.IE Tipping Point Report 2022

Insights .IE Tipping Point 2022: Irish e-commerce and digital business in the post-Covid era | 2 The role of the website is changing .IE has analysed SME website usage continuously over the last eight years, and for the majority of that time many businesses have been content to use their websites as simple, static information hubs. The pandemic, however, has accelerated a mindset shift. SMEs are now repurposing their websites into fully functioning e-commerce hubs, active centres for sales and sales growth. 54% of surveyed SMEs have the ability to offer appointment bookings on their website (v 33% in 2021). In other words, business owners increasingly view their websites as vital parts of their sales infrastructure - a true second storefront - rather than a mere digital brochure. The majority of SMEs with an online store sell through their website, which gives them higher margins and greater control over terms and conditions, compared to relying on third-party platforms. These businesses are generally aware that selling indirectly to customers eats into their profit margins and exposes them to sudden changes in third-party terms and conditions. No ‘normal’ market conditions While Ireland may be exiting the worst of the Covid pandemic, the commercial outlook for 2022 among SMEs is mixed. Compared to 2021, a higher proportion of SMEs surveyed are uncertain about their future, and more are explicitly negative. The end of restrictions does not mean a rapid return to the pre-pandemic normal of 2019. The consequences of Covid are disrupted supply chains, ongoing staff dislocation and cost pressures which means there is no path back. Consumers and SMEs will be forced to reconsider where they spend and on what. The fallout from Brexit continues, as does geopolitical turmoil in Europe. For businesses considering ways to mitigate the effects of uncertainty, investment in digital is likely to be the key to their prosperity and, indeed, survival. Productivity improvements and more ways to sell and interact with consumers will cushion the impact from ongoing economic shocks. 1 2 Age is a predictor, not a guarantor It is hardly surprising that Millennials and Gen Z, the digital natives first to grow up in the internet age, are more likely to embrace online shopping. We should expect that all succeeding generations, maturing in a world where the line between digital ‘online’ world and analogue ‘physical’ world is fuzzy, will have even stronger feelings. SMEs, particularly those who have been slow to embrace the internet, should be cognisant of this. There are frequent exceptions to generational trends and stereotypes. Gen Z, despite being among the most vocal proponents of climate action, are the least likely to say that sustainability is important to them when buying online. Also, while all consumers estimated that 55% of their online purchases since Covid had been with local Irish retailers, among Gen Z that figure was just 41%. While typical age-related economic factors, such as purchasing power, may be the overriding issue here, Irish SMEs should be careful not to casually apply a one-size-fits-all digital strategy to all their target demographics. 3

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