Digital economy accelerates as online spend expected to double to €14.1 billion

A Virgin Media Digital Insights report has forecast a near doubling inonline consumer spending to more than €14 billion annually by 2021.

The report finds that the digital economy is now worth around six per cent of Ireland’s GDP and a full 94 per cent of Irish internet users shop online.

Online shopping has increased by 13 per cent to €7.5 billion over the past two years which is greater than the nine per cent growth in overall consumer spending in the same period.

The average online spend has grown by 13 since since 2014 to €80 per month per person.

A full 60 per cent or €4.5 billion of Irish online shopping currently goes abroad.

If consumer spending continues on the current trajectory, that could rise to €8.5bn by 2021.

Consumers would demand compensation of €390 per month if their broadband service was removed (more than tripling from €130 in 2014).

The report also found a significant change in the reasons for buying online rather than in store:

Consumers cite convenience and price, as well as better selection, for their migration to online shopping.

The research was carried out on behalf of Virgin Media by Amárach, across a representative sample of 1,000 adults throughout the Republic of Ireland, exploring theirexperiences, behaviours and intentions in relation to the digital future.

Taoiseach Enda Kenny said that the report makes clear that the digital economy is growing at a very fast pace and it is essential that Irish businesses, in particular SMEs, capture this increasing market.

“It is important that businesses are encouraged to trade online and to maximise the opportunities of the digital economy. Supports are in place to help, including the Trading Online Voucher Scheme, which was launched in 2014 as part of the Action Plan for Jobs and provides matching funding to establish an online trading presence," he said.

Tony Hanway of Virgin Media said the report shows how rapidly the Irish digital landscape is changing.

“Ever increasing numbers of Irish consumers are shopping and using services online. This is seen in the increase in spending over the last two years and the projected forecast for online consumer spending to grow from €7.5 billion to €14.1 billion in 2021.

“Irish websites account for just 41 per cent (some €3.1 billion) of Irish online purchases, with a further €4.4 billion euro being spent offshore. If that trend continues to 2021, over €8 billion euro in goods and services will be bought offshore at that time. This represents a significant potential loss of trade to the Irish economy and Irish businesses.

“With online spending by Irish consumers set to almost double in value in the next five years, there are opportunities for digital-savvy Irish SMEs and start-ups to capture their share of the fastest-growing sector in the economy, but they have to act fast.”

The Digital Lives section of the report looks at the psychological, social, and emotional impacts of increasingly pervasive digital technologies and draws important conclusions for society and industry.

Digital technologies have had a positive impact on work and study, but decidedly more mixed outcomes when it comes to personal relationships.

· Some 53 per cent of respondents felt that digital technologies helped them with their work while 71 per cent said they helped with studying and learning new skills.

· 39 per cent of respondents believed that digital technologies helped relationships with current or previous partners; 30 per cent found them a hindrance.

· Just 24 per cent said they helped with intimacy while 37 per cent said they hampered it.

· 32 per cent said that technologies were an obstacle to relationships with their children and 33 per cent saw them as an aid.

· 49 per cent of respondents were worried about the impact of digital technology on their privacy.

· Overall, 65 per cent of respondents said they felt more connected to family through digital communications

Virgin Media CEO Tony Hanway said: “While people are comfortable and knowledgeable with digital technologies, a clear value proposition needs to be offered before they will adopt them.

“One of the biggest challenges to SMEs, start-ups and even large companies in the future, will be persuading already satisfied customers that they really should try the new products and services that digital technology will make available in the coming years.

“There will be opportunities for businesses to invent and launch new products and even to create new markets. Meeting that challenge will demand a deep understanding of the needs and circumstances of Irish consumers, especially their emotional drivers and expectations.

“Businesses must start with the customer and the emotional and the relational impact they want them to experience when they use a new product or service.

"The ability to develop a more customer-centric approach will decide the winners during the next wave of the digital economy.”

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