New Zealand businesses are only just beginning to reap the rewards of IT and internet use, according to a Statistics New Zealand report.
Stats NZ’s business practices report, the first of its kind, shows that while 36% of New Zealand businesses operate a website, sales generated through the internet are worth only 0.3% of their total operating income.
Total operating income includes sales of goods and services, rental income and government grants, says Mathew Page, an economics statistician with Stats NZ.
In dollar terms, 0.3% represents $523 million in sales for the year ending June 2001, which seems a tiny return on the country’s huge investment in ICT, which ITANZ put at about $11 billion in a 2001 report.
“Yes it does, but we aren’t measuring things like productivity gains or cost savings in that figure,” says Page, who goes on to say a large number of companies didn’t track sales via the internet separately. “That makes it quite hard to get accurate information. We went back to companies and asked them to estimate what they sold online where that was the case.”
Of those businesses that do run a website, the survey reports that only 3.9% offer the capability for online payment, dramatically reducing the potential earnings from online transactions. Of great concern is the fact that only 3.6% of sites offer a secure online capability, which would indicate that some sites are willing to accept credit card information in an insecure manner. Less than 1% of sites offer order tracking functionality, something most consumer-focused e-commerce vendors say is an important aspect of operating a retail site.
Most companies, however, do make use of IT and the internet in their daily lives. Nearly half were connected to a local area network (LAN), with a further 20% going one step further to a wide area network (WAN). Twenty-one percent use IT for procurement purposes and although 69% of respondents claim to have systems for monitoring the quality of suppliers’ products, around 30% didn’t bother or didn’t know if they monitored suppliers for quality.
“This is the first year we’ve run the survey so we can’t really compare it with anything to see how we’re doing,” says Page. However, figures from Canada and Australia seem to indicate we are on par with those countries.
“Canada ran a similar survey that reported 0.2% of total operating income coming from online sales and in Australia they report 0.4% of total sales, which is slightly different but certainly comparable.”
In comparison, market researcher IDC claimed last year that online business-to-consumer spending is bucking international expectations by continuing to rise.
New Zealand business-to-consumer (B2C) growth was expected to increase from less than $1 million in 2001 to $5.5 million by the year 2004.
According to the researcher’s New Zealand manager, Dinesh Kumar, B2C spending was “ tracking along” in this country, with the number of unique users climbing from 1.4 million in 2001 to 2.3 million by 2005. The dollar amount they spend online was also increasing from an average of only $0.69 a person to $0.88 each in 2002 and on to $2.39 in 2005. “The numbers are quite small but they’re growing steadily.”
The Statistics survey was sent to businesses with more than six employees and a GST turnover of more than $30,000. There were 2756 responses.