Wednesday 26 April 2017

Irish firms leave offline business behind as 'Amazon effect' starts to take hold

Ireland's traditional retailers are facing increased pressure from giants such as Amazon
Ireland's traditional retailers are facing increased pressure from giants such as Amazon
Adrian Weckler

Adrian Weckler

Companies are ditching offline business as new research shows that online sales in Ireland doubled in the last two years, from 17pc to 33pc.

This is expected to rise to 40pc this year, as Irish people gradually switch to online channels to shop and do business.

A new report, by Amarach Research for Virgin Media, predicts half of Irish firms' online sales will soon be to customers outside Ireland.

"We have seen large shifts in the percentage of sales generated online in recent years and it looks like that shift will accelerate in the year ahead," the report said.

"The pace of change for Irish businesses is accelerating. Some of this is challenging, as old ways of working don't work anymore."

There has also been a big jump in the number of companies which say that online reviews of their product or service are critical to their business prospects.

The Virgin report claims that 67pc of Irish firms say online reviews are important - a jump from 53pc two years ago.

And 80pc of companies say that they now change their business services or methods following customer reviews and feedback.

The research comes as Ireland joins a wave of countries whose traditional retailers and businesses are facing increased pressure from giants such as Amazon and online payments companies.

In the US, UK and other countries, Amazon is introducing same-day delivery as standard on some products, seven days a week.

It is also buying up planes to guarantee that it doesn't have to rely on third-party delivery companies to deliver products on time.

The effects of online business are being seen in traditional retail sales periods. In December, the January sales in major Irish retail outlets started on Christmas Eve to combat online sales starting on Christmas Day.

A recent report from the European Commission indicated that Ireland ranked first of 28 EU countries at incorporating technology at work, a jump from third place last year.

It said that Ireland scores especially well in ecommerce and online sales compared to EU rivals.

A third (32pc) of Irish small-to-medium sized businesses sell products or services online, said the European Commission.

This figure is twice the average among European small businesses, which stands at just 16pc.

Similarly, Irish small and medium-sized businesses record 19pc of turnover from ecommerce activities, compared to an average of 9pc of turnover across the rest of the EU.

Ireland also tops the European tables when it comes to selling online across borders, with 16pc of small and medium-sized firms trading on the internet with cross-border business partners.

This compares to a European average of just 7.5pc.

The Amarach report, commissioned by Virgin Media, was based on interviews with 200 Irish firms.

It claims that 88pc of businesses say IT capability is an important precondition for considering potential staff candidates.

This skills that are most prized include analytics (70pc), programming (60pc), digital marketing (51pc) and social media (49pc).

The report says that the digital economy in Ireland is now worth 6pc of Ireland's GDP and that online consumer spending will grow from €7.5bn to €14.1bn by 2021.

It says that 60pc (€4.5bn) of Irish online shopping currently goes abroad.

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