On the internet, small business is becoming big business. The number of web portals directed at SMEs is growing at a rip-roaring rate, with as many as 10 new UK sites a week, according to some estimates.
This land grab is easy to understand when you look at the figures. According to the Department of Trade and Industry, at the beginning of 1997 there were 3.7 million enterprises in the UK, of which 25,000 were medium-sized and only 7,000 large - meaning that there are more than three million SMEs out there. Who wouldn't want a piece of that?
Most portals plan to offer generic business services to SMEs, as well as the opportunity to buy computing and office products. Frequently, business portals hope that the small-business person will want to source his or her technology requirements through the site.
Are these portal sites a potential threat to resellers, the companies that traditionally would expect to sell technology products to local SMEs?
The simple answer is that most of them are probably not a long-term threat, but there are several reasons for this.
Jumping then falling
One reason is that many of the sites are, quite simply, very poor. Having been launched in the rush to jump aboard the business-to-business (B2B) bandwagon, they are unlikely to stay the course.
Raymond Fagan, technology group director at financier Cavendish Corporate Finance, said he sees an enormous number of poor proposals for SME sites.
"It is such a big population, such an amorphous mass, and many people have no real idea how to get to this group or capture it as a customer," he said.
"They are not difficult sites to set up. And because of all the information available online, there is plenty of information about them, so they are not difficult to mailshot."
For a portal to get visitors or to engender any loyalty from customers, it needs to offer compelling services. But SME is a marketing term that was dreamt up by big business. Small businesses think of themselves as merely a shoe shop, a courier company, a solicitor and so on. What they have in common is a need for generic business services and products, so most sites offer a range of such services - legal, accounting and marketing - in addition to any technology products on sale.
But to make these services compelling, they need to be as good if not better than those offered by traditional professional services companies, who can tailor their offerings to their customers. A portal just for shoe shops has more of a chance of attracting shoe shops than a generic small-business site.
The internet: can it be trusted?
Paul Tollet, small-business director at Microsoft, said the internet is just too expensive. Bandwidth has to increase, and the cost of access has to reduce dramatically until it is virtually free, so that SMEs can afford to be online all the time rather than only for an hour or two each day. Only then, said Tollet, will B2B portals start to make an impression.
"There are also huge issues of trust to be resolved. Do small businesses trust the internet?" Tollet asked. "And do they trust it enough to put their data on the internet?"
Microsoft, of course, has its own small-business portal in Bcentral, which has been live in the US for 15 months or so, and Bcentral.co.uk is due to launch this autumn.
Tollet said the vendor is taking a five-year view and that the UK site will initially be full of information, hints and tips about Microsoft technology. Other services and content will be added over time. Bcentral will eventually become the launch platform for Microsoft's application service provision (ASP) strategy to SMEs.
Even if most sites will not last the course and, possibly, small businesses are not yet ready to embrace those that survive, SME portals cannot be ignored. Rather than be seen as a threat, there may be an opportunity here for resellers.
Some sites promise that channel involvement is key to their plans. Bcentral will be one, according to Tollet, even when it offers ASP-delivered software.
"It's all about reach and advice," said Tollet. "There will be a large channel component to Bcentral. People will always want to buy servers and boxes, they always want advice about how Microsoft technology can be used to benefit their businesses. The channel is instrumental in finding customers."
Other portals are set up by companies with huge existing customer bases to exploit. So any resellers becoming involved in these can be assured that there is at least a market willing to trade with them.
Work24 on the side of the small customer
One such portal is Work24, a £70m joint venture between Royal Bank of Scotland, NatWest and ScottishPower.
Work24 has a partnership with online reseller Wstore, supplying computer products to its SME customers. Wstore plans to offer a host of special discounts and packages so that the small customer can buy as well as a large customer.
Kate Hembury, sales and marketing director at Wstore, claimed the reseller is using its service partner network of VARs to offer installation, training and consultancy to Work24 customers.
So although most business portals may fall by the wayside, perhaps it would be wise for resellers to form partnerships with them anyway, particularly if a shared vertical market specialisation can be found.
Portals may not generate much business in the short term, but if the internet lives up to its potential, those resellers that have got on board will benefit. And those that did not may not live to regret it.
SME PORTALS: WHO OFFERS WHAT
- Work24.co.uk ScottishPower and Royal Bank of Scotland's £70m joint venture to capture SMEs.
- Mondus.co.uk The original business-to-business market.
- Ezoka.com Action Computer Supplies is the computer supplier at this SME portal, which claims to be a one-stop shop for SMEs.
- Barclaysb2b.com The bank's small-business portal where e-procurement is to be offered from the autumn.
- Btclickforbusiness.com Selling BT's web and hosting services.
- Virginbiz.net Virgin's web creation and hosting service, plus the usual generic services.
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