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Online and mobile usage in Ireland

Statistics overview

The Republic ranks closely behind the UK and ahead of the EU average in terms of the EC’s Digital Economy and Society Index (DESI). DESI is a mechanism by which the EC measures the relative maturity of an EU member state against the objectives of the Digital Agenda – a drive to increase the digital economies of EU member states and thereby promoting digitally-enabled cross-border trade, otherwise known as the Digital Single Market.

Source: EC Digital Scorecard March 2016

There is an interesting split in levels of internet access (77% in the north for example), partly reflecting the rural nature of much of the country. As shown in the graph below, the biggest conurbations are mainly in the south and east of the country, which is reflected in the availability of infrastructure there.

Demographically, there is also an interesting distribution of households with access to the internet with large domestic groups, either all adults or those with dependent children being more likely to have internet access. The group most likely to have access are those consisting of two adults and two children; a group also interesting to most marketers. Interestingly, 77% of households in Northern Ireland have access to super fast broadband (above 33 mbps) according to Ofcom in 2015.

Households with computer connected to the internet (%) by household composition

Source: www.cso.ie ecommerce Household Survey, Central Statistics Office, 2015

In common with other countries with more advanced digital infrastructure, consumption patterns of media are changing dramatically, while online transactions are increasing. For example, nearly half of all adult internet users are consuming news output via digital channels. This is 20% lower than the EU average but overall levels of internet access are higher. By contrast, 68% of households with a television are consuming video on demand (VOD). Likewise, the use of social networking sites, online shopping and banking are all ahead of the EU average, indicating a willingness to transact online.

Table 2: Showing Digital Economy and Society Index 2016 for Ireland and compared to the EU average  Source: https://ec.europa.eu/digital-single-market

In 2015 eir (Eircom Limited; www.eir.ie) carried out a consumer survey which, amongst other areas, looked at the types of devices present in households. Laptops were still the most popular device although this had fallen off by a modest 3% over the previous year. Tablets are certainly in the ascendency while smart TVs are one of the biggest gainers. This is reflected in the strong usage of VOD highlighted in the EC DESI data.

Figure 1: Devices used in Irish households. Source: eir connected living survey 2015

However, this survey may not reflect actual usage of these devices. Their availability doesn’t always equate to usage and, in common with other economies, mobile devices are taking on an ever-increasing role in consumption of media and transactional activity.

Figure 2: Activities carried out over devices in the home. Source: eir connected living survey 2015

Providing a slightly different view than the EC DESI results, the eir connected living survey looked at more specific activities. Communication is obviously a very important part of device usage with personal and work email access being some of the most often uses of the technology. Entertainment activities, such as YouTube, movies, catch-up TV, music and sports are all showing increases in usage over the previous year. Access to online banking is also showing a healthy 5% increase over the previous year.

Overall, the picture being presented indicates an increasing adoption of digital technologies for accessing products and services. From a broader perspective, international merchants would be advised to not ignore the more traditional forms of communication; particularly when looking at building a brand in the country, even one that is only going to be available digitally.

To set some context around online retail activity in the Republic, it is important to look at the overall retail sector. According to Retail Ireland, total retail in the Republic is forecast to be worth €35bn in 2016 (most recent figures available) while the Irish Central Statistical Office (CSO) have reported an average year-on-year growth of 1.3% since 2001. More recently, year-on-year (YOY) figures have looked healthier, with January 2016 being 10.3% up on the same time the previous year.

The majority of the domestic retail sector is made up of family-owned businesses. Of the 42,000 retail and wholesale businesses active in the Republic in 2015, 75% fall into this category, 73% have less than 10 employees and 83% are Irish-owned.

This points to a fragmented retail market which is mainly aimed at serving local communities. Bigger conurbations offer more opportunities for scale but the overall picture is one in which ecommerce offerings should prosper.

Figure 3: Offline retail sales year-on-year growth since February 2015. Source: TradingEcomomics.com January 2016

Recent figures from the CSO shows that there has been an 11% increase in sales volumes between February 2015 and February 2016. Values however have only increased by 8.7% indicating potential for some deflationary pressures and showing the importance of value to the Irish consumer, many of whom will still be feeling the effects of the financial crisis of 2008 and onwards.

Figure 4: CSO Retail Sales Index. Source: CSO statistical release, 30 March 2016

These figures do however include motor trades. With these activities excluded, volumes increased 7.1%. From a monthly perspective, volumes increased for books and other retail sales. Exceptions included electricals, which fell 2.4%.

From an ecommerce perspective, the indicators point to a consumer base that is ready to transact online, an infrastructure able to support this activity and a retail environment ideally suited to the benefits of digital channels. 2016 data from Eurostat shows that Irish businesses are seeing an increasing proportion of their turnover coming from ecommerce. In 2015, this equated to 37%, an increase of 13% since measurement started in 2010 and one of the highest in the EU28. This growth is another indicator that Irish consumers are already engaging with brands via digital outlets.

Figure 5: Percentage of turnover from ecommerce channels. Source: Eurostat.europa.eu February 2016

These figures are reflected in the growth of domain registrations; indicating that many more Irish businesses are developing some form of online presence. However IEDR, the Irish Domain registrar, reported in 2015 that 91% of small and medium enterprises (SMEs) don’t have a transactional website. The same report also highlighted that traffic to online merchants’ websites increased by 27%, revenues rose by 45% and average order value increased by 10%; indicating not just an increase in visits, but also in spend. Irish consumers are becoming much more confident in their purchasing behaviours.

Wolfgang Digital, in their Q4 2015 ecommerce Report looked at the devices used for accessing transactional websites. In 2014, the dominant device was desktop which was responsible for 54% of traffic. In 2015, smartphones had increased by 10% to 39% of all traffic. As tablet had stayed at 17% and desktop had fallen by 10%, it is reasonable to assume that smartphones are becoming much more important in the multichannel journey. This isn’t to say that only retailers with stores and websites are gaining, although there is an obvious benefit for them – consumers are taking smartphones with them to combine offline and online research and then making the purchase in the appropriate channel.

Most popular devices for e-commerce traffic

Figure 6: Changing trends in devices used for visiting ecommerce websites. Source: Wolfgang Digital ecommerce report Q4 2015

Combined, mobile devices now outstrip desktop in terms of total traffic at 56% versus 44%. This doesn’t take into account the channel via which the final transaction takes place and it is highly likely that desktop devices will still be responsible for the majority of transactions.

The role of smartphones is further highlighted in the Consumer Barometer 2015 data, which shows that 38% of users utilise the devices for product discovery while 27% use the functionality to access more information about a product; prices, features and availability.

Figure 7: Role of smartphones in purchase decisions. Source: IAB/Consumer Barometer 2015

The data also highlights the importance of a mobile-optimised experience with a quarter of users saying that issues would encourage them to go to another website.

The Irish market sees over 30% of internet traffic going via smartphones; over a third higher than the EU28 average and ahead of both the US and UK markets. This is reflected in device penetration where, according to the Consumer Barometer 2015, 75% of the adult Irish population use a smartphone.

In parallel to other surveys showing that VOD is growing in the Republic, Statcounter report that over half use their smartphones daily to access video. According to Ofcom, 63% of adults in Northern Ireland have smartphones and 54% of households have access to a tablet.

60% of mobile device owners have transacted via their devices. On smartphones, Android devices are ahead of Apple in terms of accessing apps and while the same is true for tablets, the difference is smaller.

Figure 8: Smartphone landscape. Source: IAB Ireland Mobile Audit 2015

From the merchant’s perspective, only 42% of Irish websites are mobile responsive but 76% are mobile-optimised. This does highlight the importance of a mobile offering for any digital merchant looking to trade into the Republic. The dataset also reinforces the importance of page load speeds for mobile users; although it does suggest Irish mobile sites perform slowly. Page speed is only one measure of performance and shouldn’t be taken to mean that Irish retailer’s mobile websites are all bad; this might not be the only competitive area that an international merchant should look at.

It is difficult to get an accurate picture of the value of the retail market in the Republic; even more-so for ecommerce. The latest published figures from Visa report that ecommerce spend in the Republic was worth €5.6bn in 2014, up 32% on the previous year. This would include sectors that many wouldn’t consider e-retail but PayPal / Ipsos research, published in Checkout magazine, suggests that e-retail (as opposed to broader ecommerce) will be worth €5bn in 2016.

PayPal’s insight also suggests that m-commerce was worth €1.4bn in 2015, up 65% on the previous year and that m-commerce in the Republic will have doubled by the end of 2017 to €2.7bn.

There is more insight as to what consumers are doing online. According to the eir connected living survey 2015, Dubliners are the most likely to shop online, with 64% of the population of the city having done so. Given that 25% of the population of the Republic is Dublin-based this is clearly a primary target market for an incoming retailer. There isn’t much difference between genders and while the 16–49 age group is the most digital, the over 50s shouldn’t be ignored.

It is also interesting to note that those shoppers in their late 40s actually appear more likely to shop online than their younger 40s peer group.

With regards to what Irish consumers are buying online, travel is the biggest sector, especially when all forms of travel-related spending are taken into account. For example, flights (70%), hotel bookings (66%) and car hire (21%) are the main categories for those online users who have made a purchase.

However, fashion products (which includes clothing and shoes) have been purchased onlineby 69% of online users. This behaviour mirrors that of other advanced ecommerce markets while electricals have been purchased online by less thana quarter of users. This is a surprise as in many, early adopter markets, electricals drove online growth and have only recently been equalled or surpassed by fashion spending. This may be an indication that, domestically in the Republic, the choice of fashion brands may not be sufficient to meet consumer demand.

Figure 9: Demographic of the Irish online shopper. Source: eir connected living survey 2015

Some of the sectors achieving less penetration online include furniture and computer games. Only 6% of online users have made an ecommerce furniture purchase and nearly a third have said they never will. 18% of the group have made online purchases of computer games while 15% say they never will. This does leave a large potential market but computer gamers are generally seen as more accepting of online purchasing, particularly as many games are now streamed from online servers.

One final point of interest is the 30% of online users who will never buy groceries. This isn’t uncommon in many markets as the ability to see and choose fresh produce often outweighs time-saving benefits on the packaged products and dry goods. With 12% already buying online and 58% remaining to be convinced, there is still a lot of potential in this sector.

Analysis of the top online shopping destinations shows some interesting insights. All of the brands in the top 20 are international; some with local domain names but most without.

Top 20 shopping websites

Source: www.similarweb.com April 2016

Looking at the broader top 50, other international brands are well represented with Marks & Spencer, New Look, River Island and Currys PC World all present. Auction and classified websites haven’t been included although some of these do sell direct from retail.

 

 

 

Demographics

Online shopping behaviour

Marketing

Trust and dispute resolution

Finance and payment

Legal framework and regulation

Logistics and delivery

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