Only by investing in digital skills and going ‘mobile-first’ can Irish businesses get back on track with the digital economy, writes John Kennedy.
Summer 1997: A group of enthusiasts gather in the basement bar of the Henry Grattan pub on Baggot Street. The motley crew of ad agency people, tech nerds and magazine publishers are excited about the dawn of the internet age. The enthusiasm is infectious, the people are earnest. It is the earliest Irish Internet Association (IIA) meeting I can recall attending.
February 2002: I attend an IIA gathering at UL to discuss the dot-com bust. We agree it is a market correction, and that trends such as mobile devices are worth keeping an eye on.
November 2010: Former IIA CEO Joan Mulvihill says that no matter how interesting app deals get (such as Groupon), retailers need to remember that the art of retail is in the detail – otherwise they risk undermining customer experiences.
July 2012: IIA launches ‘Digitise the Nation’ campaign, beginning with a roadshow to impress upon communities and businesses the need to get online.
February 2016: IEDR reveals that 68pc of Irish SMEs still cannot process e-commerce and 40pc don’t have a website. IIA reveals it is working on a new tool to help businesses get online and get trading.
June 2016: Mulvihill declares that e-commerce is not the ‘field of dreams’ for Irish businesses, there is no one-size-fits-all solution and “any initiative that does not acknowledge that fundamental understanding of retail is never going to really work”.
November 2016: A sombre gathering at the IIA AGM. The organisation narrowly avoids being wound down, the IEDR sponsors a consultant’s review and grassroots members from as far away as Donegal turn up and passionately explain that rural businesses, for whom recession is still a reality, need resources and training if they are to navigate the world of e-commerce. They need the IIA.
‘There are 234,000 SMEs in Ireland and they employ 950,000 people. If each of these firms were to take on just one person to focus on innovation, think of the scale of growth’
– PAUL FARRELL
These vignettes of memory are how I compartmentalise in my mind the slow trudge of e-commerce in Ireland, despite the best efforts of enthusiasts such as Mulvihill, and online trading vouchers from the Government.
In the time frame, the tech economy went from boom to bust, to boom again. Born-on-the-web player Google is now one of Ireland’s largest employers (6,000 people). Social network giant Facebook is at 1,500 in Dublin, and growing.
And still, Irish businesses dawdle. The poignancy of the November 2016 IIA meeting was underlined by the belief and passion of grassroots IIA members willing to fight on because if they don’t, it won’t just be their businesses that will die – their communities will suffer too in the long run.
And it will be hard to imagine leaders such as Mulvihill, a real ally to high-street traders who understood retail in depth, emerging again to foster training and knowledge in the same way and with the same spirit.
The world keeps turning. Consumers are not only shopping online; they are shopping with their mobiles and they are engaging with AI bots via social media. The businesses that are far out in front are already tapping a data treasure trove to know the customers better than they know themselves. One thing won’t change: consumers will always crave experience and value.
And yet, 40pc of Irish business don’t have a website.
No one shouted ‘Start!’
On the face of it, Dublin will tell you that the economy is on the up, the recession is receding in the mirror and civil servants are clamouring for pay rises – a sure sign that things are looking good again.
Down the country, the towns are dying.
With the exception of large urban areas, businesses in small towns and villages are fighting for survival. If you read the newspaper headlines in recent weeks, small towns have not only lost some of their businesses, but now they risk losing their communities too.
E-commerce and digital transformation are not silver bullets for the problems facing rural businesses, but they are a conduit if a business is prepared to reimagine itself. It takes sacrifice and vision, and sadly not every business is up to the task.
The gulf has been exacerbated by the lack of broadband as the country still awaits the National Broadband Plan. A study by Vodafone in November found that nearly one-third of rural Irish businesses would consider relocating to a bigger nearby town just to get broadband.
Can you hear the nails being driven into the coffins of communities?
Across the country, businesses best positioned for export may be ahead of the rest of the SMEs in engaging with e-commerce, simply because they have to be.
This year’s Virgin Media Business Digital Insights report found that 86pc of businesses have optimistic growth prospects for 2017. 74pc of these leaders say this growth will be down to digital technology, and they plan to invest accordingly.
In terms of online sales, Irish businesses say the online channel will account for 40pc of sales, up from 33pc in 2015.
You get the sense that this good news comes from the outliers, the ones far out in front. Not the laggards.
Virgin Media’s commercial vice-president Paul Farrell said that 6pc of Ireland’s GDP comes from the digital economy, with revenues from digital growing from €7.5bn in 2014 to €21bn by 2021.
Farrell said that 36pc of Irish businesses have invested in the cloud, ahead of the EU average of 21pc.
I couldn’t help but feel that this reinforced the sense that we are talking about an Ireland of two economies here – the connected, but not the disconnected.
It is only rosy in the land of the 60pc, for the Irish businesses that do have a website. I would wager that a good proportion of the other 40pc are dotted in small villages and towns. Some of these towns can only rely on seasonal gains, if they are in a tourist or holiday resort location, in the summer months.
From phone to door: A new hope
There is a tendency in people when they feel overtaken by trends or technologies to feel alienated or just give up.
That is the easy option and it never ends well.
The spark of hope in the Virgin report was the willingness of businesses to invest in skills. 88pc of businesses surveyed said that IT capability is a significant precondition for considering potential candidates (up from 75pc in 2014).
The report pointed to 34,000 domain registrations among Irish businesses with the IEDR in the past year.
Farrell said that if each business in Ireland hired one person to manage their e-commerce, it would result in explosive employment growth. “There are 234,000 SMEs in Ireland and they employ 950,000 people. If each of these firms were to take on just one person to focus on innovation, think of the scale of growth.”
The danger is that too many businesses will feel that they have been left behind by technology, that they are too old, too traditional to change.
They are wrong.
At the Virgin briefing, Gerard O’Neill from Amárach mentioned the ‘economy of likes’. He was referring to the Facebook economy and local businesses have it within their grasp to forge tangible online relationships with customers based on the context of location, creating strong local trading economies.
Think of someone selling an old lawnmower, or a local beautician drumming up make-up appointments as the weekend or wedding season approaches.
Just because a business does not have a website (though it may have a Facebook page), this economy of likes feeds directly into the mobile economy, the world of the smartphone-toting consumer.
There is a distinct chance that the failure of the last 20 years to get online could be forgotten if firms find ways of engaging with the mobile consumer.
The latest PwC 2017 Irish Total Retail report, which includes interviews with 1,000 Irish shoppers, found that while retailers are still in recovery mode after almost 10 years of recession, Irish consumers have moved on and look to social media for inspiration, using their mobile device as a tool for pricing goods while out and about.
Around 40pc of Irish consumers admit to physically shopping every week, in line with global norms.
However, consumers are relying on their smartphones and 30pc say their mobile will be their main shopping tool going forward.
PwC recommends that Irish retailers adopt a ‘mobile-first’ strategy and ensure that sales assistants on the ground can demonstrate deep product knowledge, be capable of checking other stores quickly and inform consumers of real-time offers.
This is the most tangible opportunity yet for retailers to take their domain knowledge, expertise honed over decades, and turn that into meaningful experiences for consumers in a way that marries the offline and online worlds.
People talk, people recommend and, more than anything, it is a chance to escape the old ‘service with a snarl’ mentality. Take disinterested shop assistants and replace them with engaged, passionate social media experts and bloggers on anything from bric-a-brac, cycling, gourmet foods, books, clothes and more.
It is no longer about being left behind.
It is about joining the dots between the past and present, offering the real and tangible experiences and value that the consumer will always crave.
Get talked about, do the talking.
It is no longer about just doing e-commerce for e-commerce’s sake. It is about being good at what you have always been good at.
Just do it through a mobile-first lens.
Build it, and they will come … possibly to your door.