Digitally divided – Half of New Zealand businesses not online

24 Oct 2013

  • Businesses with websites more confident, making more, employing more
  • Social media business sites increasing leads and customer interaction

New Zealand SMEs are missing out on revenue gains and growth in the economy is being constrained due to a clear divide in the use of internet-based technology, new research has found.

According to the latest MYOB Business Monitor Report 50% of local SMEs don't have their own online presence for their business. 24% have a website, 9% have a social media site and 14% have both. 3% are unsure what online presence they have. The proportion with a website is on the rise, now at 38% – up from 34% six months ago.

The use of cloud computing has also increased slightly in the last six months, with 18% of SMEs reporting they use the technology, compared to just 16% in the February 2013 Monitor.

MYOB General Manager Business Division, James Scollay, says the difference between online businesses and those that don’t have a web presence is marked across a range of performance measures.

“What’s clear to us from our years of conducting research into SMEs’ use of digital technologies is that businesses with an online presence reach more people and become more engaged with their customers,” he says. “They also earn more, have more work in the pipeline, and are more likely to be hiring staff.”

“It’s evident that there’s a digital divide emerging in the New Zealand economy and we strongly believe it’s time for more local business owners and operators to take a closer look at what online tools could do for them.”

Clear difference in performance

According to the survey, 38% of businesses with a website saw revenue increase in the 12 months to August 2013, compared to 26% of businesses without one. Over the next 12 months, more than half (52%) of businesses with a website expect to see revenue increase, compared to 37% of those without. The trend is even stronger for businesses with a website and a social media site – 63% forecast revenue growth in the coming year.

The growth expectations of online-savvy businesses are likely fuelled by their current workload. 44% of SMEs with a website and 47% of those with website and social media site reported increased sales or increased activity in the August to October period. Only 31% of SMEs with no website reported more pipeline work for the same period.

More confidence, more contribution

Buoyed by their performance, SMEs using internet technology are more positive about the economy, with over a third (36%) expecting an improvement within 12 months, compared to 23% of businesses without a website.

“Online businesses are more likely to be making a contribution to wider economic growth, including improved job opportunities for Kiwis,” says Mr Scollay. “16% of businesses with a website and 22% with both a website and a social media site are planning to increase their full-time staff this year. That’s a considerably higher number than the 6% of businesses without a website who are looking to hire this year.”

Significant business benefits

“We also asked business owners and managers to identify the benefits they had seen by using online technology,” Mr Scollay says.

“The areas they highlighted - such as it enabling them to earn and convert more leads - reinforces that being online is not just an indicator of good business management, but actually makes a significant contribution to the success of the operation.” 

Top 5 benefits of a business website
REASON % OF SMES
More enquiries/leads 61%
More customer interaction 42%
More competitive 34%
Increased revenue 28%
More conversions to sales 28%
Top 5 benefits of a business social media site
REASON % OF SMES
More customer interaction 60%
More enquiries/leads 54%
More competitive 30%
More conversions to sales 26%
Increased revenue 21%
Shifting mind-sets

Mr Scollay says the key barrier to more online participation is no longer cost or access to technology, but attitude.

“35% of those SME operators without a website said they didn’t see the value of a website, while another 23% felt it wasn’t a priority,” he says.

“We hope the kind of information we’re providing in this latest Monitor gives them motivation to take another look at the benefits of getting online. Businesses that are not online are clearly missing out on some significant advantages, from being more competitive to achieving higher revenue.

“Based on the results it’s clear there’s value for any business – in any sector – in establishing an online presence.”

Contrast in industries

New Zealand’s retail and hospitality sector is New Zealand’s ‘most online’. 32% of retail and hospitality SMEs have both a web and social site, 28% have a website only and 11% a social media site only. Only 28% don’t have their own online presence. New Zealand’s manufacturing sector is also a strong internet user, with at least 62% having their own online presence. 17% have a website and social media site, 37% a website and 8% a social media site.

New Zealand’s ‘least online’ industry is the agricultural sector, with 83% of farming, forestry and fishing businesses not having their own online presence. Just 5% have a website, 8% a social media site and 3% both. Only 32% in the construction and trades industry have their own online presence, with 19% operating a business website, 6% a social site and 7% both.

“It’s great to see some businesses leading the way – especially in sectors like retail and manufacturing, where being competitive and engaged with customers is so important,” says Mr Scollay.

“But it’s also concerning that some of our most important sectors are missing out, possibly because many business operators feel promoting their products and services via the web isn’t relevant to them. This is unfortunate, given we know around 80% of consumers now search online first before deciding to purchase a product or service. For example, if they're looking for a plumber or a sparky, customers are now most likely to search the internet for a provider in their local area.”

Auckland and Wellington most connected

When looking at the geographic spread of online business activity, Auckland and Wellington are New Zealand’s most connected main centres for businesses, with 51% of business in each city having their own online presence. This compares with only 47% in Christchurch and 43% of SMEs around the rest of New Zealand.

How connected – New Zealand’s online regions
REGION

WEBSITE

SOCIAL SITE

BOTH

Auckland 28% 8% 15%
Bay of Plenty 27% 11% 13%
Christchurch 25% 5% 18%
Hawke’s Bay 32% 13% 5%
Manawatu-Wanganui 18% 12% 19%
Northland 15% 9% 9%
Otago & Southland 23% 14% 14%
Waikato 12% 5% 12%
Wellington 23% 13% 16%
LinkedIn most popular social media avenue for business

According to the survey, LinkedIn is the most popular business social media platform, with 24% of SME operators using their profiles to connect with colleagues and other business people. 16% have a Facebook page for their business, while 4% have a Google+ business page. 4% communicate via Twitter, while 3% use YouTube as a vehicle to connect with customers.

Smart-devices increasingly popular

The survey also covered a range of other activities businesses used in relation to the internet. The use of smart devices in SMEs is growing rapidly, with the use of smartphones increasing from 46% in February 2013 to 53% in the August Monitor. Tablets are also becoming more popular with 30% of businesses now using an iPad or other device, up from 26% in February.

Almost half of all SMEs (49%) now accept some form of online payment via a shopping cart, while 44% buy products or services online. A quarter (25%) use search engine marketing or search engine optimisation as a way of promoting their business, 17% have an e-commerce facility within their website, and 15% use other websites to sell products and services.

“New Zealand businesses use of a wide array of internet tools and technology, demonstrating how comfortable many members of the local business community are with the digital space,” says Mr Scollay.

“What remains a concern, though, is the limitations we are seeing in online presence. With a website or social media profile making such a significant difference to business performance, we believe more information and support is needed to ensure local business owners get on the right side of the digital divide.”

For MYOB business tips and advice on topics such as building an online presence, visit MYOB’s blog, The Pulse.

-ENDS-

For further information or immediate comment, please contact:

Kristy Sheppard

MYOB

Tel: 09 925 3560

Mob: +61 407 450 860

Email: kristy.sheppard@myob.com

Gerard Blank

The Agency Communications Limited

Tel: 03 341 5841

Mob: 0275 243 629

Email: gerard@theagencynz.co.nz

About MYOB New Zealand

Established in 1991, MYOB is New Zealand's largest business management solutions provider. It makes life easier for approx. 1.2 million businesses across New Zealand and Australia, by simplifying accounting, payroll, tax, practice management, CRM, websites, job costing, inventory and more. MYOB provides ongoing support via many client service channels including a network of over 40,000 accountants, bookkeepers and other consultants. It is committed to ongoing innovation, particularly in cloud computing solutions, and now spends more than NZ$35 million annually on research and development. In 2013, MYOB expanded its offerings with the acquisition of accounting solutions provider BankLink. For more information, visit myob.co.nz.

About the MYOB Business Monitor

The MYOB Business Monitor is a national survey of 1,000+ New Zealand small and medium business owners and managers, from sole traders to mid-sized companies, representing the major industry sectors. It has run since 2009, commissioned to independent market research firm Colmar Brunton. This most recent survey ran late January/early February 2013. The Monitor researches business performance and attitudes in areas such as profitability, cash flow, pipeline, technology usage and the government. The weighting of respondents by both geographical location and sector is based on overall market proportions as established by Statistics New Zealand and is drawn from an independent survey group, which includes both MYOB clients and non-clients.