4. Business Use and Perception of E-Commerce

This Document is Archived

Electronic Commerce in New Zealand: A Survey of Business Use of the Internet

Information Technology Policy Group, Competition and Enterprise Branch

[ Last Updated 15 December 2005 ]

The term "e-commerce" was defined broadly for the purposes of this survey and includes the use of email between business partners, so that in Table 4.1 the number responding positively to the question "is your firm engaged in electronic commerce with other organisations?" is similar to the numbers indicating they use email (66% compared with 68%, e.g. Table 3.1). There is a very low level of integration between this aspect of e-commerce and firms' internal business systems (overall, 11%). In this respect, larger firms are clearly much more advanced than their smaller counterparts (9% for firms with 6 or fewer FTES compared with 28% for firms of 20 or more). Firms in the "business services" and "ICT" sectors have a higher level of integration than the others (27% and 17% respectively). Very few firms claim not to be using ecommerce at all but, at the same time, very few claim to be making maximum possible use (3% in each case).

Overall, these results signal that there is great potential for ecommerce use to expand: overall awareness and use at a primary level (email) are high but there is little integration with core business systems. A high level of integration would be an indicator that electronic commerce is a major consideration for businesses and this is clearly not yet the case.

Table 4.1: Business Use of E-Commerce Systems

	Has a domain name	Is engaged in e-com- merce with other organisa- tions	E-com- merce linked to internal business systems	To what extent are you using e-commerce now?
	Has a domain name	Is engaged in e-com- merce with other organisa- tions	E-com- merce linked to internal business systems	Some- times	Often	Maximum extent possible	Not at all
	%	%	%	%	%	%	%
Size (FTES)
5 or fewer	29	63	9	39	25	2	3
6 to 19	47	80	15	48	27	8	4
20 and over	68	91	28	48	38	8	3
Location
Main Centres	40	72	12	41	29	4	3
Provincial and rural	24	57	9	31	22	1	3
Business sector
Manufacturing	26	66	6	44	19	6	0
Construction	20	57	7	41	18	0	10
Primary sector	1	30	7	27	3	1	0
Wholesale/ Retail	32	60	10	40	27	1	1
Transport/ Storage	28	63	4	47	20	1	1
Business services	48	86	27	34	49	6	6
Personal services	32	63	0	33	21	0	9
ICT	62	85	17	40	35	2	8
All	33	66	11	40	26	3	3

The survey attempted to gauge business perceptions of how important e-commerce was considered to be, and for what reason. Figure 4.2 and Table 4.2 indicate that opinions on e-commerce are polarised, with very few people having a neutral perspective on e-commerce and the overwhelming majority seeing it as being either critical or important on the one hand, or not important or irrelevant on the other.

Figure 4.2: Business Perception of the Importance of E-Commerce

Not important = not important and irrelevant combined
Important = critical and important combined

In nearly all cases, e-commerce is seen to be important by many more respondents than see it as not important. "Developing the customer base", "information gathering and research", and "keeping ahead of competitors" are seen as the most important areas for exploiting e-commerce.

"Growing exports" stands out as the one area which respondents overall see as being relatively unimportant. Given the increasingly global nature of commerce and the potential contribution of e-commerce to this, this result seems to indicate a gap in understanding of its potential on the part of many businesses.

Interest in e-commerce is likely to increase with an overwhelming majority of respondents seeing it as being critical or important for their business in 12 months time, with only 17% seeing it as unimportant or irrelevant.

Table 4.2: Business Perception of the Importance of E-Commerce

Issue	Critical	Im- portant	Neutral	Not im- portant	Ir- relevant	Don't know
	%	%	%	%	%	%
Efficiency and cost reduction	22	33	5	20	11	9
Customer relations	24	33	7	22	8	7
Supplier relations	19	34	6	24	12	6
Developing customer base	30	36	7	14	7	6
Information and research	30	44	5	11	6	4
Growing exports	15	19	6	18	32	9
Competition	30	38	6	13	7	6
Importance in 12 months	36	35	5	11	6	7

Note: May total to more than 100% because of multiple selection

From Table 4.3 it seems that there is little difference between smaller and larger firms in their perception of the importance of the contribution of e-commerce in different areas.

Table 4.3: Importance of E-Commerce by Firm Size

	< 6 FTES		6 to 19 FTES		20 + FTES
Issue	Not Im- portant	Im- portant	Not Im- portant	Im- portant	Not Im- portant	Im- portant
	%	%	%	%	%	%
Efficiency and cost reduction	32	53	29	60	14	66
Customer relations	31	55	26	67	21	71
Supplier relations	36	51	31	58	35	54
Developing customer base	21	66	22	67	23	69
Information and research	18	72	14	80	15	82
Growing exports	51	33	46	40	42	39
Competition	21	67	19	76	15	75
Importance in 12 months	19	69	6	88	11	83

Not important = not important and irrelevant combined
Important = critical and important combined
Note: May total to more than 100% because of multiple selection

Table 4.4 summarises factors seen by respondents as inhibiting the take up of e-commerce. Only 10% indicate that there are no barriers to the adoption of e-commerce but no one area stands out as being of overwhelming significance. Cost is the single biggest issue with 39% seeing this as being a major inhibitor. Lack of proven benefits, concerns over loss of contacts with customers, and lack of skilled staff are all seen as important by over one third of respondents. Overall, about half this number (15%) register concern over the readiness of business partners to enter into e-commerce relationships but this seems to be a matter of greater concern for larger firms (26%) than for small ones (13%).

Other differences on the basis of location or size are not statistically significance but could indicate some underlying issues. There may be a slightly higher level of scepticism about the benefits in provincial and rural areas but a lower level of concern about security issues for example, but it runs counter to expectation that main centre firms should be finding greater difficulty in locating skilled staff than those in provincial and rural areas. On the other hand, there is anecdotal evidence which is not reflected here that obtaining external assistance is a problem in some provincial centres.

Table 4.4: Factors Inhibiting Take-Up of E-Commerce

Inhibiting factor	Overall	Location		Size (FTES)
Inhibiting factor	Overall	Main centres	Prov- incial and rural	< 6	6 to 19	20 +
	%	%	%	%	%	%
Business partners not ready	15	18	10	13	21	26
Business partners not ready	15	18	10	13	21	26
Benefits not proven	37	34	41	37	33	43
Loss of contact with customers	36	34	39	37	33	29
Lack of skilled staff	37	41	31	36	36	43
Security issues	34	38	28	34	34	43
Implementation costs	39	39	40	39	41	39
Lack of external assistance	28	28	28	28	26	29
Other	18	18	18	18	16	22
No perceived barriers	10	10	12	10	16	8

Note: May total to more than 100% because of multiple selection

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Printed: 06/09/2008