The Impact of E-Commerce on Small Businesses

Topics: Small business, Business, Marketing Pages: 7 (1855 words) Published: December 9, 2007

E- Commerce is a phenomena that is emerging rapidly between businesses all over the world, and it has affected the businesses at all sizes in many aspects. This research is looking at the small businesses, and its importance in the market and economy, EC and its benefits and limitation, and what impact has electronic commerce had on the businesses.

Small Business:

Definition: A small business may is a business with a small number of employees. The definition of "small business" often different by country and industry, but is generally under one 100 employees in the United States, while under 50 employees in the European Union. These businesses are normally privately owned corporations, partnerships, or sole proprietorships.

Small businesses are common in many countries, and it depends on the economic system in the country. Examples include: small shops, hairdressers, tradesmen, lawyers, accountants, restaurants, photographers, small-scale manufacturing etc. Small businesses are usually independent businesses that have little influence on the market.

The smallest businesses, often located in private homes, are called micro businesses (term used by international organizations such as the World Bank and the International Finance Corporation). The term "mom and pop business" is a common expression for a single-family operation business with few or no employees other than the owners. When looking at the number of employees, the definitions in the USA and Europe are the same: under ten employees. (sbc004.pdf) (Griffin, 2003)

The Importance of small businesses:

Small businesses have a clear relationship with the economy in general, and if we take an example like the U.S. where over 86% of businesses have no more that 20 employees, and the total number of people employed by these small businesses is nearly one-fourth of the entire U.S. work force, so they play a very important role in its economy as they offer a big help in the economic growth of the country, and these businesses contribute a lot to the economy by hiring one, two, or more employees, even in the internet based business.

Because of their size and need to keep their customers, new businesses are more flexible and respond quickly to changes in the market than many other and established businesses.

Small business is an important source of new jobs in many countries, they also hire at a faster rate than big companies especially in the economic recovery times. Many innovations came and started in small business.

Nearly all the goods and product that are manufactured by big companies are sold to customers by small companies. (Griffin, 2003) (DoctorEbiz.htm)

Advantages of Small Business:

•Small businesses can grow with customer needs. Often, they can create products and services that address highly personalized requests at a moments notice.

•In case of sole proprietorships they are simple to form, they have the benefit of freedom which is the most important, and also it needs low start up costs. •Tax laws permit them to treat operating expenses and sales revenues as part of their personal finance.

•Small businesses can obtain new data from a market, or even a client or two, and dramatically change their business model to align with a new opportunity.

•The proper use of technology allows small businesses to put up big shop follow-up, service and prospecting without the overhead. (Griffin, 2003) (DoctorEbiz.htm)


Definition: E-commerce or (electronic commerce) consists of the buying, selling, marketing, and servicing of products or services over computer networks and the Internet.

When we talk about e-commerce we also need to talk about E-Business which is the cooperation with other businesses and organizations, serving customers, and to have and manage the company throw electronic transaction in the business. This is all to advance and improve the business overall performance. (Turban, 2006)...
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