SMEs take note; Irish online consumer behaviour is evolving.
Only 27% of small businesses in Ireland are equipped to sell goods or services online, according to a recent survey carried out by Amárach Research on behalf of Virgin Media Business. 38% provide an online booking or reserve function only, while just 8% are set up to take both bookings and sales online.
At first glance, the figures referring to e-commerce functionality appear low. How is it that the success of Irish companies in the digital service industry, is translating so poorly to e-commerce success? The answer to this question lies in the obstacles that Irish SMEs face in the transition from traditional sales methods to e-commerce.
Conquering the online market place is not a matter of sliding a tab from ‘off’ to ‘on’ on a tablet. Irish SMEs first have to understand whether or not their customers would avail of their products or services online and, if they choose to proceed, gain an understanding of their customers’ online shopping behaviours.
Reasons to be cheerful
In the last seven years, it’s been difficult for Irish SMEs to ignore the ubiquitous statistics reminding them that the country has still not completely emerged from its economic troubles. Even the slightest changes in metrics like ‘consumer confidence’ or ‘total disposable income’ can cause tremors in the hearts of business owners wondering if the footfall to their stores will increase, disappear or remain unaffected.
The Ipsos MRBI Consumer Confidence Index for October 2015 showed a seven point increase (+55 to +62) compared to the month previous. To put this into perspective, in November 2008 the index was at a low of -62. The number comes from a survey that asks respondents about their expectations for employment levels and the economy in order to create a measure of consumer confidence.
Let’s imagine for one moment that the aforementioned tools and their generated results are taken into account by SMEs before they sell goods or services in the offline world, then what data can help judge the availability of potential customers online? Reports from the European Commission, which are released every few years, aim to give an accurate update of the European and Irish e-commerce landscapes.
The European Year of Citizens Report in 2013, which examined the internet shopping habits across Europe revealed that 57% of Irish internet users have shopped online in the last twelve months leading up to the report’s publishing. 26% of Irish consumers have bought clothes and shoes online in the same period compared to 11% in 2008. 43% bought travel and holiday accommodation in 2012, up from 32% in 2008, while the percentage of people purchasing books, magazines and e-learning materials online increased by a third between 2008 and 2012. The percentage of people buying food and groceries online doubled, from 3% to 6% in the same period.
A wider snapshot of European Union member states showed the highest shares of online shoppers were registered in the United Kingdom (82% of internet users), Denmark and Sweden (both 79%), Germany (77%), Luxembourg (73%) and Finland (72%), and the lowest in Romania (11%), Bulgaria (17%), Estonia and Italy (both 29%).
Solutions for excuses
Equipped with data on positive consumer sentiment and the willingness of consumers to embrace e-commerce, it’s time to tackle some of the concerns that a number of respondents in the Amárach survey raised when they were asked:
What is preventing Irish SMEs from selling online?
“They have to come in and view it face to face.”
Digital age or not, there are some things that consumers prefer not to buy sight unseen. This being said, it’s possible that a customer’s visit to a bricks and mortar store can assist a later online conversion. Put another way, one might go into a store try out a product for size and then go home, think about it some more and then buy online. Unfortunately, in some cases the conversion might occur on a competitor’s site.
“I provide a service…not selling.”
In a world of vouchers, Groupon, Facebook offers and discount codes, this reason doesn’t really carry weight any more. There are a number of ways for businesses that provide services, whether it be dining experiences, tours, learning etc., to benefit from e-commerce activities. Although there has been the odd horror story about the offers market, starting small with something like a downloadable voucher that your customers can bring into your store can stat the ball rolling.
“Haven’t made the investment in updating the website.”
It’s safe to say that these days having a website is as important as opening the shutters on your store or office front. This being said, the journey from having a landing page with contact details and opening hours, to a fully-fledged e-commerce site, requires investment.
“I haven’t got the resources at the minute.”
Given that 23 percent of businesses surveyed in the Amárach research had 3-4 people on staff, it’s understandable that budgets may be tight. If transforming the company’s website into an e-commerce platform isn’t an immediate priority for the organisation due to other costs or concerns, draw up a timetable of when this could become possible. Map out some interim solutions that could enable your existing web presence to assist with conversions in your physical store.
“Prefer personal touch… on a one to one basis.”
Whether it’s through your social media channels, or through your company website, there are a number of ways to emulate a personal connection between customers and the business. Customer testimonials, learning tutorials, even the business owner’s journey are common place on most e-commerce sites these days. It’s true what they say, the internet is making the world a lot smaller.
“If customers order online it is too much hassle to get it delivered”.
A speedboat, a grand piano or a Bengal tiger might warrant this response, but otherwise customers of the digital era understand that postage and packaging is often an additional cost on top of the retail price. Alternative distribution centres, publishing partners and other affiliates help small brands from all over the world take their brands global. There are options available for Irish SMEs.
Embracing e-commerce: One Irish SME’s story
One of the advantages for SMEs operating in Ireland is the positive attitude that businesses have towards networking, mentoring and sharing their success stories with like-minded organisations. The Canvas Works is an Irish business that supplies high-end and hand finished canvas prints and framed photo prints in Ireland. Speaking to Virgin Media Business, business owner Patrick Ryan shared his own journey that saw The Canvas Works go online in 2006, while imparting some advice to similar SMEs looking to get started.
According to Patrick, one of the first obstacles he faced after the making the decision to sell online, was the initial setup of the business’ ecommerce strategy. The specific challenges of this task were the building of the cart and the ordering process that could handle products of such a bespoke nature.
“To an extent, that remains the case and our newest site is still a highly customised build but the difference today is that it’s built on the Shopify platform,” Patrick explained.
A clear set of goals, funnelled through an agreed upon online selling strategy saw Patrick seek out and integrate an e-commerce software solution. Despite the bespoke nature of The Canvas Works’ offerings, Patrick was able to find a solution compatible with the business’s e-commerce requirements.
“My advice to anyone starting out on e-commerce is not to build from scratch. Use a hosted solution…that will give you a responsive, mobile friendly e-commerce site for a fraction of the cost you’d face if you were building it yourself.”
Despite this win on the business’s journey to selling online, Patrick did explain that it’s not a case of an instant solution. “Some technical competence helps in maintaining and developing your site – it’s a never ending process of improvement and investment,” he said. Like with many aspects of business, optimisation is necessary and additional expenses can never be ruled out.
A business that offers custom framing and printing solutions is likely to have experience with unique logistical queries. Patrick is in a prime position to comment on the earlier survey response which stated that delivery to customers was too much hassle.
“Some small businesses may worry about the complications of shipping but I would say in our experience, this has not been a challenge. An Post offer very competitive domestic and international shipping rates and Fastway also offer a good domestic service. We have found that free shipping is a great way to grow sales and we currently offer free shipping in Ireland and the UK,” Patrick said.
Although The Canvas Works has nine years of e-commerce experience under its belt, it is still embracing new digital frontiers. “The next stage for us is to roll out our native apps which will bring enhanced functionality on mobile devices,” Patrick elaborated. Although a fresh challenge, he believes his chosen software solution will be able to help with this service as well.
Money’s not a problem
It may surprise some that the setting up of business banking or merchant accounts etc. was not listed as a key barrier of entry to e-commerce by Patrick or the Amárach survey respondents. Could it be the case that disruption in the Fintech (financial technology) market in recent years has made receiving payments online much easier for businesses?
Perceptions such as “my business’ turnover isn’t big enough to warrant the assistance of merchant services”, or “The fees make it not worth our while”, are debunked by new business models that offer scalable card acceptance solutions for SMEs, some of which can cost less than a mobile phone payment plan. The change in the payments industry, perhaps inspired by subscription models in other industries (such as Netflix in the home entertainment sector), coincides with the popularity of PayPal as a payment option in recent years.
Furthermore payment processing companies like Stripe, founded by the Limerick-born Collison brothers, and Irish based company Realex have made a big dent in a payment processing industry, once dominated by banks, in a very short period of time. Although both companies facilitate payments for some of the world’s biggest brands, neither shuns the business of small merchants.
Entering the e-commerce arena
One thing to remember is that support exists for Irish SMEs, even specific assistance for firms looking to make the leap into e-commerce.
The IE Domain Registry (IEDR) even operates a fund to help improve the online presence and e-commerce functionality of Irish SMEs. This year 15 Irish SMEs and micro-enterprises will receive a share of its €150,000 OPTIMISE Fund.
Even without such assistance, there are a number of options available for Irish SMEs looking to dip their toes and sell online for the first time. Auction sites like eBay and online marketplaces such as Etsy and Amazon are a perfect way for brands to start selling online without breaking the bank. These sites handle the payments and in some cases even take care of the customer service for the seller. It’s very possible that if a business has success working with these online marketplaces that they will adapt the knowledge gained from this experience and choose to proceed with their own e-commerce initiative hosted on their own business sites.
It will be exciting to see how the data shifts in the future if businesses factor in some of the key learnings discussed earlier and explore even a small percentage of the options available to them.
The global e-commerce landscape is ripe for a takeover from Irish SMEs.