Hey big spenders: Ireland’s digital economy now worth 6pc of GDP

21 Sep 2016

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The digital economy is now worth 6pc of Ireland’s GDP and at this trajectory will hit €14bn by 2021. Sadly, 60pc of this spend goes overseas.

According to the Virgin Media Digital Insights report, the average Irish citizen’s spend has grown 13pc since 2014 to an average of €80 per person per month.

The report found that 94pc of internet users in Ireland shop online.

‘Irish websites account for just 41pc (some €3.1bn) of Irish online purchases, with a further €4.4bn being spent offshore’

Future Human

At this rate, consumer spending online in Ireland is set to double to €14bn annually between now and 2021.

Irish SMEs are laggards, not leaders, in digital economy

As usual, Irish SMEs are allowing themselves to be shouldered aside by savvy overseas e-commerce traders.

About 60pc of Irish online spending – that’s €4.5bn – currently goes abroad, and this will reach €8.5bn by 2021.

“Ever-increasing numbers of Irish consumers are shopping and using services online,” said Tony Hanway, CEO of Virgin Media Ireland.

“This is seen in the increase in spending over the last two years, and the projected forecast for online consumer spending to grow from €7.5bn to €14.1bn in 2021.

“Irish websites account for just 41pc (some €3.1bn) of Irish online purchases, with a further €4.4bn being spent offshore. If that trend continues to 2021, over €8bn euro in goods and services will be bought offshore at that time. This represents a significant potential loss of trade to the Irish economy and Irish businesses.

“With online spending by Irish consumers set to almost double in value in the next five years, there are opportunities for digitally savvy Irish SMEs and start-ups to capture their share of the fastest-growing sector in the economy, but they have to act fast,” Hanway said.

The reasons why Irish people are preferring to shop overseas are quite interesting. 53pc do so because the product is not available in local shops, and 72pc do so because they can get a better deal online. Convenience is another factor for 48pc of the consumers who were surveyed by Amarách Consulting for the report.

Taoiseach Enda Kenny, TD, agreed it was imperative that Irish SMEs position themselves to catch the digital wave.

“This report clearly highlights the huge opportunity for Irish businesses to increase their share of online sales,” he said.

“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.

“Supports are in place to help, including the Trading Online Voucher Scheme, which was launched in 2014 as part of the Action Plan for Jobs and provides matching funding to establish an online trading presence,” the Taoiseach said.

The Tinder generation

The report also looked at how digital technologies are impacting upon the personal lives of Irish people, with 71pc welcoming the new skills they are learning.

From a romantic point of view, 39pc of users state that digital technologies from apps like Tinder to online dating sites helped them to find relationships with current or previous partners.

Just 24pc, however, said the platforms helped with intimacy, while 37pc said they hampered it.

32pc of parents said that digital technologies were an obstacle to relationships with their kids, while 33pc viewed them as an aid.

Overall, 65pc of families felt more connected through digital communications.

The quick adoption of these technologies by Irish families and communities is an opportunity that Hanway urges SMEs not to ignore.

“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,” Hanway said.

Irish emerge as big online spenders (infographic)

Virgin Media Digital Insights Report

Virgin Media Digital Insights Report

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