Thursday, 10 July 2014
Ceisteanna - Questions - Priority Questions
Online Business Voucher Scheme
7. To ask the Minister for Jobs, Enterprise and Innovation the annual trends regarding the level of investment in e-commerce by indigenous Irish business; and the numbers of persons employed in the sector. [29883/14]
Retail is one of the forgotten sectors of the economy, although it has probably suffered the most outside of construction in recent years. It has lost approximately 50,000 jobs recently and representative organisations state those in another 30,000 are clinging on by their finger tips. We are seeing a radical reorientation of people's spending patterns from the shop to online purchasing and my concern is that 75% of the business is going abroad. The Government must have a clear strategy to ensure Irish retailers start to use the service.
In the past decade the influence of the Internet on the economy has been growing steadily, about which there is no doubt. In 2013 Indecon Consultants estimated that digital‐related activities contributed 4.4% of GDP to the economy. The consultants predicted that this contribution would increase by 16% year on year. Almost 95,000 jobs are already supported by digital-related activities in the economy.
Notwithstanding this trend, CSO data suggest only 23% of small companies in Ireland are engaged in sales through e-commerce. The proportion is considered to be even lower for companies with fewer than ten employees. These companies are potentially losing valuable sales opportunities in both the Irish market and in selling overseas. It is estimated that Irish consumers spend just under €6 billion online annually, of which 60% to 70% goes overseas.
Encouraging more indigenous companies to engage in e-commerce is, therefore, a key objective of the Government’s national digital strategy and An Action Plan for Jobs. The 2014 action plan includes a commitment to roll out a trading online voucher scheme to 2,000 micro and small businesses by the end of 2015. The scheme is intended as a catalyst to support businesses to start trading online or improve their current online trading offering, rather than simply having an online presence and there is a qualitative difference. It provides successful applicants with a voucher up to the value of €2,500 to help meet these objectives. The value of the voucher must be matched by the applicant company. The trading online voucher scheme falls within the remit of the Department of Communications, Energy and Natural Resources. However, the vouchers will be administered by the local enterprise offices.
Following a piloting of the scheme by the Dublin City Enterprise Office at the start of the year, the Minister for Communications, Energy and Natural Resources announced the national roll-out of the scheme last week. Applicant businesses will be selected on the basis of their project plan, including their expected growth in jobs and exports as a result of trading online.
The Minister will agree that the figures are startling. People are spending €8.5 million every day online; while 43% of the population had bought something online. Millions of Irish people now regularly orientate towards online shopping. The figure of €6 billion given in the Minister of State's reply is up from €2.9 billion in early 2012 and it is reckoned that it will grow to €21 billion by 2017, which means it will be an enormous chunk of the figure for the retail sector. That a figure of 75% in this fast-emerging sector is being lost to the country means that thousands of jobs are being lost. The Minister of State mentioned the roll-out of a trading online voucher scheme, but the numbers are not high enough. What is his objective regarding the amount of money he will spend on the project into the future and how many retailers does he expect to be affected annually?
There is strong recognition by the Government of the size of the spend and its impact on GDP. The advent of the online trading vouchers through the local enterprise offices, LEOs, is a concrete policy intervention in recognising this trend and providng funding towards supporting businesses.
On the eligibility criteria, the vouchers will be available to a maximum figure of €2,500. Approval must be obtained prior to incurring any expense and third party costs only will be considered. All third party supplier invoices must contain proper business details. This is a robust document that greatly encourages businesses that may have had an online presence but which were not trading online. It will be for the LEOs to advertise locally to ensure businesses will come into them.
We are talking about an annual spend of approximately €32 billion. We expect €21 billion of this to be accounted for by the spend online by 2017, with 75% of it going abroad. It is reckoned that every 1% of that spend we win back boosts the local economy by approximately €40 million. Every time we have this debate the Government rightly states it is doing something about it, but there is a mismatch between the level of the Government's response and the size of the problem. Exactly how much will the Minister of State spend in the coming years in focusing on this crisis within the retail sector? How many businesses does he expect to reach and how money jobs does he believe will be created?
The important point is that we have recognised the potential value and created a solution through the roll-out of the trading online voucher sheme. In terms of the early results under the pilot scheme, seven out of ten companies stated the voucher application process had already helped them to determine how online trading would fit into their businesses. Some 70% of the companies involved in the pilot scheme in Dublin had received more customer inquiries, while 55% had had more sales. There is a provision within the LEO infrastructure to allow those companies that wish to trade online do so and we are already seeing a positive impact. It is impossible to give the exact figure for how much the State will spend in supporting this activity, but there is a provision available and it has been rolled out across the State in the piloting of the scheme. The demand from small local businesses to participate has been extremely high. It will take us a little time to have data on the numbers of businesses that have come in and how this has had an impact on their businesses.