Online spending falls year-on-year as economic downturn bites

4 Nov 2008

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There has been a noticeable fall in the amount of products and services bought online since 2007, and online research for products has fallen 10pc due to the decline in economic activity.

Irish shoppers are spending less money buying good and services onlin, and are spending less time on the internet doing research on their favourite products, according to a landmark report that has just been published by Dublin-based digital communications consultancy Net Behaviour.

The Net Behaviour Report Consumer Index shows that since 2007, there has been a 2pc fall in the quantities of products and services purchased on the internet.

Purchases of ‘luxury items’ have seen a sharper decline, with purchases of flights down by 5pc, hotel bookings by 7pc and videos and DVDs by 5pc.

The research – which was carried out by Monitrack Internet Research – also indicates a drop of around 4pc in the amount of time that consumers in Ireland spend online researching products to buy.

Online research on clothing and accessories is down by 10pc, on electrical goods by 8pc, on videos and DVDs by 8pc and on books and magazines by 9pc.

The Net Behaviour report shows that 40pc of Irish internet users are between 25 and 44 years of age. However, it also notes that some 16pc are between 45 and 54, and a considerable 27pc are over 55 years of age.

The report warns that the size of the over-55s markets is often missed by the mainstream media, perhaps because these more mature internet users do not necessarily visit the newest sites or blogs, or use social networks as often as their younger counterparts.

“The general decline in economic activity – in Ireland and overseas – over the past year has almost certainly been the major factor in the fall in online purchasing activity,” explained Emmet Kelly, operations director, Net Behaviour.

“In particular, consumers are less willing to spend the kind of money on luxury items that they would have happily spent a year ago.

“It’s noticeable that, while online product research is down by 4pc, purchasing has fallen by just 2pc overall. While it’s possible that consumers are becoming more internet savvy by needing to search less when they need to make a purchase, the Net Behaviour Consumer Index indicates that Irish internet users are less keen to look for ways to spend their money than was previously the case.”

According to the findings, RTÉ is now Ireland’s second busiest website, after Google, with the Aer Lingus and Ryanair sites ranked third and fourth respectively.

Regarding RTÉ, the report said: “This represents an amazing growth in the popularity of the service for this broadcaster, and also indicates a shift in internet use towards rich-media mainstream news provision, video online and podcasting.”

eBay leads the online shopping sector with a massive 36pc of the market. Amazon follows in second with 25pc. Argos has 21pc and BuyandSell 19pc.

RTE.ie has emerged as the favoured medium for watching online television-related content, with 15pc of the market, followed closely by BBC.co.uk with 14pc.

“Broadband penetration – often in a bundle with a phone line or 3G modem – makes services like video on demand a reality for Irish consumers for the first time. Also, offerings like BBC iPlayer … and enhanced Sky Interactive services means internet use for film and video is a more taken-for-granted aspect of peoples’ lives,” the report said.

RTE.ie/business and Independent.ie/business are joint leaders in the online business news sector, with 6pc each of the market. The Financial Times follows in second, along with the Sundaytimes/business with 4pc.

Freeonlinegames.com dominates the gaming sector by controlling 6pc of the online market. Miniclip.com follows second with 4pc. Out of those who play games online, 29pc of 18-to-24 year olds use Freeonlinegames.com at least once a month. A total of 33pc of those 25 to 34 who play online use this site.

RTE.ie/sport is the market leader in online sporting sites among Irish users with 13pc, followed by Skysports.com with 10pc, BBC.co.uk/sport with 9pc and GAA.ie with 8pc.

Aer Lingus and Ryanair are the leaders in the Irish online airline space and are amongst the most popular Irish websites with 45pc each. Aer Arann gets 13pc of Irish monthly visits, EasyJet gets 8pc, BA nets 10pc and BMI clocks 8pc.

Google is the clear winner and is visited at least once a day by 64pc of Irish internet users, while Yahoo! is now only used by 21pc of internet users for daily searches, with MSN at 14pc and Ask with 2pc. Monthly usage (including daily) shows a similar story with 72pc for Google, 40pc for Yahoo! and 26pc for MSN.

For fact searching and information, some 44pc of Irish internet users will visit Wikipedia in a given month, making it Ireland’s fifth busiest site. “In fact, Wikipedia is now more popular than any of Ireland’s newspapers, property sites, blogs or even Bebo, and only lags in importance behind Google, RTÉ.ie, Ryanair and Aer Lingus for Irish internet users,” the Net Behaviour Report said.

By John Kennedy

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Editor John Kennedy is an award-winning technology journalist.

editorial@siliconrepublic.com