Online spend at €4bn a year but 75pc of it is going abroad
ALMOST €1 of every €12 spent by Irish consumers goes to overseas internet retailers, figures obtained by the Irish Independent have revealed.
Around €4bn of the country's annual €35bn retail spending is now done online.
But only a quarter of the money from internet purchases goes to Irish online merchants.
And the flight of consumer cash is likely to get worse, with online spending growing year-on-year.
While consumers have drastically cut back on purchases in traditional stores since the recession kicked in, the frequency of online buying shows no let-up.
The Digital Hub Development Agency said figures from Visa Europe indicate online purchases by Irish consumers now exceed €4.1bn.
The figures show that online purchases were €2.96bn in 2010 and are growing by up to 39pc a year, said Dr Stephen Brennan, strategy officer with the Digital Hub, a state body promoting Ireland's online sector.
He warned that Irish companies would have to beef up their online presence to stem the flow of purchases overseas, with the market predicted to soar to €21bn by 2017.
"The Irish retail sector has been doing very badly, but official figures don't capture the huge amount being spent online, most of which is going overseas," he said.
The latest Central Statistics Office figures show that retailers in Ireland have an annual turnover of around €32bn. However, the CSO said that while that may include some internet sales by Irish-based retailers, it does not include purchases from internet-only operators or those selling from overseas locations.
The latest Eurostat figures show 43pc of Irish consumers made an online purchase last year, with travel and hotels the number one buys, which has led to many travel agencies closing in recent years.
Clothes and sports goods are the second most numerous purchases, with 17pc of people buying them online last year, followed by books and magazines at 15pc, music and film at 14pc and electronic equipment at 13pc.
However, only 4pc of Irish consumers bought food over the internet in the past year, far fewer than in the UK, where one in five people regularly shops for groceries.
Figures from online advertising body IAB Ireland, though, show the average person here had spent €685 on online purchases in the past six months, well above the EU average.
This growth has been fuelled by the success of deals websites such as Groupon, which entice consumers into making online purchases for the first time, said Alan Coleman of Wolfgang Digital, an online marketing consultancy.
A spate of closures of Irish travel agencies and record, video, book and computer games stores has come about as a result of online competition.
Retail Excellence Ireland chief executive David Fitzsimons said retailers were very aware of the need to meet the online challenge, as evidenced by 300 of them attending a conference on the topic last month.
Consumers are particularly keen on buying branded goods online, which explains why clothes and sportswear shopping has surged, said Mr Fitzsimons.
"Even if Irish retailers are not actually transacting online, it's vital to have a strong presence so customers can research their options or order goods before collecting them in-store," he said.