7 SPECIAL ARTICLE: HOW SOPHISTICATED IS THE E-COMMERCE PERFORMED BY AUSTRALIAN BUSINESS?
Background
Around the world there is considerable debate as to what constitutes e-commerce. The main differences revolve around the technological complexity of the transactions, namely whether the transactions that enable e-commerce need to be fully automated. Some suggest that a simple one off email which constitutes an order is e-commerce, whilst others suggest that e-commerce over the Internet requires a sophisticated web site with technologies that enable secure transactions and integration with backend systems.
The ABS' annual Business Use of Information Technology survey collects data on the use of various information technologies by Australian businesses. Included in the surveys is a series of questions which, when analysed, can provide an understanding of the sophistication of use of the Internet and the World Wide Web.
This article uses information from the latest survey to shed some light on the current techniques and processes being used by Australian businesses when they undertake Internet commerce.
What is Internet commerce?
The ABS surveys have avoided the use of the terms e-commerce or Internet commerce due to variable interpretation by respondents. For purposes of producing results we do refer to Internet commerce and define Internet commerce transactions as purchasing or selling via the Internet, or more precisely placing or receiving orders for goods and services via the Internet, with or without on-line payment. This interpretation is consistent with the international definition recommended by the OECD for use by member countries in their national collections.
The definition we use restricts the attributes of Internet commerce and as such is both definable and measurable. It therefore allows us to measure something which, in common usage, has a multitude of meanings.
The ABS does not collect information on broader e-commerce, that is transactions conducted over computer-mediated networks other than the Internet.
Findings of the ABS surveys
When the results of the ABS's latest 2000-01 survey are analysed, some interesting findings on Internet commerce by Australian businesses are revealed. Generally, the methods of Internet commerce used by Australian businesses appear to be low technology and simple in process. For example, of the businesses earning income from the sale of goods and services via the Internet or web during the financial year to June 2001, just under one third received orders via the Internet but had no web site. This would indicate that their Internet commerce was unsophisticated and probably restricted to fairly simple email orders. In contrast, the remaining two thirds of these businesses have taken the next step in technology uptake and have established a web presence. By adding further functionality to their web sites, these businesses can potentially increase the sophistication of their Internet commerce to enable more automated Internet commerce applications.
How sophisticated is the Internet commerce done by Australian business?
Of the businesses which had established a web site and were earning income from the sale of goods and services via the Internet or web during the financial year to June 2001, there were varying degrees of sophistication in the Internet commerce facilities they offered. For example, on their web sites:
- 39% have on-line ordering
- 14% have on-line payment capabilities
- 11% offer secure access or transactions (eg secure socket layers)
- 10% have shopping cart facilities.
However, half of the businesses which received orders via the Internet during 2000-01 had established a web presence without any of the above four features. Consequently the Internet commerce facilities they offer are unlikely to be sophisticated.
Interestingly, only 8% of businesses earning income from the sale of goods and services via the Internet or web have the facility to integrate the processes with their back end systems . This appears very low and would presumably be an area where businesses stand to gain efficiencies by automating and integrating post order functions and processes.
Does business size matter?
If the data are broken down by business size, the results reveal that smaller businesses (in terms of employment) are less likely to be involved in Internet commerce and typically have little sophistication in their Internet commerce processes. At the end of June 2001, only 7% of the very small businesses (fewer than 5 employees) had received orders for goods or services via the Internet or web. This compares with large businesses (100 or more employees) where 24% had received orders for goods or services via the Internet or web. Of the businesses involved in Internet commerce, fewer than a quarter of the small businesses, compared to over half of the large businesses, had established web sites that included the facilities to either receive online orders or payments, had shopping cart facilities or offered secure access or transactions.
What else affects the level of Internet commerce sophistication?
The length of time that businesses have been receiving orders for goods or services via the Internet or web appears to be linked with the level of sophistication of their Internet commerce processes. Typically the longer a business has had a web site and has been able to receive orders via the Internet or web, the more sophisticated their web sites are in relation to Internet commerce functionality.
Conclusion
Most Australian businesses which are undertaking Internet commerce are using fairly simple processes and techniques. The level of sophistication of these processes and techniques increases with the size of the business. Not surprisingly, it also increases with the time businesses have been receiving orders for goods and services via the Internet or web.
If you would like further details on this work please contact John Ovington,john.ovington@abs.gov.au.
Print Page
Print All