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.IE Tipping Point: How e-commerce can reignite Ireland's post-Covid-19 economy

Irish SMEs win online shopping battle as Covid-19 restrictions discourage in-store purchasing

Covid-19
e-commerce
smes
Website
by Naomi Temple
20 Aug 2020

The Covid-19 crisis has been a tipping point for Ireland for many reasons. Our .IE Tipping Point: How e-commerce can reignite Ireland’s post-Covid-19 economy Report, in partnership with Digital Business Ireland assesses the attitudes and responses to the Covid-19 crisis of 1,000 Irish consumers and 500 retail and customer-facing professional services SMEs.

Over 7 in 10 Irish consumers (74%) say Covid-19 restrictions in physical stores, such as social distancing, queues, and capacity limits, have negatively impacted their decision to shop in them.

The omni-channel future

While current restrictions are changing consumer behaviour, the report shows that if Covid-19 were controlled and social distancing no longer required, 48% of consumers would continue to do the bulk of their shopping in physical stores.

52% would engage in some form of online shopping – 11% would do most of their shopping online, while the remaining 41% would do a combination of both, shopping in-store for necessities but online for other products. It is clear that a “blended” shopping approach is preferred by consumers.

Consumers who said they would mostly shop online believe it to be safer (59%) and more timesaving (56%). Among the group that would prefer to shop mostly in-store, 62% say that physical shops are more convenient, while 55% say they simply want to go outside and be social, indicating the growing psychological toll of Covid-19 restrictions.

Irish SMEs win online shopping battle

According to the Tipping Point report, 95% of Irish consumers shop online at least some of the time, and 75% say they have either spent more online during the Covid-19 crisis or the same as before it. Lockdown seems to have done little to quell consumer demand online.

Historically, the bulk of Ireland’s e-commerce spend has gone abroad to foreign companies. However, since the Covid-19 crisis Irish consumers estimate that they have done most of their online shopping with Irish SMEs (53%) versus international retailers (47%). Those figures were the opposite before the crisis (52% international vs 48% Irish).

53% of consumer online purchase have been with Irish SMEs

Among consumers who have done most of their online shopping with Irish SMEs since the Covid-19 crisis, 67% say they have done so out of a sense of solidarity and a need to support Irish businesses. 48% said Irish SMEs are more reliable than international retailers; 41% said they are more trustworthy.

However, among those who have tended to shop online with international retailers during the Covid-19 crisis, cheaper products (71%) and a better range of products (69%) have been major factors influencing their decision. Over a third said international retailers have better online services and storefronts than their Irish counterparts.

Digital investment pays off

Despite the majority of Irish consumers turning to Irish SMEs for online shopping, 79% of small businesses said that they had not invested any money whatsoever in their online services since the Covid-19 crisis. Indeed, only 25% of all SMEs sell online in any capacity.

It is clear, however, that SMEs that do invest in online services reap rewards. Almost half (46%) of those that have invested since the Covid-19 crisis say they are busier than or as busy as before it. Among those SMEs with an online store, 88% said they had noticed a change in their volume of sales since the Covid-19 crisis. 77% say this has been a positive change.

Comment

Speaking about the .IE Tipping Point Report, our Chief Executive, David Curtin, said:

“Despite the Covid-19 crisis, consumers have continued to spend online. They are now looking closer to home for retailers that they trust and know are reliable. Most significantly, they simply want to support Irish businesses through an immensely challenging period.

“Once an effective treatment or vaccine is found and Covid-19 is no longer a contributing factor to consumer purchasing decisions, Irish SMEs may gradually lose out on the goodwill that they are currently benefiting from. From a digital perspective, Irish SMEs are still far behind their international peers; as many as 80% have not invested anything at all in their online services since the Covid-19 crisis began, despite lockdown and the closure of physical stores. International retailers are seen as having better online storefronts and services, in addition to cheaper products and better product ranges.

“We need to ensure this new swing to Irish online retail is not short-lived.

“Those SMEs that embrace omni-channel, facilitating both an online and in-store experience, while promoting their trustworthiness and reliability will be able to better compete with international online retailers.

“Properly equipped with the digital technology and skills required to meet consumer demand, Ireland’s small businesses have a crucial role to play in reigniting this country’s post-Covid-19 economy.”

Lorraine Higgins, Chief Executive of Digital Business Ireland, said:

“Never before has the need for a digital business model been more acute. As Covid-19 engulfs our world, it has brought to the fore the pressing need for an omni-channel, bricks-and-clicks approach to business, a fact that is corroborated by stratospheric online retail sales figures over the past number of months.

“While an integrated, omni-channel business model must become an elevated priority in order to offset the threat of a return to a leak in spend to international businesses, further efforts will have to be made to bridge the digital divide.

“Personalisation, artificial intelligence, flexible payment options, faster delivery times, and seamless customer journeys will be a key focus for discerning e-tailers, who must seek out opportunities to differentiate themselves in a busy online marketplace.

“On a macro level, the timely delivery of the National Broadband Plan and further take-up of the Digital Trading Online Voucher will help us to become a leading digital economy.”

For further information, visit our .IE Tipping Point page where you can download the full report.