The increasing availability of ubiquitous high-speed broadband connections and the establishment of an effective online presence allow Australian businesses, particularly small businesses, and not-for-profit organisations, to participate in a global marketplace. Greater use of online opportunities will enable Australian businesses to conduct their existing business processes more efficiently to maximise their overall competitiveness, grow revenues and increase productivity. It will also spur new business processes and innovations that can drive Australia’s future economic growth.

The Council of Small Business of Australia has recognised that:

‘the opportunities for small businesses in Australia’s broadband future are limitless. The NBN presents Australian small businesses with a once-in-a-lifetime opportunity to grasp a global long-term advantage.’

These advantages are available to all types of businesses, whether those businesses operate in, for example, the manufacturing industry, the services sector or retail. Digital technologies can streamline internal processes, improve information gathering, facilitate better customer service and permit more targeted sales and marketing campaigns, even for those businesses that still require a face to face transaction or need to deliver a physical product. A recent report by the Australian Communications and Media Authority indicated that Australians went online during the last quarter of 2009–10 to purchase a wide range of services, with travel, print and music related items being the most frequently identified purchases.

The OECD estimated – [PDF -1.45MB] that participating in e-commerce as a sales channel with consumers can deliver efficiency improvements for businesses. Specific areas for efficiency gain identified by the OECD include:

• a reduction in inventory costs due to the adoption of ‘just-in-time’ delivery and the ability to improve forecasting
• expanded opening hours to 24 hours, seven days a week, unrestricted to physical shop hours and open to a global marketplace
• reduced distribution costs and need for physical office/retail space

The OECD estimated – [PDF -1.45MB] the impacts of e-commerce on distribution costs for some types of businesses could result in savings of 50 per cent to 90 per cent, compared to traditional bricks and mortar systems. Particularly for those businesses engaged in the retail industry, it is important that they are effectively engaging online and enjoying these cost savings because a global digital economy levels the playing field between local, national and international retailers, allowing them to compete at the click of a mouse on quality, price, customer service and delivery times.

A vibrant online retail industry in Australia could also have economy-wide benefits and advantage consumers. An Access Economics report [PDF- 928kb] stated that the economic benefits of e-commerce included an increase in consumer welfare as a result of greater choice and reduced information costs. A PricewaterhouseCoopers report – [PDF - 492kb] commissioned by the UK Government, estimated that UK households that were not online were missing out on an estimated savings of £560 (about $A850) a year from shopping and paying bills online.

For not-for-profit and community service organisations, engaging online could expand their supporter pool to include potentially the entire world and support more innovative fundraising models. Greater use of broadband and digital technologies could drive internal efficiencies and streamline member management processes.

In addition to improving current business models, an NBN-empowered digital economy could also drive new business models and greater firm-based innovation. Recent research undertaken by the ABS demonstrated that there was a strong relationship between the intensity of technology use and innovative activity in businesses. Based on firm level data for 6 442 businesses tracked over time, the ABS concluded that:

‘By enabling closer communication and collaboration, ICT assists businesses to be more responsive to innovation opportunities and provides significant efficiency gains. For example, having ICT technologies such as broadband internet, web presence and automated system linkages, assists businesses to keep up with customer trends, monitor competitor’s actions and get rapid user feedback, thereby assisting them to exploit opportunities for all types of innovations.’

Australia’s ICT sector itself will be a key beneficiary of a growing digital economy.