Amazon expansion is a key to Ireland’s online market clout

The announcement by Amazon that it is creating an additional 500 jobs in Ireland has far-reaching implications about Ireland’s position in the global online market.

If you imagine the online market as a gigantic physical set of stalls in a single location, then Ireland occupies a tower on the site.

That tower has been built over many years, and it is not yet at the height Amazon requires of it, and nor does it have the necessary scale to manage projected growth, but it is far more advanced than any towers being created by competitors.

The global online market was valued at almost $1.7trn last year and it grew by about 25% in the previous 12 months.

Ecommerce sales accounted for more than 7% of global retail revenues last year, and that is set to rise to over 12% by 2019. In that year, worldwide online sales could hit a gargantuan $3.55tn.

This helps explain why Amazon, a world leader in online selling, is expanding in Ireland.

It is not doing so to meet the online needs of the 6.4m people on this island.

Instead, it is planning for the mammoth retail opportunity that exists internationally for an online retailer that has the depth and breadth needed to supply customers across the web.

To do that, Amazon needs smart people, a base in a country with competitive costs, a stable political system, and access to the technology needed to serve such a huge market. This lies at the heart of Amazon’s decision.

Data storage centres are another part of the jigsaw being arranged to support the strategy to service global consumers from Ireland.

Ireland offers unique attributes for these energy-heavy vast data-management centres that will be equipped to handle at hyper speed enquiries and orders for companies such as Amazon.

We have a climate that suits these data centres, and they will be located on an island that is secure and located within the enormous European market.

The Amazon decision is another alarm going off for entrepreneurs weighing up the opportunity to pursue a fortune on the web from an Irish base.

While Amazon is a global company, it does not have a monopoly on the web. Retailing worldwide, both physical and online, will be worth over $28trn by 2019.

It is a rich environment to consider as a supplier of products and services using technology and technologists based in Ireland.

A short number of years ago, I was involved in establishing an online industry publication. It was targeted at a specialist set of potential readers who work in a services industry which operates worldwide.

The idea was to combine a clever piece of publishing technology with high-quality content and offer that solely online to a large group of business users.

This business was set up on a very small budget. It has not become a gigantic media empire but it has hit its profit targets and is showing remarkable growth in its fourth year of operation.

Readers are emerging from markets around the world and subscribing simply and effectively. The publication has no paper costs and is designed to be read on all sorts of mobile devices.

In sharp contrast to the newsflow coming from companies including Trinity Mirror and the Telegraph in the UK in recent weeks, comprised of further cutbacks, this small publication is thriving from an Irish location.

Examples such as this should be seized upon by others. Enterprise Ireland offers plenty of support for budding online retailers and modest budgets can get you a long way.

Indeed, Amazon itself provides a platform for websites who want to specialise in a particular market and tap into the Amazon product range in exchange for fees on anything sold.

Figuring out novel ways for SMEs to mine the vast global retail market will be as important over the long term to Ireland’s economy as Amazon’s welcome decision this week.

Joe Gill is director of corporate broking with Goodbody Stockbrokers. His views are personal.


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