Drifting online economy? Just cry me a digital river

15 Feb 2016

Stop lecturing SMEs about missing the e-commerce boat if you are not going to help them with how to triumph in the digital economy

If we keep on telling traditional businesses and high street retailers that they missed the boat on the digital economy then they may never embark on the e-commerce journey. It’s time to change the tone and just help them with the how, says John Kennedy

“Stop talking. Stop talking. Stop talking. Oh, my god, they are still going on.” That’s the noise my brain makes when people tell me how to suck eggs. The fact that they may have to tell me over and over again because I didn’t listen in the first place usually eludes me because of my pride. And an ego with a capital E. Or I’m preoccupied with other matters. Mostly with other matters.

The point I’m trying to make is, in the lexicon of e-commerce, Irish businesses may have stopped listening because of the hectoring, lecturing tone we all adopt when it comes to the digital economy: they have missed the boat, it’s too late, all that cash going overseas is their own fault. Blah, blah, blah.

I’m probably the worst culprit of this and I think I’ve thrown in the word “lamentable” in relation to the current situation on a good few occasions. Well, it’s time to lament our own actions and change. And for the agents of change to get over themselves. If you keep on telling people they are bad at something, they might just start to believe you. Or they simply might stop trying.

Irish businesses have had plenty of things to care about in the recession years. Staying alive probably occupied 110pc of their time since 2008. In recent months, when you consider the storm and flood damage a lot of them have had to put up with, along with high council rates and high rents, telling them that revenues are flowing to the UK, US and China is a little too much for their plate. It’s a little rich.

Digital economy? Businesses have their own existential economic crisis

It’s an existential crisis alright, but one where foresight, compassion and understanding will go a lot further than lecturing. Let’s focus on being constructive and not destructive. Help them with the “how” not the “why”.

And keep the language real. Digital is not a silver bullet. It may help, but it’s only part of the solution. The rest is up to them. Help them with how to help themselves.

These businesses know all about the digital economy. They know all about e-commerce. Many of them are on Facebook, they have smartphones. In fact, they love them. They are not blind.

What we have all failed to do is help them with how.

Embarking on the digital journey isn’t easy. This wasn’t helped in the early days of the internet by web designers charging astronomical fees to build a website. When social media came along it wasn’t helped by self-proclaimed social media ninjas and other charlatans charging an arm and a leg to tell them just to be themselves on social, turning something that ought to be natural into a dark, supernatural art.

The tech industry itself doesn’t help because of its love affair with acronyms and keeping customers at arm’s length with email addresses rather than phone numbers. Banks themselves didn’t make it easy because it has been extremely difficult to set up merchant accounts for online trading and getting a .ie domain address requires following stringent business rules that some liken to registering a new business.

If you place yourself in the mind of someone more concerned with keeping the wolf from the door and the lights on, let’s be honest, we created a mental block. A mountain too hard and too steep to climb.

Last week, the Irish Internet Association (IIA) took a stab at solving this problem by kickstarting a research path with the support of the IEDR, AIB and AIB Merchant Services to find out what would help SMEs get online faster with the intention of creating a diagnostic tool that will give them the know-how and a checklist of what to do.

IIA pointed to IEDR research which showed that 40pc of Irish firms don’t have a website and, of those that do, 68pc can’t process e-commerce payments. The IEDR estimates are that €8.5m is spent online every day by Irish consumers and 80pc of this goes overseas.

There are lots of different statistics. The Department of Communications estimates that 91pc of SMEs can’t process e-commerce payments, for example.

According to the second UPC Report on Ireland’s Digital Economy, published last year, the internet economy in Ireland employed the full-time equivalent of 49,000 people in 2012 and more than 150,000 new jobs could be created in the area by 2020. It estimates the value of Ireland’s internet economy is forecast to grow from its current level of €8.4bn to an estimated €21.1bn by 2020, with consumer spending contributing 60pc (€13bn) to this figure.

The statistics are different but the thesis is the same – money is leaving the country because Irish SMEs aren’t in a position to stem the digital tide.

Success at retail lies in the detail

The IIA’s CEO Joan Mulvihill actually knows quite a few things about the detail of retail. It was her forte at BDO Simpson Xavier prior to joining the IIA. And she worked with many privately-owned family businesses, many of them high street retailers. So I sense her plan to develop a body of research culminating in a handy tool to simplify the journey of ‘how’ to do e-commerce rather than ‘why not’ comes from a rational appraisal of a very real situation based on very real experience and genuine empathy.

Retailers know all about e-commerce. And they know there is a tsunami of change coming their way that includes embracing services like Apple Pay and finding box-clever ways of encouraging footfall that incidentally involves smartphones.

Last week, we spoke to Stephen Brewer, the former CEO of Eircell who masterminded the arrival of prepay into Ireland in the 1990s and sold the very first Apple computers in Europe in the late 1970s. As chairman of an Irish start-up called Imob Media, he is fully engaged in the next phase of high street mobile commerce that involves using clever geofencing to subtly steer consumers into high street stores based on the context of them simply walking past a store.

This morning, we wrote about a promising young Dublin start-up called Buymie, which has developed proprietary technology to ensure consumers can buy groceries and other items from retailers in Dublin and have goods delivered from phone to door within one hour.

Last year, we wrote about Patrick Leddy, CEO of Pulsate, who raised $1.2m from PayPal and retail data science giant Dunnhumby to develop his concept of context marketing for the high street employing technologies such as Apple’s iBeacon wireless communications platform.

Also, last year, I spoke to the Irish government’s chief digital adviser, Dr Stephen Brennan, about the €5m trading online voucher scheme to enable small companies to embrace the digital economy. Brennan said that where the scheme has been embraced by 1,000 out of 2,000 targeted companies within a three-year period, it has delivered tangible results.

Every time the IEDR, the organisation responsible for the .ie domain, reports its annual results, it usually prompts a backlash on Twitter from various domain name resellers who point to the red tape that is holding firms and individuals back from registering. The IEDR reported what it claims to be its highest annual number since 2011, some 35,225 new .ie domains were registered in 2015 – that’s 96 domains a day. Dublin, with 71, has the highest number of .ie domains per 1,000 people, followed by Carlow (52) and Wicklow (48). Donegal, with 18 .ie domains per 1,000 people, has the lowest rate in the Republic of Ireland.

Domain name resellers have businesses to run and more than likely know more than most what is actually holding people – particularly Irish businesses – back. If they are frustrated about red tape, security and pricing then they need to be listened to.

On the other side of the coin, it is worth remembering the state of the IEDR prior to CEO David Curtin taking the reins of the organisation in 2002, when it was almost bankrupt. Curtin has stuck with unwavering conviction to a principle that the .ie domain should be a bastion of best practice and solid reputation for this nation, not just a flagship but our nation’s flag on the fast-moving digital high seas. Not only that, each year the IEDR awards €150,000 to 20 firms towards enabling micro-enterprises to get fully online. Credit where it is due.

The next step

It is an odd juxtaposition to have some of the biggest companies in e-commerce in the world, from Apple to Google, Amazon, PayPal and many others, running sophisticated operations while down the street we bemoan and “lament” why Irish firms aren’t digital enough.

Let’s be fair. Jeff Bezos was able to create Amazon.com in Seattle initially to sell books because he had a mass market on his doorstep and could quickly enjoy economies of scale.

To the high street butcher or retailer in Dublin or Dundee, Scotland, for that matter, it is a different story and one that requires tact and empathy to help them navigate the digital straits in a way that makes sense. Blinding them with science and statistics, telling them it is their own fault for letting revenues float downstream, is not the answer.

It is not about having the scale of Amazon but more about having the latitude to engage in a constant conversation with loyal customers who are always right. The tools are there for the taking from Facebook to WordPress to start that conversation.

All of the expertise and know-how exists in abundance, from the thousands of Irish managers at the various tech giants dotted around our cities to the derring-do of entrepreneurs like the Collison brothers with Stripe, which exists fundamentally to take the friction out of electronic payments.

Believe it or not, despite the skills gap, one of the problems for many technology graduates today is actually finding a job in technology once they leave college because they don’t have initial experience. Perhaps we should look at ways of getting these graduates jobs for a year or two as digital strategists with traditional firms. That kills two birds with one stone.

I remember attending my very first IIA meeting in the basement of a bar on Baggot Street in Dublin on a summer’s evening in 1998. In the initial gloom of the basement, eyes were bright and shining with the promise of what the internet – we didn’t call it digital then – economy could mean for businesses. It could be revolutionary, we all agreed.

That’s why it’s surprising that, almost 20 years later, we are still talking about the “how”.

All the constituents, from the domain name resellers to the banks to the start-ups with the nous, you all need to get on board with the “how” rather than the “why.” Stop the blame game, change the tone of your conversation, find a new way to engage that doesn’t involve lecturing or statistics.

Otherwise, just cry me a digital river about why online revenues just drift elsewhere.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years