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The total online spending by small businesses is expected to reach $70 billion by the year 2012, up from $47 billion in 2006, according to JupiterResearch's new report "US Online Small Business Market Category Forecast, 2007 to 2012."

Small Business Online Spending To Top $70 Billion

The amount of small businesses that buy online will grow at a compound annual growth rate of 4.3 percent through 2012, driven mainly by the growth in the number of small businesses overall.

"While technology manufactures are reluctant to push the online channel over others, retailers will continue to promote the online channel as it provides them better margins," explained Sonal Gandhi, JupiterResearch Analyst and lead author of the report.

"Growing competition among online retailers for small business spending will in-turn put pressure on them to offer promotions and incentives leading to higher conversion online."

According to the report, small businesses will continue to see value in buying online either through convenience or better prices or variety. As relationships with online suppliers mature, small businesses are likely to provide them with greater portion of their business.

"In addition, 82 percent of small business decision makers research products or services for their business online, monthly or more frequently," said David Schatsky, President of JupiterResearch. "Companies should therefore make driving and tracking the influence of online on off-line sales an important part of their strategy."