Advantages of internet to SMEs

Small and Medium Enterprise with information-based products have a real advantage in the net worked world. Not only can web sites display product information and take orders, but they can deliver the end-product immediately and at a low cost.

These benefits accrue to among others music, video, software companies, lawyers, accountants, stockbrokers, consultants, restaurants and super market retailers. SMEs have never had an excellent time such as these where they can form more-or-less informal global networks, so that they can provide support around the world at very low cost and obtain expertise on local issues and problems. In many cases, consumers prefer to deal with smaller firms. This means that there are benefits in terms of image to position a small firm as part of a network of local experts.

Niche marketers can be big beneficiary in this era of internet. Though in Uganda there are no many real examples of small firms that have successfully used the Internet to exploit niche markets, online based company like maswali.com now want to ensure that Ugandan services and products in particular are known around the world.

With online transaction and a niche market, competition is significantly less, customers are far less likely to engage in price comparisons (and far more willing to tolerate delays and product imperfections), and relatively high freight charges are not so noticeable.

Risks
Companies with physical products may be at a disadvantage. They must deal with the complexities and expenses of international order fulfilment something which has so far prevented even amazon.com from obtaining a profit from its widely utilised online book store operations.

The issues of distribution, warehousing, timely delivery, order tracking and (above all) return of unsatisfactory goods are such as to make most small companies pause before they decide to go into business on a global scale (business over the Internet).

Small companies competing in standardised product areas face serious challenges. Products such as CDs or DVDs - which are effectively identical, and for which only service and price can differentiate sellers - face enormous competition and frequently do not last long. Customers of online stores are notoriously fickle and disloyal.

One example of poor service can be enough to send an online shopper to a rival store, while order fulfilment and product returns are difficult, expensive and logistically complex. It is already becoming apparent that successful online purveyors of CDs, books, DVDs and videos are comparatively large companies which can absorb freight costs, and can offer speedy and efficient returns service for imperfect products.