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| E-com a minority interest in the Emerald Isle |
November 6, 2001 |
By Peter Wolchak
WHEN IRISH CITIZENS MAKE ONLINE PURCHASES, THEY should take a moment to acknowledge the hard work of their government in its aggressive development of e-com avenues.
The Irish government has passed supportive legislation and funded infrastructure programs designed to make the island a more receptive setting for New Economy businesses.
“The government in Ireland is a stellar example of what governments should do.
It has been very proactive,” said Suz Iventosch, a research analyst at Metricnet, a division of Meta Group in Weimar, Calif., and the co-author of The World E-Commerce and Internet Market Report.
The Irish government has also pumped US$71 million into classroom computers and high-speed Internet services for schools, and US$80 million into the development of an international broadband network. In 2000, the government passed the Electronic
Commerce Bill, which gave legal recognition to electronic signatures-a cornerstone of electronic transactions-and committed to posting essential government data and services online by the end of 2002.
And last year, Prime Minister Bertie Ahern announced a research and development plan worth US$2.3 billion designed to lure scientific researchers to Ireland. This program follows a decade of corporate tax breaks that encouraged companies like Microsoft, EMC and Dell to set up shops in the country.
Moderate success
But all of these efforts have only yielded moderate success in boosting ecommerce revenues. Irish research firm Amarach Consulting found that the number of people buying online in Ireland rose slightly in Q2 2001 to 116,000, up from 104,000 in Q2 2000.
Amarach estimates that US$22.4 million was spent online by all Irish Internet shoppers in 2001, representing only a small slice of the European business-to-consumer pie, which eMarketer set at US$16.4 billion in 2001.
More discouraging yet for e-commerce proponents, the Office of the Director of Telecommunications Regulation and Irish Marketing Surveys reported that in 2001,67 per cent of the population had never purchased anything online and 26 per cent of people with home Internet access said they had no desire to e-shop.
This low penetration of online commerce can likely be attributed to two factors, according to Metricnet’s Iventosch. First, only one third of Irish Internet users have a credit card, the primary means of completing online purchases. Second, even with cards in hand, there are few domestic Web sites at which Irish consumers can spend their money.
This is an important factor, she added, because despite claims that ecommerce opens the borders of the world, significant disincentives exist when a purchase is made in another national jurisdiction. “You can look at products from all over the world but [when you make a purchase] are you then bound by the legal structure and tax systems in those places? Where is the point of sale? That hasn’t really been determined.”
Crunching the numbers
Numbers from Amarach confirm that Irish Internet users often buy outside the country, although that situation is changing. In Q4 1999, Irish e-shoppers bought mostly from U.S.-based sites, but early this year 51 per cent made their last e-purchase from an Ireland based company.
Iventosch said the e-com trend is definitely moving upward in Ireland, but total growth numbers will still be hindered by a factor even the government cannot control: Ireland’s small population, which at about 3.7 million is similar to Montreal.
“Their potential is limited by their population base,” she said. “The population of the country is smaller than in some cities in North America, but the growth potential is really good, considering they are such a forward-thinking society.”
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