SMEs still missing out on online revolution

Irish SMEs with a website earn an additional €24,000 a year and receive 22 extra jobs on average compared to those who remain offline. 

This is according to new IE Domain Registry (IEDR) research, which shows that being online opens up a whole new world to small businesses — with boosts to revenue, productivity, and customer acquisition.

Consumer expectations have shifted, too. When we asked 1,000 Irish shoppers, more than 70% said they were more likely to purchase from a business that has a website. More than three-quarters said they find it frustrating when they can’t find details about their local business on the web, and a further 60% said they’d consider shopping with a competitor if they couldn’t find their preferred business online.

On the surface, it would seem that all the necessary ingredients for a healthy Irish digital economy are there — consumers are more tech-savvy and willing to spend online, and businesses stand to benefit from this demand.

Certainly, the latest edition of the European Commission’s Digital Economy and Society Index (DESI) paints a rosy picture of it. So rosy, in fact, that we are ranked number one in Europe for buying and selling online by a significant margin; ahead of the UK, Germany, and France.

But on closer inspection, using the DESI as a metric for Ireland’s e-commerce health, especially for SMEs, is misleading. The DESI classifies ‘small enterprises’ as businesses that have between 10 and 49 employees. This classification, therefore, excludes the ‘micro-enterprises’ (businesses that employ fewer than 10 people) that make up more than 92% of the Irish economy.

Our dot. ie Digital Health Index tells a very different story. Twice a year, we survey 500 Irish SMEs, the vast majority of them with fewer than 10 employees, to assess the condition of Ireland’s digital economy. We check to see whether they have a website, a social media page, and can engage in e-commerce, among other things.

The most recent survey, published in November, showed that less than two-thirds of Irish SMEs have a website; of these SMEs, less than a third can take sales orders on their sites, while only 28% can actually process payments online. Indeed, one-in-five SMEs still have no online presence whatsoever; neither website nor social media page.

Our share of the European e-commerce market is valued at more than €9 billion, and as consumers, we are spending more online than ever before; according to the Digital Health Index, 41% of Irish consumers have increased their online spend in the last two years. This is a glaring missed opportunity for our SMEs, especially as 85% of surveyed consumers say they would prefer to spend on an Irish website.

In a post-Brexit Ireland, where economic diversification and preparedness is so essential, e-commerce must be a high priority for all our businesses, especially our smallest — and our most vulnerable — micro-enterprises.

By selling online, Irish SMEs have access to a virtually borderless global marketplace that stays open 24 hours a day, 365 days a year.

Whereas an offline business owner in Letterkenny might depend exclusively on local footfall for business, an online business owner in the same town can make money, even while they sleep, as Internet shoppers in London and Lisbon log on to browse and buy their products.

Anecdotally, it seems that for many entrepreneurs, particularly in rural parts of the country, selling online is either too time-consuming or too complicated. To change this, we must concentrate our efforts by building up two key pillars.

The first pillar, mentorship, means more funding opportunities and shoulder-to-shoulder guidance for SMEs. The Government’s existing e-commerce initiative, the Trading Online Voucher Scheme, is useful, but the surprisingly low uptake indicates that SMEs have issues with its conditional grant of up to €2,500.

The second pillar is infrastructure. While rural broadband connectivity is improving, for many SMEs actually connecting to the Internet remains a problem.

While the European Commission’s stats are a useful guide, considering the huge importance of micro-enterprises to Ireland, they are not an accurate measurement of our overall e-commerce success.

  • David Curtin is chief executive of the IE Domain Registry (IEDR).


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