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Businesses Urged to Tap E-Commerce Potential More Aggressively

SINGAPORE – 04 JUN 1999

A recent survey commissioned by the National Computer Board (NCB) on Internet-based business-to-business e-commerce has shown that companies that were planning to embark on e-commerce tended to have conservative forecasts ...


A recent survey commissioned by the National Computer Board (NCB) on Internet-based business-to-business e-commerce has shown that companies that were planning to embark on e-commerce tended to have conservative forecasts about their trading activities, compared to the actual level of activities that were already experienced by current users.

The survey, which covered more than 1000 companies in eight industry sectors, showed that companies in the selected industry sectors were highly Internet-ready. Close to three-quarters (73.3%) of the companies surveyed had corporate Internet access. Over a third of the companies (33.4%) owned corporate websites.

Interest and Usage of Business-to-Business E-Commerce

About 9% of companies within the selected industry sectors were already buying and selling with their trading partners via the Internet. 28% expressed interest in doing so within the next six months. The rest of the companies (63%) were either not interested, or were unsure of their future plans.

Interest and Usage by Industry

Among the industries surveyed, the manufacturing and logistics sectors emerged as being most ready for e-commerce. Manufacturers of electronic products showed the highest level of current usage of e-commerce (14.9%). This was followed by freight forwarding firms (9.2%) and publishing firms (7.8%). These three industry sectors also reported the highest level of interest among firms planning to embark on e-commerce.

Interest and Usage by Company Size

The survey also showed that the larger companies were embracing business-to-business e-commerce more readily. More than 16% of the large firms, compared to less than 8% among the small and medium companies, were currently trading with their partners on the Internet. Among firms that have not started to use e-commerce, the larger ones appeared to be generally more enthusiastic about adopting e-commerce. Almost half (49.3%) of the large companies, compared to about a quarter (25.2%) of the small companies, expressed interest in embarking on e-commerce.

Motivations

The top five motivations cited by companies who were using or planning to use Internet-based business-to-business e-commerce were:

- Image and reputation (62.9%)

- Increase in sales (51.7%)

- Global reach of suppliers (49.1%)

- Global reach of customers (46.8%)

- Improved productivity (41.6%)

Barriers

Companies that were interested in adopting e-commerce cited security (59.4%), initial setup costs (36.9%) and ongoing operational costs (28.2%), as key barriers. Companies that were not interested in e-commerce reported a very different set of barriers. A large majority (64.8%) among this group saw no need in adopting e-commerce. Of these, over three-quarters (75.6%) were small companies, less than a quarter (21.7%) were medium companies, and only 2.7% were large companies. Other companies which were not interested were held back by the initial set-up costs (5.3%) and ongoing operational costs (4.5%).

State of Business-to-Business E-Commerce in Singapore

Among the companies that were currently buying and selling via the Internet, a high proportion were already using web-based trading platforms - such as transaction-enabled websites and trading communities, as opposed to basic email. In comparison, proportionately more companies among those planning to embark on e-commerce expected to use only email to communicate with their prospective trading partners.

For example, among companies that were currently procuring through the Internet, more than half (56.8%) used Web-based trading platforms. About one third (31.8%) relied solely on email to communicate order information with business partners. In contrast, companies planning to procure through the Internet expected to use mainly basic email (61%), with slightly more than a third (37.3%) expecting to use Web-based trading platforms.

The survey findings showed that a high percentage of companies currently engaged in Internet-based e-commerce were already conducting cross-border trade with their overseas partners. In contrast, companies that were planning to embark on e-commerce had more conservative expectations of their overseas trading activities. For example, almost 80% of companies that were currently procuring through the Internet were transacting with overseas partners. In comparison, only 29% of those that planned to procure through the Internet expected to transact with overseas partners.

Companies that were already conducting business via the Internet were fairly upbeat about the growth potential of their e-commerce trading activity. 95% of companies that were already procuring via the Internet expected an increase in their e-commerce transaction value in the next twelve months. About 25% expected their procurement value to grow by at least 50%. All of the companies that were already selling via the Internet expected an increase in their sales transactions. About 19% expected the value of their sales transactions to grow by at least 50%.

Commenting on the survey findings, Mr Michael Yap, Chief Executive, NCB said, "There appears to be a difference in expectations between businesses already using e-commerce, and those planning to do so. Almost 80% of the current users were already transacting with overseas partners through the web. They were also generally optimistic about the growth prospects of their e-commerce trading activity. In contrast, businesses that were planning to embark on e-commerce appeared to be more hesitant about going into e-commerce in a big way, and were more conservative in their expectations. This difference between the two groups reflects that the potential offered by e-commerce might be greater than expected. There is much room for companies to be bolder and more aggressive in exploiting e-commerce."

Mr Yap added, "The survey also showed that among the companies that were not interested in e-commerce, the majority - more than 60% - saw no need for e-commerce. This group comprised mainly the small- and medium-sized companies. I urge these companies to re-examine the value proposition of e-commerce to their business. To companies that have found it difficult to implement e-commerce, I encourage them to make use of various assistance schemes that can help to defray part of their set-up and operational costs. In addition, companies can also tap on existing bureau, leasing and hosting services offered by e-commerce services providers to get on board quickly and easily. On our part, we will continue to build greater awareness and deeper understanding on the use of e-commerce."

Mr Yap concluded, "Over the last two years, the efforts by the government and industry to promote e-commerce have seen through the early adoption by businesses in Singapore. Going forward, the challenge is to encourage pervasive use of e-commerce by mainstream businesses. We aim to have 20% of Singapore companies adopt e-commerce in the next two years, and 50% by the year 2003. The survey findings will enable us to fine-tune key strategies and programmes that will help achieve this goal."


RELEASED BY: CORPORATE COMMUNICATION DEPARTMENT
NATIONAL COMPUTER BOARD.

LAST UPDATED: 19 JUN 2024