Aussie businesses are not using the Internet to its full potential.

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Australian small and medium businesses (SMEs) are still far more likely to make an online sale to a customer located around the corner than interstate or overseas.

That’s according to the Sensis e-Business Report, released today, which shows Aussie businesses are failing to exploit the Internet’s global reach and are still selling goods mostly to local web users.

In fact, most web sales by OZ SMBs were made to customers in the same city or town and the likelihood of a sale diminished as the distance between a business and potential customers increased.

87% of SMEs online successfully sold goods and services to local customers, unchanged from 2011, while 51% sold interstate.

Two thirds of businesses said the bulk of online sales came from locals, an increase of 6%.

Overseas customers on the other hand accounted for just 5% of regular transactions (+2%) although over one in four said ‘at least’ some sales were to international customers.

One the retail front, 87% of Aussie retailers are connected to the web with under two thirds accepting e-payments and just over half accepting online orders.

This is one of the lowest figures of all the industries polled by e-Sensis.

This clearly shows Australian small business were still grappling with how to use the internet to target overseas customers, warns the report’s author, Christena Singh.

“E-commerce offers SMEs the opportunity to reach a potentially global market, so itis interesting to note most sales made using e-commerce are still relatively close tohome,” Ms Singh said.

“If small businesses want to make the most of the new world of mobile and internetenabledcustomers they really need to think strategically and put in place a strongdigital business plan.”

Only 15 per cent have a digital business strategy, according to the report, even though 62% of SMEs have a website, meaning it could be time for business to sit down and think about the web.

SMBs listed internet security as the top concern, but a lack of computer expertise and the cost and time to introduce new technologies and the cost of hardware/software were issues raised.