Irish consumers to double online spend by 2021, says study

SMEs still missing out on growth of online sector, says Virgin Media Digital report

Irish consumers are set to double the amount they spend online within the next five years, but only some of it will find its way to Irish retailers, according to a new study.

Consumers are also putting an increasing value on high-speed internet connectivity, the Virgin Media Digital insights report found Irish consumers will shell out up to €14.1 billion a year by 2020 on commerce sites, but more the half of that spend will go to retailers outside the country.

The report also revealed 94 per cent of internet users here shop online, with growth in spend outpacing general trends in consumer spending, rising 13 per cent in the past two years compared with 9 per cent for overall spending.

Opportunities missed

The figures show Irish SMEs are still missing out on opportunities presented by the growth of the sector. The digital economy is currently worth about 6 per cent of Ireland’s GDP, but about €4.5 billion of consumer spending goes to ecommerce companies overseas.


Only 41 per cent of Irish online purchases take place on Irish websites, a trend that could cost Ireland’s economy more than €8 billion in lost sales by 2021 if it continues.

But the reasons for the love towards online shopping have altered slightly. Although price remains the top consideration for consumers, with 72 per cent of respondents citing it as their reason for shopping online, convenience has fallen to third place, with a lack of local availability moving to second.

The survey also found that almost 60 per cent of those who shop online would buy the product in a local shop if they could get it at the same price.

The research, which was carried by Amárach, surveyed 1,000 adults throughout the Republic. This is the third instalment of the digital insights report, which was first published in 2012.

Internet connections are becoming increasingly important to consumers, with the average person placing a value of €390 a month on their high-speed internet access. That figure is triple the amount consumers said in 2014 they would need in compensation to give up their broadband service.

But the research also revealed that fewer people were happy with their broadband speed. Some 69 per cent of people said their broadband connection speed was sufficient for their needs, down from 74 per cent in 2014.

“It is clear that the digital economy is growing at a very fast pace and it is essential that Irish businesses, in particular SMEs, capture this increasing market,” Taoiseach Enda Kenny said.

“This report clearly highlights the huge opportunity for Irish businesses to increase their share of online sales. Taking the leap to trading online can be a big step for many Irish businesses. It is important that businesses are encouraged to trade online and to maximise the opportunities of the digital economy.”

Psychological impact

The report also looked at the psychological, social and emotional impacts of digital technologies, and found mixed results. Although the advance of technology has had a positive impact on work and study, the findings are less clear-cut when it comes to personal relationships.

The survey found 37 per cent of respondents said technology had hindered intimacy compared with 24 per cent who believe it helped. Almost half of respondents said they were worried about the privacy implications of digital technology, a figure that has remained almost unchanged from the 2014 report.

On the positive side, 39 per cent of respondents considered digital technologies to have helped relationships with current or previous partners; only 30 per cent said they had hampered relationships. Almost two-thirds said they felt more connected to family through digital communications.

The internet of things is one development that was put to consumers, with more than a quarter rating the ability to control home security through their smartphones as a service they would like to use in the future.

Virgin Media chief executive Tony Hanway said although people were comfortable with and knowledgeable about digital technologies, a clear value proposition needed to be offered before they would adopt them.

“One of the biggest challenges to SMEs, start-ups and even large companies in the future will be persuading already satisfied customers that they really should try the new products and services that digital technology will make available in the coming years,” he said.

“Businesses must start with the customer and the emotional and the relational impact they want them to experience when they use a new product or service. The ability to develop a more customer-centric approach will decide the winners during the next wave of the digital economy.”

Ciara O'Brien

Ciara O'Brien

Ciara O'Brien is an Irish Times business and technology journalist