Electronic Commerce
Ireland’s e-commerce sector has grown rapidly in recent years, mainly
attributed to U.S. and other non-European computer and information
technology companies’ use of the country as a gateway to the rest of the
European continent. U.S. firms find Ireland attractive because of its
relatively low taxes, highly educated population, its inclusion in the
euro-zone and because it is the only English-speaking nation in the
European economic and monetary union.
Ireland is a major provider of e-commerce software and technology, and
individuals may purchase a wide range of goods and services online.
Many international computer and Internet companies including IBM, AOL
Time Warner and Microsoft (all U.S.), have businesses in Ireland. There
are also homegrown telecommunications and e-commerce companies such as
Eircom. More than 800 firms were members of the Irish Internet
Association, the nation’s largest online business association, in
November 2001. Companies involved in electronic commerce offer services
ranging from car rentals to recruitment services. [1]
Revenue Statistics
The ICT sector is a key component of the Irish economy with over 1,000
companies – international and indigenous – employing more than 100,000
people and accounting for more than 25% of Irish exports. Despite the
recent ICT downturn worldwide, the outlook for the $3.6 billion Irish
ICT sector in 2002 remains positive. Key drivers are the technological
and regulatory forces that are shaping the ICT industry and the Irish
Government’s objective to position Ireland as a key player in the
emerging worldwide e-Economy.
Within the $3.6 billion Irish ICT market, the principal market segments
are telecom services ($1.5 billion), computers & peripherals ($1.0
billion), computer software ($0.6 billion), and telecom equipment ($0.3
billion). [2]
E-Commercial Behavior
E-commerce in Ireland has the potential for large growth, though
business-to-business activity is always going to be more important than
retail electronic commerce, also known as business-to-consumer, because
of the nation’s relatively small population. Additionally, an Amarach
Consulting study conducted in August 2002 found that the numbers of
online shoppers (B2C) in Ireland has fallen over the last year. An
estimated 188,000 Internet users mad an online purchase in the last
three months compared to 238,000 at the beginning of the year. This
represents a 21% decline in one year. In percentage terms, 18% of Irish
Internet users made an online purchase compared to 24% at the start of
2002.
With respect to consumer usage of the Internet for commercial purposes,
travel services, books, compact discs (CDs) and entertainment tickets
continue to be the biggest online purchases among Internet users.
Nearly half of Irish online shoppers claim that the main benefit of
shopping via the Internet is the ability to shop at any time of the day
or night. Over forty percent of surveyed users indicated they could get
better deals or cost-savings by shopping online, while 30 percent said
that the ability to compare products and prices from different vendors
(websites) was a key reason to shop online.
Size Of Sales
- Domestic: 2001 online revenues= $120
million, forecast to reach $300 million by 2003
Government Promotion of E-Commerce
The Irish Government is committed to developing a strong e-commerce
presence for Ireland internationally, and is undertaking a series of
initiatives across its departments and agencies to stimulate the sector.
The Information Society Commission, an advisory body established in
1997, is overseeing the Irish Government’s strategy for extending the
use of IT throughout private and professional spheres in Ireland. For
instance, the government introduced an Electronic Commerce Bill in
April 2000 that passed Parliament and was implemented on July 10th,
2000. The Electronic Commerce Act was enacted to enhance Ireland’s
attractiveness and deal with issues such as electronic contracts,
signatures, and documents. ).[3]
E-Business Facts
E-business is a technology being transferred across every continent and
some countries have become pioneers whereas others have become sluggish
to embrace this technology. Those countries faring best in e-business
are found in the 2002 edition of the Economist Intelligence Unit’s
e-readiness rankings.[4]
“E-readiness” is shorthand for the extent to which a country’s business
environment is conducive to Internet-based commercial opportunities. It
is a concept that spans a wide range of factors, from telephone
penetration to online security to intellectual property protection. The
Economist Intelligence Unit in conjunction with IBM, the sponsor of the
e-readiness rankings, developed the criteria which included the
following six categories: connectivity and technology infrastructure;
business environment; consumer and business adoption, social and
cultural infrastructure, legal and policy environment, and supporting
e-services.
Ireland’s 15th rank is largely due to the fact that consumers and
businesses have embraced the Internet, and because their economic and
political stability and openness to foreign investment make them
attractive targets for all types of business, particularly e-business.
In addition, the Irish Government’s clear ICT strategy, investment in
developing its IT infrastructure, and enactment of a legal and policy
environment promoting industry growth have facilitated Ireland’s
E-readiness.
With respect to business adoption of e-commerce capabilities in
Ireland, more than half of chief executives surveyed by Enterprise
Ireland and Deloitte & Touche in late 2001 indicated that they had
some sort of e-business. Additionally, about two-thirds of those polled
said their companies used the Internet for marketing and selling goods;
32% for product procurement; and 21% for recruitment purposes.
Although not consistent with business adoption of the Internet, the
Irish population has demonstrated its Internet acumen in recent years.
According to NUA.com [insert hypertext for NUA.com http://www.nua.com],
an authoritative online source for information on Internet demographics
and trends, 34% of the Irish population (September 2002) has online
capabilities, compared to 59% of Americans (April 2002), 33% of Italians
(August 2001), 28% of French (May 2002), 39% of Germans (August 2002),
20% of Spanish (May 2002), and 57% of British (September 2002). [5]
Payment Technologies
[insert types of payment technologies employed in Ireland] With 63% of
Irish adults without a credit card, this helps explain why Irish people
conduct fewer e-commerce transactions compared to the UK where credit
card ownership is double the level. [6]
Obstacles To Growing E-Commerce For B2B And B2C
Despite Ireland’s embracement of Internet capabilities to benefit
business and consumers alike, there still remain many obstacles to
fueling the growth of business-to-business and business to consumer
activities. These obstacles include, but are not limited to the
following:
- Broadband Utility: The dilemma of
broadband within Ireland is two-fold: developing access to the
high-speed data connections and convincing Internet users of its
utility. With respect to development, Ireland has made rapid progress
since 2000 in developing its broadband capacities by having the
government attract high-end international technology companies. For
instance, in 2000 the government invested in broadband links between
Ireland and the U.S. and 36 European cities, and in 2001 a further
upgrading of capacity was implemented with new links being establish to
six additional U.S. cities, a further 14 European cities as well as
Tokyo and Hong Kong.[insert reference footnote link:
http://www.ebusinessforum.com/index] However, user adoption of broadband
has been mixed. According to a 2002 study conducted by the Office of
the Director of Telecommunications Regulation, only 14% of adults in
Ireland say they are “very likely” to subscribe to broadband services,
while 32% claim they are “fairly” likely to sign-up. [7]
- Cost-Effective Internet Access:
Although there does not appear to be a shortage of Internet Service
Providers (ISPs) within Ireland, and the cost of these services is
relatively inexpensive, Internet users cite ISP cost as a inhibitor to
their broad utilization of the Internet at home. According to a survey
administered in May 2001 by Ireland’s Office of the Director of
Telecommunications Regulation (ODTR), the cost of Internet access and
slow connection speeds available to residential Internet users were
identified as the main barriers to continued Internet usage growth. The
cost of a basic package per year varies from $125-$200 for a standard
line to about $385 for an Integrated Service Digital Network (ISDN)
line, where available. There are, however, several bottom-end ISP
services available for free.
- Alternative Payment Methods: Not
having a credit card is the main barrier to online shopping in the
country, particularly among younger users.
- Security: Security concerns also
continue to be a major barrier to online shopping with 66% of Internet
users agreeing that companies are not doing enough to demonstrate the
security and safety of online shopping. [8]
In the longer term, the availability of a competitive-priced national
broadband infrastructure, increased e-business education for Irish small
businesses, and high consumer confidence in Internet security should
bolster e-commerce activity locally.
[1]
http://www.ebusinessforum.com
[2] http://exportit.ita.doc.gov
[3] http://www.ebusinessforum.com
[4]
“Economist Intelligence Unit’s e-readiness rankings”
http://www.ebusinessforum.com/index.asp
[5]
http://www.nua.com/surveys/how_many_online/
[6] Agence
France Presse. “Irish Telecom Boom Peters Out As Job Losses Emerge.”
September 6, 2001.
[7] http://www.nua.ie/surveys
[8] http://www.nua.ie.surveys