Trading Online Vouchers incentivize micro-enterprise to develop online trading in their business to better compete, including as a result of the COVID-19 crisis
The practice addresses the rapid change in business models across many sectors resulting from the growth of internet usage, adoption of mobile and digital technologies, the impacts of globalisation and also the current COVID-19 pandemic.
Irish consumers spend almost €1m per hour, 24 hours per day, online! Yet less than 25% of Irish SMEs are trading online, leading to a trade deficit where 70% of online spending is going out of Ireland. McKinsey research shows that companies that introduce internet trading grow twice as fast and export twice as much, compared to non-adopting businesses. Given their resource limitations micro-enterprise and SMEs can be slowest to adapt to changing business realities.
This issue is being addressed through an incentivized programme to introduce online trading to Irish businesses, with a Voucher’ (TOV) to cover a % of expenditure up to €2,500 in value, available to eligible enterprises to develop a commercial Internet presence. The scheme is administered by the Local Enterprise Offices which deliver part of the SME Competitiveness Measure of the ROP. The initiative is widely promoted in regional media, social media and through direct promotion to enterprise clients of the Local Enterprise Offices (LEOs).
Stakeholders include the Local Enterprise Offices supported by other relevant agencies. Beneficiaries are the micro-enterprise community -companies successfully trading for a minimum of 12 months with up to 10 employees and turnover < €2m.
Nationally, the annual budget for TOV’s is €5 million to support 2,000 enterprises each year to develop their online trading presence to suit their needs.
A dedicated human resource in each LEO is assigned to promote and administer the scheme. This takes 8-10 hours per week (approx 0.25 FTE).
Evidence of success
The scheme is having an excellent impact nationwide with strong uptake in particular sectors, e.g. retail (24%), creative/manu. (17%) traded services (16%) professional (14%) and food (6%).
Almost 6,000 companies have availed of the scheme over 4 years and numbers continue to increase.
Companies availing of TOV’s record the following positive results:
-85% increase in enquiries including 40% increase in overseas enquiries
-Sales growth averaging 21%
-Average 1.4 jobs created per enterprise.
The scheme works very well overall, but typical difficulties encountered include:
• Limited promotional budget available to create awareness/meet targets
• Access to finance is difficult for some smaller enterprises
• Many businesses are risk averse/not willing to invest in the current climate.
Potential for learning or transfer
The practice has had an excellent impact in Ireland , in particular targeting micro and rural enterprises that suffer from the online trade deficit that exists. The uptake continues to increase each year. It also fosters online business activity which is essential for many enterprises as a result of the COVID-19 pandemic.
The transfer of the practice is relatively easy to adopt, once the regional implementation structures are in place to roll out the scheme, including its promotion and administration. A range of useful documentation, development guides and templates are generally available to assist the transfer process. The scheme complies with EU funding rules / De Minimus Aid, etc. which facilitates its smooth transfer.
Learning from the Irish model, the practice is already transferred to Slovenia roll-out of a similar scheme to address targeted enterprise needs there, involving Slovenian Ministry of the Economy, supported by the Development Centre at the Heart of Slovenia.
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