Broadening the Net
By : Roseanne Gerin
Messangers online: Marcin Dulinski is comptroller for Internet courier orders at Syrena Kurierzy in Warsaw.
A small courier company on a muddy side street in Warsaw's Ursynow district seems an unlikely candidate for the Internet.
But Michal Rusiniak, the owner and president of Syrena Kurierzy, started a Web site for his firm two years ago, hoping to attract more customers. A year later, the 24-year-old entrepreneur purchased software to allow his clients to place their package delivery orders online. But with an average of only two to three orders per week at about zl. 40 per delivery, the money generated by Internet orders is an insignificant part of Syrena's total sales. And while Rusiniak is an Internet fan, his small enterprise hardly relies on the Net for business.
"Since it's just a few orders a day, the Internet has a minuscule impact on our operations, and at the moment we see it as basically an information tool about our company," Rusiniak said.
Syrena is one of the 48% of Poland's small and medium-sized enterprises (SMEs) that have computers with Internet access. Yet, as with most SMEs, the Internet is not a necessity when it comes to their bottom lines. Syrena's online orders, for example, total only about zl. 200, less than 1% of its average weekly sales of zl. 50,000, Rusiniak estimated. "The reason why this number is so small is because our regular customers are not using the Internet to make regular orders," he said.
Polish SMEs, entrepreneurial businesses that employ up to 250 workers, go online for a variety of reasons, such as communicating via e-mail, setting up a Web site, researching competitors' offers and in a few rare cases for e-banking transactions and providing online ordering for clients. Most, however, use the Internet passively to search for general information about competitors.
According to a survey of SMEs employing up to 49 workers, which was conducted by the market research firm Demoskop last October, Polish entrepreneurs use the Internet to find information (86%), to send and receive e-mail (69%), to download software and databases (44%) and to represent their firm online (43%).
Few entrepreneurs use Internet banking and e-commerce transactions, mainly due to the limited availability and uncertain safety of such transactions. According to Aleksandra Sztetyllo, the director of the promotions department of the government's Polish Agency for Enterprise Development, only about 1% of Poland's SMEs engages in retail e-commerce.
The Demoskop survey also found that firms with a large number of employees, overseas business partners, offices in cities and towns, or a boss with a university degree are most likely to be wired. The businesses using Internet the most are in the production, multi-sector and service industries.
At the end of 1998, SMEs accounted for 99.8% of the more than 1.7 million companies operating in Poland. Small firms, or those employing 10-49 workers, comprised 99% of this amount, while medium-sized companies employing 50-249 workers accounted for 0.77%, according to the Central Statistical Office (GUS). In 1999, SMEs accounted for 48.7% of Poland's gross domestic product (GDP), or the total value of the country's goods and services. Of that amount, small businesses, which employ up to 49 workers, accounted for 38.2% of GDP, while medium-sized companies employing 50-249 workers accounted for 10.5%.
"When you speak about the Polish economy, you are mainly talking about small and medium-sized companies," said Sztetyllo, adding that small firms constitute the majority of businesses in Poland.
The key business sectors of SMEs are trade and repairs (40%), production industry (14%), construction (12%), transport and communication (10%) and other service businesses (25%).
Syrena's staff of 10 full-time office workers and 40 part-time couriers orchestrates the delivery of packages around Poland and beyond. Its operations rely on seven computers only one of which has Internet access via a modem. All full-time employees have e-mail access, although Syrena's sales representatives still depend on fax communications with clients.
Syrena's staff also uses the Internet for strategic purposes, checking their competitors' Web sites to compare services and prices, Rusiniak said. The firm's software allows employees to see who's logging on to their Web site as well. "The Internet is a useful tool to find out which firms are interested in our offer," Rusiniak said. "Especially if we notice that it's a big, well-known company, there's a hint that we could contact them and present our offer, and thus attract customers." Between 50 to 100 visitors log onto Syrena's Web site each day.
Like Syrena, other Polish SMEs use the Internet to post information about their companies. "We realized that a Web site is as important as a business card," said Artur Kostkiewicz, the Internet coordinator and accounting director of Viktorio, a Warsaw courier with 30 employees. "Most other firms of our size have one."
Corporate identity Net style
Early days: Absolut furniture's Malgorzata Kempa (r) and Izabela Wajnert say their Web site has improved the company's corporate image.
Absolut, a Warsaw-based distributor of contemporary Italian and German office furniture, with seven branch offices in Poland, displays photos of its products on its Web site along with news about the furniture industry and the addresses of the firm's distributors. It also has an online questionnaire where prospective clients can send inquiries.
"The Web site conveys Absolut's image," said Malgorzata Kempa, the company's marketing director, adding that no prices are shown since face-to-face consultations are part of her firm's service. She said she could not attribute any part of the company's zl. 54 million ($13 million) turnover in 2000 to purchases made by customers who went to the web site first.
Only a handful of Polish SMEs are using the Internet to conduct e-commerce-related activities. The Warsaw-based travel agency Polish Travel Quo Vadis, for instance, operates a traditional travel agency as well as processes online hotel and excursion reservations for Wirtualna Polska's and HotelsPoland's Web sites.
HotelsPoland, which caters mainly to foreign tourists and companies and some Polish businesses, has 2,000-3,000 viewers a day, up to 10% of whom make online reservations, according to Dariusz Palecki, Quo Vadis' co-owner and commercial director. Few Poles use the service, fearing the cyber theft of their credit card numbers, he said.
Fifteen percent of the firm's sales come from online transactions. In 2000, Palecki estimated that Quo Vadis' turnover was $8.7 million, of which online bookings constituted $8 million. The firm processes 1,500-6,000 online reservations a month, depending on the season, Palecki said. His firm earns 1-10% commission on the reservations depending on service and price, but it has to pay 3% commission to the credit card companies to process the transactions.
Despite the financial intake, Palecki said that online transactions were not a vital part of Quo Vadis' sales, and that the Internet was not a necessary tool for travel agencies. "You can sleep safely without the Internet today," he said. "And probably for the next 20 years you could work without a computer by just having a fax and telephone since (most) clients are going the traditional way of travel shopping."
Traveler's tales: Dariusz Palecki, director of Polish Travel Quo Vadis, is waiting for the day when all business is done online.
Quo Vadis also uses the Internet for e-banking. The firm conducts its banking transfers and customer payments online. During a recent visit to the agency's office, the firm conducted a daily total of zl. 424,000 worth of e-banking payments.
Despite the number of SMEs that are online, 52% still lack Internet access. Sixty percent of small businesses said they did not use the Internet because they had no need. Other reasons were the high costs (16%), a lack of technical possibilities (10%), problems with telecommunication lines (3%), a lack of Internet skills (2%), and a lack of basic Web knowledge (2%).
Some industry professionals said the government should bear the responsibility for getting Polish SMEs online. Mainly they cite increased competition from European Union businesses, many of which use the Internet to a greater degree than their Polish peers and that Polish businesses are losing out. Western companies often look for Web sites before contacting firms, said Andrew Kinast, the managing partner of business advisory Grant Thornton Poland. Hence, Polish companies without Web sites will not even be considered, he added.
Racing to get online
Businesses with 20 employees will have to buy computers and go online whether they like it or not. A new law requires firms with at least 20 employees to submit employee information for social insurance. This must be filed electronically via a diskette or over the Internet with the Social Insurance Office (ZUS) by the end of 2001, according to Sztetyllo. Yet according to Demoskop's survey, slightly more than half of SMEs approved of electronic reporting, although most thought it would create problems within ZUS.
"Companies were afraid it would cause turmoil problems with data transfer," Sztetyllo said. "They were more afraid that it would cause certain disorders within ZUS, but they were not afraid to do it electronically."
To give SMEs a boost in cyber space, some industry observers contend that the government should fund Internet awareness and usage programs for SMEs.
This year, the Polish Agency for Enterprise Development submitted a proposal to the government for funding regional educational conferences to teach SMEs how to advertise online and use Internet banking. It also urges gminas, or local communities, to use the Internet as a tool for both promoting business within local communities for foreign investors and to have local entrepreneurs with access to Internet," Sztetyllo said.
But entrepreneurs are divided on whether the government should step in. "(The government) should wake up to the fact that this is a new era of business," Palecki said. "(Poland) has applied to be part of the European Union. These small companies will be lost without having 21st-century tools of communication to do business."
Others argue that government funds for SMEs are almost non-existent. "They can't do anything," said Kostkiewicz of Viktorio, referring to the agency for enterprise development. "Their funds are too small."
With or without governmental efforts to step up the Internet, Rusiniak of Syrena is confident that his online orders will increase. He said that overall Internet usage is increasing, private courier delivery is growing as a competitor to the national postal service, and Internet infrastructure is improving. "I think it will grow at the same pace as our company is growing, at 10% per annum."
