The Impact of the Internet on SME Businesses

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The Impact of the Internet on SME Businesses

  1. 1. DO YOUKNOW The Impact of the Internet on SME BusinessesThat Every Business Owner, Manager & Stakeholder In Australia Should Know About © Businesses In HyperGrowth Pty Ltd. All rights reserved.
  2. 2. Contents1. World-Wide Alert: Global Trends for Small- and Medium- Sized Businesses2. The Threats and Opportunities for Small- and Medium- Sized Businesses in Australia3. Strategies for Australian Businesses to Seize the Opportunities
  3. 3. 1. World-Wide Alert: Global Trends for Small- and Medium- Sized Businesses
  4. 4. Dont blink. The future is rushing straight at us.
  5. 5. A comparison between the dawn of the Internetwith the development and commercialisation ofelectric power is appropriate.(Nicholas Carr, The big switch: Rewiring the world,from Edison to Google, New York: W.W. Norton & Company, 2009)
  6. 6. There are 2 billion Internet users worldwide(Source: McKinsey Global Institute (MGI), Internet matters: The Nets sweeping impact on growth,jobs and prosperity, May 2011) 800 million of them are active Facebook users (Source: http://www.facebook.com/press/info.php?statistics, November 2012)
  7. 7. If Facebook and Twitter were countriesThey d rank 3 rd and 6th in the world s most populous.
  8. 8. By 2016, there will be 3 billion Internetusers globally almost half of the worldspopulation.(Source: Boston Consulting Group, The Internet Economy in the G-20: The $4.2 Trillion GrowthOpportunity, March 2012. Note that the G-20 is the Group of 20 major economies which comprisesArgentina, Australia, Brazil, Canada, Chine, the EU, France, Germany, India, Indonesia, Italy, Japan,Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the U.K., and the U.S.A.)
  9. 9. The Internet accounts for 3.4% of GDP in the13 countries that McKinsey Global Institute(MGI) looked at, and 21% of GDP growth in the last 5 years in mature countries.(Source: McKinsey Global Institute (MGI), Internet matters: The Nets sweeping impact on growth,jobs and prosperity, May 2011)
  10. 10. and there are 2.6 jobs created for 1 job lost(Source: McKinsey Global Institute (MGI), Internet matters: The Nets sweeping impact on growth, jobs and prosperity, May 2011)
  11. 11. 75% of Internet impact interms of economic valuearises from companiesoperating in traditionalindustries (ie. not those thatexist only because of theInternet, such as puree-commerce companies). (Source: McKinsey Global Institute (MGI),Internet matters: The Nets sweeping impact on growth, jobs and prosperity, May 2011)
  12. 12. Small and medium businesses heavily usingWeb technologies grow twice as much as othersMGI found that the SMEswith a strong web presencegrew more than twice asquickly as those that hadminimal or no web presence.In addition, the SMEs thattook advantage of theInternet reported the share oftotal revenues they earnedfrom exports was more thantwice as large as thatreported by others.They also created twice thenumber of jobs as others. (Source: McKinsey Global Institute (MGI), Internet matters: The Nets sweeping impact on growth, jobs and prosperity, May 2011)
  13. 13. The Internet Creates JobsA detailed analysis of France over the past 15 years shows thatthe Internet created 1.2million jobs and destroyed 500,000 jobscreating a net 700,000 jobs or 2.4 (new) jobs for every onedestroyed. This result is reflected in our survey of more than4,800 SMEs in the countries we studied which shows that 2.6jobs were created for every one destroyed, confirming theInternets capacity for creating jobs across all sectors. Further,companies that have fully integrated the technology and use itextensively create more than twice as many jobs as theaverage, while the Internet has a neutral to slightly negativeeffect on companies using it sparingly or not at all.(Source: McKinsey Global Institute (MGI), Internet matters: The Nets sweeping impact on growth, jobs andprosperity, May 2011)
  14. 14. The Internet is Evolving at a Dramatic Rate Which is Also Accelerating Note: Further analysis this Exhibit is in the following pages.Source: Boston Consulting Group, The Internet Economy in the G-20 The $4.2 Trillion Growth Opportunity, March 2012
  15. 15. The Internet is Evolving at a Dramatic Rate Which is Also Accelerating The take-away: The number of Internet users in Developed markets will grow by over 32% from 2005 to 2015. The number of Internet users in Developing markets will grow by over 484% from 2005 to 2015.Source: Boston Consulting Group, The Internet Economy in the G-20 The $4.2 Trillion Growth Opportunity, March 2012
  16. 16. The Internet is Evolving at a Dramatic Rate Which is Also Accelerating The take-away: The number of fixed broadband users will grow by over 243% from 2005 to 2015. The number of mobile broadband users will grow from a very small number in 2005 to 2,134,000,000 in 2015, the percentage growth of which will be a very large number at least 2,134,000,000%.Source: Boston Consulting Group, The Internet Economy in the G-20 The $4.2 Trillion Growth Opportunity, March 2012
  17. 17. The Internet is Evolving at a Dramatic Rate Which is Also Accelerating The take-away: The amount of data transferred Around the Internet will grow 3,120% from 30 exabytes (that s 30,000,000,000 gigabytes) to 966 exabytes from 2005 to 2015.Source: Boston Consulting Group, The Internet Economy in the G-20 The $4.2 Trillion Growth Opportunity, March 2012
  18. 18. In the Developing World, Many Businesses are Going "Straight to Social (Media)" In the 1990s and early 2000s, most business use of the Internet (other than email) was around individual websites that provided company, product and service information, etc., much of which was static other than the eCommerce systems that many set up to manage online sales. Many Australian businesses established their websites during this period. In the late 1990s Web version 2.0 came into being. A Web 2.0 site may allow users to interact and collaborate with each other in a social media dialogue as creators of user-generated content in a virtual community, in contrast to websites where people are limited to the passive viewing of content. Examples of Web 2.0 include social networking sites, blogs, wikis, video sharing sites, hosted services, web applications, mashups and folksonomies. Businesses that go straight to social (media) are those that went straight to Web 2.0 with an emphasis on social media (ie. Facebook, Twitter, MySpace, etc.), effectively bypassing the traditional approach that started in the 1990 s.Source: Boston Consulting Group, The Internet Economy in the G-20 The $4.2 Trillion Growth Opportunity, March 2012
  19. 19. In the Developing World, Many Businesses are Going "Straight to Social (Media)"Source: Boston Consulting Group, The Internet Economy in the G-20 The $4.2 Trillion Growth Opportunity, March 2012
  20. 20. The Internet s Contribution To GDP is Significant & Growing ($trillions) Australia s Internet economy in 2010 was valued at $1.2trillion, representing 3.3% of GDP.Source: Boston Consulting Group, The Internet Economy in the G-20 The $4.2 Trillion Growth Opportunity, March 2012
  21. 21. The Internet s Projected Contribution To GDP For 2016 ($billions) Australia s Internet economy in 2016 is projected to be worth $1.7trillion, representing 3.7% of GDP.Source: Boston Consulting Group, The Internet Economy in the G-20 The $4.2 Trillion Growth Opportunity, March 2012
  22. 22. Projections For Online Retail By 2016 (% of Total Retail Purchases) Australia s online retail sales are projected to be 8.9% of total retail sales by 2016 the 3rd highest of the G-20 group.Source: Boston Consulting Group, The Internet Economy in the G-20 The $4.2 Trillion Growth Opportunity, March 2012
  23. 23. The ROPO AffectProducts and servicesresearched online andpurchased offline (ROPO)represented 7.8% ofconsumer spending in 2010. ROPO is a bigger factor in developed economies.Mobile shopping using a smartphoneto identify deals, compare products andprices and "seal the deal" while on thego is growing in popularity worldwide.Source: Boston Consulting Group, The Internet Economy inthe G-20 The $4.2 Trillion Growth Opportunity, March 2012
  24. 24. ROPO Greatly Amplifies the Internet s Impact on Retail ($billions) Australia s online retail expenditure was $20billion in 2010, but another $38billion was spent on research-online, purchase-offline purchases.Source: Boston Consulting Group, The Internet Economy in the G-20 The $4.2 Trillion Growth Opportunity, March 2012
  25. 25. ROPO Greatly Amplifies theInternets Impact on RetailRetailers of all stripes face anespecially fast-changing andincreasingly competitive environmentin the years ahead.With the rapid growth of eCommerceand its potential to disrupt both thetop and bottom lines, retail may beripe for a transformation similar to theone seen in media. A multichannel offering that captures sales wherever they occur will become a "must have" for most businesses.Source: Boston Consulting Group, The Internet Economy inthe G-20 The $4.2 Trillion Growth Opportunity, March 2012
  26. 26. Smartphones are Changingthe Business LandscapeSmartphones have become an indispensablepart of our daily lives. Smartphone penetrationhas risen to 52% of the population and thesesmartphone owners are becoming increasinglyreliant on their devices. 58% access the Internetevery day on their smartphone and most neverleave home without it. Implication: Businesses that make mobile a central part of their strategy will benefit from the opportunity to engage the new constantly connected consumer. Source: Google, Our Mobile Planet: Australia Understanding the Mobile Consumer , May 2012
  27. 27. Smartphones areChanging the BusinessLandscapeSmartphones have transformedconsumer behaviour. Mobile search,video, app usage and socialnetworking are prolific. Smartphone usersare multi-tasking their media with 80%using their phone while doing other thingssuch as watching TV (48%).Implication: Extending advertisingstrategies to include mobile anddeveloping integrated cross-mediacampaigns can more effectively reachtoday s consumers.Source: Google, Our Mobile Planet: AustraliaUnderstanding the Mobile Consumer , May 2012
  28. 28. Smartphones are Changing the Business LandscapeSmartphones help users navigate the world. Appearing on smartphones is critical for localbusinesses. 86% of smartphone users look for local information on their phone and 88% takeaction a result, such as making a purchase or contacting the business.Implication: Ensuring that clickable phone numbers appear in local results and leveraginglocation-based services on mobile make it easy for consumers to connect directly withbusinesses. Source: Google, Our Mobile Planet: Australia Understanding the Mobile Consumer , May 2012
  29. 29. Smartphones are Changing the Business Landscape Smartphones have changed the way that consumers shop. Smartphones are critical shopping tools with 94% having researched a product or service on their device. Smartphone research influences buyer decisions and purchases across channels. 28% of smartphone users have made a purchase on their phone. Implication: Having a mobile optimised site is critical and a cross- channel strategy is needed to engage consumers across the multiple paths to purchase.Source: Google, Our Mobile Planet: AustraliaUnderstanding the Mobile Consumer , May 2012
  30. 30. Smartphones are Changing the Business LandscapeSmartphones help advertisers connect with consumers. Mobile ads are noticed by 87%of smartphone users. Smartphones are also a critical component of traditional advertising as63% have performed a search on their smartphone after seeing an offline ad.Implication: Making mobile ads a part of an integrated marketing strategy can drive greaterconsumer engagement. Source: Google, Our Mobile Planet: Australia Understanding the Mobile Consumer , May 2012
  31. 31. Online advertising, a $65billionbusiness in the G-20 in 2010, isforecast to grow 12 percent a year toalmost $125billion in 2016.In countries with more developedInternet economies (such as Australia),15 to 30 percent of advertisingspending has migrated online.Online spending inthe U.K. overtookspending ontelevisionadvertising in 2011 and it nowexceedsspending on allother media Source: Boston Consulting Group, Thecategories. Internet Economy in the G-20 The $4.2 Trillion Growth Opportunity, March 2012
  32. 32. The Internet is having a big impact on how enterprises do business and interact with one another, too. Cloud-based data storage, integrated procurements systems, and "enterprise social networks (such as Yammer)" that facilitate communication within and amongst organisations in real time are helping companies address a host of procurement, coordination, communication, and fragmentation issues.Source: Boston Consulting Group, The Internet Economy in the G-20 The $4.2 Trillion Growth Opportunity, March 2012
  33. 33. The Youngest and Oldest Consumers Tend to Value the Internet the MostSource: Boston Consulting Group, The Internet Economy in the G-20 The $4.2 Trillion Growth Opportunity, March 2012
  34. 34. Five Value LeversWeve identified five value levers that explain theInternet advantage of High-Web SMEs (companiesthat use a wide range of Internet tools to market, sell,and support customers, interact with suppliers, andempower employees): Geographic Expansion. Enhanced Marketing. Improved Customer Interactions. Leveraging the Cloud. Easier and Quicker Staff Recruitment.[Note: High-Web businesses use a wide range of Internet tools to market, sell, and support customers, interact with suppliers, and empower employees. Medium-Web businesses market or sell goods or services online. (Source: McKinsey Global Institute (MGI), Low-Web businesses have a website or social networking site. Internet matters: The Nets sweeping impact on growth, jobs and prosperity, May No-Web businesses do not have a website.] 2011)
  35. 35. Five Value Levers Geographic Expansion. The Internet creates a borderless world for many SMEs, enabling them to compete with much larger, multinational companies by accessing markets that were previously out of reach. Enhanced Marketing. Online marketing delivers expanded reach and measurable returns. It also yields valuable data about consumers and their preferences, enabling expressly targetted advertising and offers. Improved Customer Interactions. Social media makes it possible for companies to engage in a real-time dialog with customers not only to boost sales but also to build loyalty and even to help create, refine, and enhance products and services. Leveraging the Cloud. SMEs can access sophisticated, often cloud-based, tools to enhance a wide range of functions, including customer relationship management, information management, and customer payments. As a result, these companies can grow quickly without requiring large investments in infrastructure. Easier and Quicker Staff Recruitment. The recruiting options available today are more powerful and less expensive that ever before, and they enable SMEs to tap a global talent market.Source: Boston Consulting Group, The Internet Economy in the G-20 The $4.2 Trillion Growth Opportunity, March 2012
  36. 36. (High-Web) SMEs That Make Extensive Use of the Web Grow Faster These figures represent the variation in sales growth between High-Web businesses and their Low- & No-Web competitors.Source: Boston Consulting Group, The Internet Economy in the G-20 The $4.2 Trillion Growth Opportunity, March 2012
  37. 37. The Internet will change even more in the next five years than it has in its first twenty- five. It will have more users, more mobile users, more users using various devices throughout the day, and many more people engaged in an increasingly participatory medium.Source: Boston Consulting Group, The Internet Economy in the G-20 The $4.2 Trillion Growth Opportunity, March 2012
  38. 38. Businesses in particular need to make a choice. They can rise to the challenge of a new Internet-driven marketplace and benefit from the expanded capabilities and higher growth rates that the High- Web SMEs are already achieving throughout the G- 20 nations. The alternative is following in the footsteps of such industries as music and publishing, which held on to outdated business models for too long and are now dealing with competitive environments that have been reshaped around them.Source: Boston Consulting Group, The Internet Economy in the G-20 The $4.2 Trillion Growth Opportunity, March 2012
  39. 39. For those willing to think big, embrace change, move quickly, and organise differently, there are countless opportunities to reap the rewards of the Internets creative destruction in industries ranging from health care to retail and consumer goods.Source: Boston Consulting Group, The Internet Economy in the G-20 The $4.2 Trillion Growth Opportunity, March 2012
  40. 40. In Summary By 2016 approximately half of the world s population will be using the Internet. The percentage contribution of Internet-based commerce might still be low, but 21% of GDP growth in mature (developed) countries in the past five years has been Internet based. Small- and medium-sized businesses heavily using Web technologies grow twice as much as others. Social media/networking and mobile devices are key drivers of Internet-based business growth. The research-online, purchase-offline sales, when added to online sales represented almost 12% of total retail sales in Australia in 2010. The Internet is becoming such a powerful advertising medium that it is overtaking television in terms of expenditure. Don t blink the future is rushing straight at us.
  41. 41. 2. The Threats and Opportunities for Small- and Medium-Sized Businesses in Australia
  42. 42. Australia s Internet Economy: Set To Grow by $20billion by 2016Source: Boston Consulting Group, The Internet Economy in the G-20 The $4.2 Trillion Growth Opportunity, March 2012
  43. 43. The Internet s Impact on Commerce in Australia: Growth Projections for 2016 Key take-away: Australia s online retail sales will be 8.9% of total retail sales by 2016.Source: Boston Consulting Group, The Internet Economy in the G-20 The $4.2 Trillion Growth Opportunity, March 2012
  44. 44. 96 percent of SMEs report that they were online and use theInternet in the following ways (and the percentage that do so): To communicate via email 96% To look for information about products and services 91% Internet banking 91% To look for suppliers of products or services 88% To get reference information or research data 86% To access directories such as the Yellow Pages 82% To pay for products and services 80% To place orders for products and services 79% To access and use online catalogues 76% To receive payments for products and services 75% To use a website to advertise or promote your business 67% To take orders for products and services 62% To streamline communications with customers and staff 61% To monitor your markets or the competition 44% To promote the business using e-mail marketing 31% To advertise your business on other websites 21% To use online auction sites to sell goods or services 21%Source: Sensis, The Online Experience of Small and Medium Enterprises - November, 2011
  45. 45. The Product Share of Online Retail Sales in Australia
  46. 46. Australian SMEs taking orders for goods and services online,by industry sector, April 2011
  47. 47. While 96% of SMEsreported that they wereonline, only 16% of those reported that they had some form of strategy for their businesses digital activities.For most SMEs that did have a digitalbusiness strategy, it was most likely tobe focused on internet and websites(90 and 89 per cent respectively), with54 per cent including a mobilecomponent and 53 per cent including asocial media component.Source: Sensis, The Online Experience of Smalland Medium Enterprises, November, 2011
  48. 48. With only 15% of all SME businesses in Australia operating with a digitalbusiness strategy, it leaves 85% of SME businesses in Australia to beingMedium-Web (at best), Low-Web or No-Web users meaning that most (85% of) SME businesses in Australia are standing still or going backwards in relation to their High- Web competitors.Ø High-Web businesses use a wide range of Internet tools to market, sell, and support customers, interact with suppliers, and empower employees.Ø Medium-Web businesses market or sell goods or services online.Ø Low-Web businesses have a website or social networking site.Ø No-Web businesses do not have a website. (Source: McKinsey Global Institute (MGI), Internet matters: The Nets sweeping impact on growth, jobs and prosperity, May 2011)
  49. 49. The Boston Consulting Group s Report (The Internet Economy in the G-20 The$4.2 Trillion Growth Opportunity) In Regards To Australia and its Internet EconomyBCG estimates the size of the Australian internet economy at $44 billion, or 3.3 per cent of GDP,and says it is expected to grow at an annual rate of seven per cent to reach $67 billion, or 3.7 percent of GDP by 2016. About half of that $67 billion will relate to consumption.It also says, however, that the trend towards retail buying offshore the source of fiercecomplaints and lobbying by physical retailers was a major factor in measuring the size of theinternet economy here. With imports deducted from the value of the internet economy, the size ofthe economy was diminished by one percentage point. It highlights the missed opportunity for Australian retailers, the report said. It also said theactual influence of the internet on retailing was larger than the value of online purchases becauseconsumers had spent about $44 billion offline in 2010 after researching their purchases online.The significance of retail to the growth of the internet economy can be seen in BCG s estimatethat the sector accounts for about one third of the G20 GDP and its forecast, for instance, thatonline retail will represent up to 23 per cent of total UK retail sales in 2016.It sees mobile shopping, using smartphones and other portable devices, as having a dramaticimpact on retail commerce and e-commerce generally and says retail may be "ripe" for atransformation similar to that experienced by the media industry, where, in developed economies,between 15 per cent and 30 per cent of advertising spending has migrated online. It forecastsonline advertising, a $US65 billion business in 2010, to grow at 12 per cent per annum in G20economies through to 2016, to about $US125 billion. Page 1/3
  50. 50. The Boston Consulting Group s Report (The Internet Economy in the G-20 The$4.2 Trillion Growth Opportunity) In Regards To Australia and its Internet EconomyIn Australia it expects online advertising to grow from 18.4 per cent of total advertising spendingin 2010 to 34 per cent in 2016, making it the largest advertising medium.The other significant conclusion from the report is the opportunity it outlines for small andmedium-sized enterprises. In 11 of the G20 countries, "high web" SMEs have experiencedrevenue growth that was up to 22 per cent higher than that achieved by SMEs with no or low webusage, BCG said. In the UK, sales at high-web companies increased six times as fast as those offirms with no internet presence.In this economy the exponential take-up of smartphones and tablet devices does tend to indicatethe potential for a structural shift upwards in e-commerce generally and e-retailing in particular.As the national broadband network rolls out (whichever version of it we ultimately end up with)there ought to be another surge in broadband penetration and usage.While, in terms of its cost, the NBN is consumer-centric because so much of its cost is tied up inconnecting homes to the network, the big economic opportunity, if they can seize it, lies in thepotential for businesses, particularly small businesses, to extend their reach and change the verynature of their businesses.Similarly, as Telstra, Optus and Vodafone roll out their 4G networks, there is a massiveopportunity for internet-savvy businesses to target and reach a bigger market more efficiently andeffectively by leveraging off the smart dimensions of the new generation of mobile devices. Page 2/3
  51. 51. The Boston Consulting Group s Report (The Internet Economy in the G-20 The$4.2 Trillion Growth Opportunity) In Regards To Australia and its Internet EconomyBCG says that mobile devices will account for four out of five broadband connections by 2016.The mobile internet no doubt helps explain the explosion in usage of social networks, particularlyin developing economies, which already have more than 800 million users. BCG says socialnetworks reach more than 80 per cent of consumers in developed and developing economiesalike.After a slow start Australian retailers and businesses more broadly are making an effort todevelop meaningful online presences. Whether they aim to capture online sales or the offlinesales shaped by online research, the kinds of growth rates BCG is describing, within thetimeframe it was considering, means the laggards are likely to be punished severely.One only has to look at what has happened to the media sector, as its revenue has shifted to theinternet at an accelerating rate, to see how disruptive and destructive the internet can be totraditional business models and how difficult it is for those models to profitably compete withcompetitors that have been designed for the internet once the competitors are established.For the traditional retailers and other businesses with consumer interfaces they either embracethe net or become increasingly irrelevant and threatened. Page 3/3
  52. 52. In Summary Australia s online retail expenditure was $20billion in 2010, but another $38billion was spent on research-online, purchase-offline purchases. Australia s online retail sales are projected to be 8.9% of total retail sales by 2016. Extrapolating the 2010 figures for research-online, purchase-offline sales to 12% in 2016, the result of online-based sales with therefore exceed 20% by 2016. With only 15% of all SME businesses in Australia operating without a digital business strategy, it leaves 85% of SME businesses in Australia to being Medium-Web (at best), Low-Web or No-Web users meaning that most (85% of) SME businesses in Australia are standing still or going backwards in relation to their High-Web competitors. After a slow start Australian retailers and businesses more broadly are making an effort to develop meaningful online presences. Whether they aim to capture online sales or the offline sales shaped by online research, the kinds of growth rates BCG is describing, within the timeframe it was considering, means the laggards are likely to be punished severely.
  53. 53. 3. Strategies for Australian Businesses to Seize the Opportunities
  54. 54. Five Value LeversWeve identified five value levers that explain theInternet advantage of High-Web SMEs (companiesthat use a wide range of Internet tools to market, sell,and support customers, interact with suppliers, andempower employees): Geographic Expansion. Enhanced Marketing. Improved Customer Interactions. Leveraging the Cloud. Easier and Quicker Staff Recruitment.[Note: High-Web businesses use a wide range of Internet tools to market, sell, and support customers, interact with suppliers, and empower employees. Medium-Web businesses market or sell goods or services online. (Source: McKinsey Global Institute (MGI), Low-Web businesses have a website or social networking site. Internet matters: The Nets sweeping impact on growth, jobs and prosperity, May No-Web businesses do not have a website.] 2011)
  55. 55. Five Value Levers Geographic Expansion. The Internet creates a borderless world for many SMEs, enabling them to compete with much larger, multinational companies by accessing markets that were previously out of reach. Enhanced Marketing. Online marketing delivers expanded reach and measurable returns. It also yields valuable data about consumers and their preferences, enabling expressly targetted advertising and offers. Improved Customer Interactions. Social media makes it possible for companies to engage in a real-time dialog with customers not only to boost sales but also to build loyalty and even to help create, refine, and enhance products and services. Leveraging the Cloud. SMEs can access sophisticated, often cloud-based, tools to enhance a wide range of functions, including customer relationship management, information management, and customer payments. As a result, these companies can grow quickly without requiring large investments in infrastructure. Easier and Quicker Staff Recruitment. The recruiting options available today are more powerful and less expensive that ever before, and they enable SMEs to tap a global talent market.Source: Boston Consulting Group, The Internet Economy in the G-20 The $4.2 Trillion Growth Opportunity, March 2012
  56. 56. High-Web businessestypically have a DigitalBusiness Strategyincorporating: Website(s) with compelling content for the market(s) served. Online marketing. Social media. Online payments system(s). Productivity-based system(s) that support growth & scalability. Provisioning for privacy and security.
  57. 57. Attributes of Effective Digital Business Strategies Being able to be found. No matter how advanced your products or services may be, and no matter how effectively your website might describe those products and services, if people can t find you amongst the ads and search engine results, you re losing business. Being found could be the results of pay-per-click ads, results from search engineers, links from social networking sites, links from affiliate sites, or indeed, via offline activities, your business needs to be found in order to attract visitors.
  58. 58. Attributes ofEffective DigitalBusinessStrategies Once you ve been found, make sure that your site can be viewed optimally on the visitor s device.
  59. 59. Attributes of EffectiveDigital Business StrategiesWhen visitors arrive atyour published article,your discussioncontribution, your blog,your website, etc.,they ll skip over you ifyour content isn t Providinginteresting or reasons forcompelling, or if your visitors to stay awebsite can t be easilyread or navigated, or while.they assess for anynumber of reasons thatyou can t help them,they ll abandon you in aheartbeat and moveon. You must providereasons for them tostay a while.
  60. 60. Attributes of Effective Digital Business StrategiesProvide them with reasons to keep coming back again, again, and again
  61. 61. Attributes of Effective Digital Business Strategies Give reasons for people to undertake the action you want them to take. Whether it is to have them submit their details, or respond to your article, or undertake your trial offer, or to buy your product or service, provide them with compelling reasons to do so (and it the time that you want time to do it in).
  62. 62. Attributes of EffectiveDigital Business Strategies And when they take the action you want them to take, make it easy for them.And after they ve taken the action,thank them and give themreasons to come back again, andagain, and again
  63. 63. Attributes of Effective Digital Business Strategies Make follow-up a standard business process, especially if you want repeat business, or referrals, or endorsements, or testimonials, or case study subjects
  64. 64. Attributes of Effective Digital Business Strategies One system solution to run the whole business. This means never having to enter the same information twice. This eliminates the obstacles with juggling multiple systems, re-keying information, manually importing and exporting data between separate applications, and toggling between systems trying to determine what s going on in the business.
  65. 65. Attributes of EffectiveDigital Business Strategies Key benefits on the one system solution include: Gain real-time visibility and business intelligence. Design a fully featured, database-driven website. Boost conversion rates and increase revenue. Operate a multi-channel business. Manage inventory in real time. Increase employee productivity. Improve customer satisfaction and retention. Conduct ecommerce around the globe.
  66. 66. Attributes of Effective Digital Business StrategiesUnified sales channelsproviding the ability to centraliseall customer, product and Regardless of which channeltransaction data across different the customer interacts with,channel online, mobile, social, their transactions andretail stores and call centres. interactions are all stored inCustomers can shop from any one place, allowing you tochannel, or even use multiple provide better service, cross-channel by ordering online channel loyalty pointand picking up or returning in a programs, and pick-up orstore, for example. return through any channel.You can make the same The system tracks inventoryproducts available in all across channels, allowingchannels, or choose to feature you to display real-timedifferent products in different inventory availability to yourchannels depending on the shoppers by store orcustomer segment you re channel.targeting with each channel. Selling a product through one channel can automatically reduce the inventory available for other channels.
  67. 67. Attributes of Effective Digital Business Strategies Intelligent merchandising. The system allows you to feature products on any channel in various ways, so that you can display the right products to the right shoppers at the right time. For example, you can display products based on best sellers, best margins, best ranked, or most overstocked, and publish them to shoppers based on their location or purchase history. It also lets you automatically and dynamically merchandise associated products based on what shoppers bought, so you can provide People who purchased this product, also purchased recommendations. Integrated, closed-loop marketing. The system lets you run multiple types of marketing campaign including email campaigns, paid search campaigns, affiliate marketing or direct mail marketing and automatically track their lifetime revenue and profitability. Full closed-loop tracking allows you to measure the success rate of each marketing campaign in real-time, and see the cost and profit for each sale and campaign. And by tying the campaign to your customer through all their future interactions with your company across channels, you can measure the lifetime value of the campaign and focus your marketing dollars on the campaigns that provide the best results.
  68. 68. Improve customer service and satisfaction.The system gives you a complete 360-degree view of each customer. You cansee, in one place, every interactionshoppers have had with your company,including their lifetime purchasehistories, website activities, responsesto your marketing campaigns,communications with your company,and much more. You can use thisinformation to provide better servicequickly and accurately answering theirquestions. You can also use thisinformation to segment and target themwith marketing campaigns, and tomerchandise different products to them.Your sales team can sell moreeffectively by understanding whatproducts customers viewed on yourwebsite, and by providing productrecommendations that the systemautomatically presents based on similarshoppers purchase history.
  69. 69. Attributes of Effective Digital Business Strategies Increase accuracy and efficiency. Businesses of the system may report major cost savings and efficiencies in managing their operations. According to a recent Nucleus Research report, companies using modern cloud-based ERP systems for ecommerce experience on average 20% employee productivity gains, 50% reduction in time spent on accounting functions, and 80% lower development costs. Because these systems automate more of your business and manages everything in real time, it eliminates the errors that are unavoidable when juggling multiple separate systems. Now you, your customers, your suppliers and your partners always know exactly what s happening with every order. Automated processes and better accuracy means faster orders, more satisfied customers and lower operational costs.
  70. 70. Attributes of Effective Digital Business Strategies Increased visibility for better decision making. Customisable dashboards give you unprecedented visibility across your entire organization, and unified customer records allow you to see every interaction a customer has had with your company. The dashboards provide real-time access to key performance metrics, and support intelligent, timely business decisions. In addition, full visibility into unified customer records allows you to see all of a customer s transactions, interactions and even which items they ve placed in your shopping car allowing you to easily segment your customers and merchandise to them based on any of this information.
  71. 71. Attributes of Effective Digital Business Strategies Shopping and Merchandising Tools. Web capabilities should include easy-to-use site building tools, secure shopping cart functionality, integrated real-time credit card processing with Payment Card Industry Data Security Standards compliance and multi-level fraud protection, coupons, gift certificates, cross-selling and more. The system should provide all the functionality you need to give your online retail business a high-end web presence that s easy to manage and maintain.
  72. 72. Self-Service Capabilities. Websites should come with a customer self-servicecentre, where shoppers can track their packages, review their purchasehistories, manage returns, view responses you ve given to their questions,update account information, re-purchase individual products or entire orders,download digital goods, review and approve quotes, pay bills, and more. All ofthis information is available to your shoppers 24/7.
  73. 73. Attributes of Effective Digital Business Strategies Integrated, Real-Time Inventory Management. Your site will show real-time inventory availability updated based on actual inventory. You can display the inventory amounts to your shoppers and even tell them how much is available in each physical location. You choose whether to automatically remove out-of-stock products from your website or keep selling them. The system s procurement capabilities can automatically recommend, based on your sales history, when you should re-order items, and what the preferred stock level and lead time should be, even for seasonal items. This level of accuracy in real-time inventory availability allows you to reduce the number of back orders and customer disappointments, as well as reduce the buffer stock you need to ensure that back orders don t happen. Reducing back orders increases customer satisfaction and loyalty; reducing buffer stock reduces the inventory on hand and the turnover rates for your products.
  74. 74. Attributes of Effective Digital Business StrategiesAttributes of Effective Digital Business StrategiesSeamless Order Management andFulfillment. The system should provide anorder management workflow that can becustomised to match your company sbusinesses processes. This allows efficientoperations to fulfill your orders, and allowsyou to scale and handle more orders withthe same fulfillment team. The workflow caninclude a separate order approval processthat reviews by exception, only red flaggingorders that meet pre-defined criteria.Fulfillment can be split up into separate pick, pack and ship steps. Seamlessintegration with UPS, FedEx, USPS and others allows you to generate real-timepricing, print shipping labels, generate customs documentation, and automaticallysend out tracking numbers all from within the system.
  75. 75. Attributes of Effective Digital Business StrategiesIntelligent Sales & Marketing Optimisation via: Affiliate Management. You can track all of the leads and sales coming from your affiliates, report on every sale, automatically calculate commissions, and provide your affiliates password-protected access to this information. This allows you to easily have an affiliate marketing program and increase your sales. Pricing and Promotions. The system should allow you to set different pricing levels for the same item for different customers, or offer channels or volume discounts. You can also set up different promotions to encourage sales of specific items or group of items. This flexibility in pricing and promotions allows you to use pricing as a way to provide value to different customer segments.
  76. 76. An Effective Digital Strategy, Well Implemented, Will Help You Grow FasterSource: Boston Consulting Group, The Internet Economy in the G-20 The $4.2 Trillion Growth Opportunity, March 2012
  77. 77. Conclusions Whilst there will be exceptions, small- and medium-sized businesses in Australia are doing it tough. The Internet is accelerating in its ability to change business landscapes and is therefore both a threat and an opportunity for businesses around the world: A threat to those that don t fully adopt its use (85% of SME businesses in Australia). An opportunity to those that do (15% of SME businesses in Australia). After a slow start Australian retailers and businesses more broadly are making an effort to develop meaningful online presences. Whether they aim to capture online sales or the offline sales shaped by online research, the kinds of growth rates BCG is describing, within the timeframe it was considering, means the laggards are likely to be punished severely. For businesses that choose to fully exploit the opportunities available with the Internet, the path has already been travelled by many and the keys to success are well known. Central to that success is the development and implementation of an effective digital business strategy.
  78. 78. NOW YOUKNOW The Impact of the Internet on SME BusinessesThat Every Business Owner, Manager & Stakeholder In Australia Should Know About © Businesses In HyperGrowth Pty Ltd. All rights reserved.
  79. 79. NOW YOU KNOWThis report was produced as a collaborative project by: Businesses In HyperGrowth Pty Ltd and KwikWeb Pty Ltd © Businesses In HyperGrowth Pty Ltd. All rights reserved.

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