E-commerce sells, but who’s buying?

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Billy

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5 May 2017 | 0

Billy MacInnesHaving a website is good for business. That’s the clear conclusion from a survey of 500 Irish SMEs by Ignite Research on behalf of the IE Domain Registry (IEDR). The details were outlined in a blog post by IEDR’s Donal O’Nuallain entitled What is the value of a website which reported SMEs with a website gained an additional 22 jobs or sales a year at an average value of €1,089 per job or sale, equating to an average of €24,000 a year. For many smaller businesses, that’s not a figure to be dismissed lightly.

Unsurprisingly, SMEs in Dublin received almost double the average number of extra jobs or sales (41) while Connacht and Ulster had the fewest (12). According to the IEDR this is to be expected because 67% of all new .ie domains registered in 2016 were in Leinster. Expected but not necessarily ideal given just how much business and employment is being sucked into Dublin and the surrounding counties. And that proportion is growing all the time.

You might presume that as websites become increasingly important to businesses and customers alike, they could help to redress the balance away from Dublin and the east of the country. Sadly, it would appear not and that however much customers might be willing to transact with businesses via their websites, it’s not helping to alleviate the pressure on so many companies to establish their physical presence in Dublin or surrounding counties.

It certainly raises questions over the argument of the IEDR that selling online enables SMEs to have “access to a virtually borderless marketplace, open 24/7, 365 days a year” if so many of them can’t even use a website to escape the borders of Dublin and Leinster.

Anyway, I was intrigued by the following paragraph in the blog post: “85% of SMEs with a website said it is important for generating new business or sales. Of this group, 40% said that they are generating additional work through their websites. With an average of 22 additional jobs or sales coming through each year, SMEs with websites can make an extra €24,000 a year compared to those without.”

Minority interest
This appears to suggest that while 85% thought their website was important for generating new business or sales, only 40% of those with websites agreed they were generating additional work through them. In other words, 60% believed their websites were important to bring in new business or sales but when asked to put a figure on it, they couldn’t. To put it bluntly, a substantial majority of those who thought their website was important for generating new business or sales had no idea whether their websites generated additional jobs or sales.

O’Nullain believes this may be because their websites can’t take sales or process payments online. Instead, those SMEs might “have static ‘postcard’ websites that offer only the most basic product and contact information. This would suggest that while SMEs may be generating new sales leads through their websites, they are not converting them into paying customers”. He cites IEDR’s most recent dot ie Digital Health Index (November 2016), which showed only 32% of SMEs could take sales orders on their websites, 28% could process payments, and 29% process bookings or reservations.

Separate research from Ignite Research for the IEDR found that 83% of Irish consumers felt a business should have a basic website and 70% said companies without a website looked outdated. There were financial consequences too with 60% claiming they would shop online with a competitor for the same product if their local business did not have a website.

Nevertheless, while the findings from both sets of research suggest that big majorities of consumers and SMEs believe having a website is good for business, there’s still a lack of clarity in terms of the actual revenue and sales they bring in to companies from consumers. Having a website is good for business, but no one is sure just how good.

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