ON THE MONEY The Irish E-commerce Report 2021
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ON THE MONEY The Irish E-commerce Report 2021
Contents Section 1 Online Revenue Section 2 Revenue Percentile and Digital Maturity Section 3 Revenue Percentile and Market Share Section 4 Online Profitability Section 5 Deeper Data for Newsletter Subscribers Section 6 Window of Opportunity Section 7 What’s Next Section 8 Key Takeaways Section 9 About Wolfgang Digital Section 10 About The Data
1
Online Revenue
E-commerce revenue for retailers
grew by a seismic 159% in 2020.
To give this context, average annual growth
from 2017 until 2019 had been 32%.
Covid has revolutionised online retail in two
ways.
+69%
Firstly, while the growth in online Conversion Rate
shopping was always going to increase in time,
the pandemic accelerated that growth faster
than anyone would have predicted.
Average Transaction Value actually decreased
marginally while the ‘King of KPIs’, Conversion
Secondly, Covid has brought new people into
Rate increased by more than two thirds.
the e-commerce economy who likely would not
have participated otherwise, for example, the
What do these figures tell us?
wealthy over 65s demographic was the least
likely to shop online pre-Covid. They are now
This remarkable growth is being driven by
hoovering up the Tesco delivery spots.
increases in the number of online
purchases and the number of online
purchasers, not an increased average purchase
size.
-5%
Average Transaction
Value2
Revenue Percentile and Digital Maturity
2019 2020
80
70 +24%
60
PERCENTAGE
50
40 -24%
+15%
30
+6%
20 +9%
10
0
Less than 1 million More than 1 million More than 5 million More than 10 million More than 20 million
(Primary School) (Secondary School) (Degree) (Masters) (PHD)
REVENUE
In 2019, most (59%) e-commerce merchants Over €1 million, the business has graduated to
were making less than a million euro online. It ‘secondary school’. Investments will start to
was the minority (41%) who were sitting in the show a positive return on investment (ROI) and
one million plus club. In 2020 this swung to the the business can start to build successful
majority (67%), making more than 1 million euro investment on top of successful
online. investment.
The €1 million mark is a critical benchmark for It’s notable that the number of e-commerce
e-commerce websites. Any sellers commanding merchants sitting in the top tier, the €20 million
less than €1 million in online revenue are plus cohort, our digital maturity ‘PHDs’, more
considered to be in ‘primary school’ in terms of than doubled in 2020. Surprisingly, the
digital maturity and any investment in salaries revenue growth rate for this cohort was 150%
or service providers is likely to show a negative which almost matched the study average.
return on investment in the short term.Why is this surprising?
Normally you’d expect the biggest businesses to have a lower percentage increase. This huge
increase demonstrates the scalability advantage of e-commerce.
An e-commerce retailer such as Lululemon can get a pair of yoga pants in every closet in the country
with a great product and a digitally mature e-commerce presence. An offline only retailer would
need to undertake a monumental expansion of square footage to obtain a similar result.
Digital Maturity
Primary school
“How do I sell online?”
Secondary school
“How do I get my offline
customers to buy from
my online store?”
PHD
“How do I keep my promise
and do next day deliveries
on this mountain of online orders?”3
Revenue Percentile and Market Share
Here we look at what percentage of online spend is being captured by the different cohorts.
2019 2020
100
90
80
70
PERCENTAGE
60
50
40
30
20
-3% +3%
10
-9%
-2%
0
Less than 1 million 1-5 Million 5-10 Million 10-20 Million 20 Million
(Primary School) (Secondary School) (Degree) (Masters) (PHD)
REVENUE
The startling statistic here is the utter This is the opposite of what was predicted by
dominance of the biggest e-commerce early internet evangelists. 15 years ago the big
websites. In 2020, the top 15% of the business- idea was the “long tail”. Early internet thought
es captured a gargantuan 84% of consumer leaders spoke of how the internet would
spend. Covid accelerated this trend. The largest democratise and decentralise commerce. The
movement in market share was to this cohort. idea the long tail espoused was that you’d buy
The 35% of businesses turning over less than your rug online from a merchant in Marrakesh,
€1million are now fighting it out for a meagre and you’d buy your shoes online from a
1% of the e-commerce market. merchant in Milan.It was predicted that when you added up the Once again demonstrating the scalability
revenues of the long tail of small advantage of e-commerce for businesses
independent businesses, it would dwarf the that reach digital maturity.
revenue of the larger businesses.
2020 saw businesses of all sizes experiencing
While social media has democratised global package-picker-pounding levels of growth.
media, and blockchain may decentralise global And in a year of firsts, CMOs and CFOs were
finance, the shrivelling long tail of e-commerce high fiving, or should I say elbow bumping,
merchants in Ireland has been accelerated by and celebrating ‘ROI’ at board tables the
Covid. length and breadth of the country.
Rather than Chris Anderson’s “long tail” we are
experiencing the opposite; Vilfredo Pareto’s
‘80:20 principal’. In Ireland in 2020, 84% of
online spend was captured by the top 15% of
online businesses.
“ROI”
CFO
CMO4
Online Profitability
The language of marketing has changed as a ROAS 2019 vs 2020
result of digital marketing. Where traditional
120 % +108%
marketers tell stories of “brand lift” and
emphasise “share of voice”, performance 100 %
marketers analyse “revenue lift” and present +77%
80 %
“market share”.
60 %
This means the Chief Marketing Officer now
40 %
speaks the same language as the Chief
Financial Officer and the Chief Executive 20 %
Officer. In Wolfgang, we’ve witnessed this
0
shared language among clients’ board *Google **Facebook
members result in budget flowing into market-
ing and those increased budgets leading to CPC 2019 vs 2020
website revenues increase from less than €10
*Google **Facebook
million to over €20 million in a year. 0%
-5 %
We’ve witnessed multiple examples of this
new view on marketing leading to exceptional
-10 %
revenue growth in the last year.
-15 %
The digital media duopoly of Google and -13%
Facebook are the key drivers of this revenue -20 %
growth. And we’ve been keenly tracking our
favourite metric, Return on Ad Spend (ROAS) -25 % -22%
on both those platforms. ROAS measures the
revenue returned against the ad spend.
*Google ROAS is calculated on non-brand search and
shopping campaigns.
** Facebook ROAS is calculated on direct response
targeted DPA campaigns.ROAS on Facebook has increased a magnifi- This is an excellent example of Google’s tech
cent 76% while Google has actually managed catching up with its vision. Do you remember
to more than double its ROAS year on year. when Google declared it was a “mobile first”
Both internet giants’ ROAS have benefited company? And do you also remember every
from cheaper clicks (more ‘face in fone’ time = year for the next 6 years was declared “the
more ad impressions = lower CPCs) and higher year of mobile” until finally the amount of
conversion rates. But what has Google done mobile traffic overtook desktop traffic in
that has allowed it to double campaign profita- 2017? That very year, Google shifted its focus
bility in a year? from “mobile first” to become an “AI first”
company. 3 years later they have delivered on
It’s Google’s AI-enabled automated that vision with their AI-enabled automated
advertising machine. campaigns, which have undoubtedly contrib-
uted to the ROAS doubling year on year...
And in half the time it took them to realise the
“mobile first” vision last time around!
In crunching the numbers, we’ve found the
blended ROAS for Google and Facebook is
8:1.
This 8:1 ROAS insight is instructive to
businesses seeking to grow their online
revenue. If a €12 million website wants to hit
€20 million, this insight allows the CMO to
forecast to the CFO that an extra €1 million in
ad spend with Google and Facebook should
see them increase their online revenue by the
€8 million required to hit the €20 million
mark.
I’ve been a digital marketer for 14 years. In 13
of my 14 years, human-made campaigns
All they need is the skills to spend the money
vastly outperformed Google’s machine-made
wisely.
campaigns, and by some distance. 2020 was
the first year in which Google’s machines
outperformed humans in the majority of
campaigns.5
Deeper Data for Newsletter Subscribers
As a valued Wolfgang Howl reader we've ROAS
10
some extra valuable findings just for you.
8
Average ROAS on Google non brand search
increased from an average of 6 in 2019 to an
6
average of 10 in 2020.
Average ROAS on Facebook direct response 4
ads increased from an average of 4 in 2019 to
6 in 2020. 2
These figures don't match up to our overall 0
Google* **Facebook
ROAS growth as that's calculated by averag-
ing the ROAS growth across all websites for a CPC
more accurate figure.
0.30
Average CPCs on Facebook decreased from 0.25
24 cents to 15 cents. Average CPCs on
0.20
Google decreased from 28 cents to 21 cents.
0.15
0.10
0.05
0.00
Google* **Facebook
*Google ROAS is calculated on non-brand search and
shopping campaigns.
** Facebook ROAS is calculated on direct response
targeted DPA campaigns.6
Window Of Opportunity
Every e-commerce website’s biggest competitor, and Google’s biggest customer, Amazon, has
savagely cut their Google Ads budget in Ireland.
We’ve analysed Google auction insight reports and independent tools to discover that Amazon has
reduced its January 2021 spend on Google Ads by approximatley 50% year on year.
Amazon's Google Adspend in Ireland
600k
Lower
400k Spend
200k
Mar 19 May 19 Jul 19 Sep 19 Nov 19 Jan 20 Mar 20 May 20 Jul 20 Sep 20 Nov 20 Jan 21
As a result of Brexit associated costs and otherwise would have been buying from Jeff
delivery issues, Amazon is in the process of Bezos’ internet behemoth.
opening a fulfilment centre in Ireland and it is
expected that Irish customers will be able to This reduction in competitor spend comes at a
buy from amazon.ie rather than amazon.co.uk. time when Ireland is facing more than a month
It appears Amazon is reducing its advertising of extended lockdowns forcing consumers
to the Irish market until these initiatives are online. The online opportunity is heightened
complete. for multiple reasons in the short term.
This presents a window of online opportunity
for Irish retailers to capture customers that7
What’s Next?
Amazon will ramp their ad spend back up.
Covid lockdowns will pass.
But in the meantime, smart e-commerce merchants will have captured new customers and
fast-tracked their digital maturity.
One of the beautiful advantages of selling online is once you’ve made a sale you own the custom-
er’s email address. A customer relations management (CRM) strategy can leverage this asset to
convert a once-off shopper into a valued customer for life.
Given the headwinds of scrutiny on privacy and the end of the third-party data party, combined
with business’s engorged databases of new customer contact details, we at Wolfgang expect CFOs
and CMOs to be calculating ‘customer lifetime value’ and getting excited about “the year of
email” in 2021.8
Key Takeaway’s
1 2
€1m
2020 saw revenue grow by a package Two thirds of e-commerce websites
picker pounding 159% year on year. This now turnover more than €1 million.
compares to an average of 32% over the
previous 2 years.
3 4
2020 e-commerce market share Google advertising ROAS doubled
converged beyond the Pareto 80:20 while Facebook’s was up by two thirds.
principle of economics. The top 15% In 2017, Google declared itself an
of e-commerce websites by revenue AI-first company and said its ai
(>€20 million) captured 84% of enabled Smart campaigns would turbo
consumer spend. This is the opposite charge advertisers’ growth. 2020 was
of the “long tail” that wags the dog the year Google’s tech caught up with
prediction of early e-commerce its promise and ROAS, driven by
evangelists. Google’s Smart campaigns, doubled.9
About Wolfgang Digital
Wolfgang Digital’s mission is “exceptional digital marketing driving extraordinary business
growth”. On average, Wolfgang clients grew online revenues by 174% in 2020.
Google has crowned Wolfgang as their Best Search partners as well as Best Shopping partners in
EMEA. Wolfgang are two-time winners of Best Large Integrated Agency in Europe and Best SEO
Agency in the world winners. 1% of all Wolfgang Digital revenues go directly to their social
enterprise, Wolfgang Reforest.
About The Data
There is half a billion euro of online spend in the dataset in 2020. This represents approximately
7% of the Irish e-commerce market (source: JP Morgan) so it’s a very significant sample size. The
smallest contributing business was turning over €20,000 per month. The largest contributing
business was turning over €20 million per month. All the figures we show are averages across the
clients. So, the smallest contributor’s revenue increase is weighted equally to the largest contribu-
tor’s revenue increase.
NB if you are a regular reader of our reports you will know that in previous years, we’ve reported
on both travel and retail. Travel has tumbleweeded and is down 58% year on year. Unfortunately,
there’s not much to say beyond that. So, for this year’s report we focus on e-commerce retail.hi@wolfgangdigital.com +353 1 663 8020
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