Small Businesses to Spend $8 Billion on Technology Online

Small businesses have $156 billion to spend on technology, and they will spend $8 billion of those dollars at online retailers, according to research by Cahners In-Stat Group.

In addition to their online spending, small businesses will spend another $26 billion with offline retailers, Cahners found. In its report “Small Business Channel Surfing,” Cahners predicts that small businesses will be a key buyer segment for technology sellers of all kinds, particularly offline retailers.

“In the face of well-branded offline competitors such as CompUSA, Circuit City, and Staples, that have built online sales resources, online retailers may take some major bumps in the coming years when it comes to servicing the small business community,” said Kneko Burney, manager of Cahners’ Markets & Opportunity Group. “Many expect the Internet to evolve into a dominant channel for the small business market. The reality is the Internet is merely another way to serve customers and build relationships, offering 24/7 convenience and information. However, it cannot replace the power of local offline resources.”

Other findings of Cahners’ research include:

• Small businesses will invest nearly $30 billion on technologies purchased directly from the manufacturer
• As vendors develop more online resources and sales tools for small businesses, vendor direct channels are expected are expected to remain influential within this market
• Online retailers (e.g., Buy.com) are expected to lose business to offline retailers that build online selling resources
• Online sellers have a much higher barrier to entry to enter the offline arena, whereas offline sellers are building their distribution channels rapidly, including online selling capabilities.