME should establish a suitable generic strategy and decide on a set of objectives that support it. Finally, it should identify a set of relevant CSFs. Further research currently being undertaken as part of a follow-up study will be used to validate this approach.
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