Amazon’s growing expansion into Ireland will transform the retail landscape.
The retail giant has been aggressively growing its European footprint since the pandemic. Its ambitious plans for Ireland will change how indigenous companies, particularly small-to-medium enterprises (SMEs), conduct business.
Amazon employs 6,500 people across Cork, Dublin, and Drogheda, and when it launches an Amazon.ie website in Ireland in 2025 that number will increase, as will its presence.
People in Ireland already shop on Amazon stores in other countries, but its new Ireland store will offer “a localised shopping experience”, including even “more from Irish businesses, low prices, and fast and convenient delivery and returns”.
“Customers will also be able to browse products with clearer, local pricing, and without additional customs charges,” the company said.
Following the announcement, many SMEs came out in support of the move, calling it a “game-changer,” for homegrown Irish businesses.
Laura McCarthy, founder of Drink Botanicals Ireland, said that Amazon had greatly helped her business, with one of her products the fourth best seller in the US last year, an achievement “largely helped by Amazon”, Ms McCarthy said.
The founder of Dublin-based vegan protein powder EarthChamp, Dave McGeady, said the retail giant helped the company to expand internationally when they themselves had struggled to do so.
“Amazon has been a game-changer for us,” Mr McGeady said. “For small businesses, Amazon creates opportunities to compete with bigger, more-established brands.”
Pat O’Flynn, CEO at iron supplement maker Solvotrin Therapeutics, said the businesses had seen “huge growth” from Amazon, with the Dublin-founded firm selling in 14 countries.
For the businesses yet to take the plunge, the Irish Government is funding free workshops for SMEs, encouraging them to “seize the Amazon opportunity”.
MentorsWork, a fully government-funded mentoring programme formed through a partnership between Skillnet Ireland and the Small Firms’ Association, has run webinars on helping firms improve their online presence and sales.
These webinars have included help with preparing for the launch of Amazon.ie in 2025.
The new online store will offer Irish businesses “unprecedented access to a wider audience and greater opportunities for growth”. However, it noted that the website launch also presents challenges and risks “that must be navigated carefully.
“With the impending launch of Amazon.ie, it’s essential for businesses to be prepared to seize new opportunities,” David Broderick, head of the SFA, said.
While many Irish SMEs have already benefitted from Amazon, the retailer is, in many ways, late to the game, with dedicated stores already launched in several EU countries, including Belgium, the Netherlands, Poland, Sweden, Germany, France, Italy and Spain, as well as the US and UK.
These markets are well-established, so the impact of Amazon’s expansion is well-documented.
Shopping habits have changed significantly in the digital age, in no small part driven by the ‘Amazon effect’, a term referring to the company’s dominant position in the e-commerce market and its leading role in disrupting traditional retail.
The last few years have seen the decline of several brick-and-mortar industries, due to the rise in e-commerce.
In 2017, Toys R Us, which had a short-lived presence in Ireland, filed for bankruptcy and had closed all of its 740 US stores by the following year.
While the giant had amassed significant debt, the Harvard Business School said that wasn’t enough on its own to destroy the company, attributing its failure to an increased debt load and a squeezing of the toy market under competition from Amazon.com.
Department stores were another casualty of the e-commerce revolution, something Ireland knows all too well. Two major department retailers have exited the Irish market in recent years: Debenhams in 2020 and Argos in 2023, with the closure of the latter largely down to its online competitors.
In its final financial statement filed to the Company’s Registration Office before its closure, Argos Ireland said it would continue to review its portfolio of stores “in light of the changing retail environment”, adding that it planned to review “the development of the company’s online offering” as sales declined.
The number of department stores in the US has also fallen sharply, with those that shut being bought and transformed in to ‘fulfilment centres’ by Amazon, the company that led to their downfall.
Across the US, department stores fell from 14.1% of retail sales in 1993 to only 2.6% last year. In the UK, department-store revenue is forecast to have contracted at an annual rate of 2.7%, to £35.6bn (€42.2bn), according to market-research group IbisWorld.
So Amazon’s expansion plans come with an important caveat: An even greater uphill challenge for traditional brick-and-mortar stores.
“The data is there for what Amazon has done to the high street, and it is not good,” says Tomás Kenny, of Galway-based Kenny’s Bookshop.
“During the pandemic, such a strong emphasis was placed on supporting local and Irish businesses,” Mr Kenny says. “That campaign was quite successful .
“With such a drastic move from Amazon coming down the pipeline, we run the risk of undoing these efforts.”
Kenny’s is one of several Irish-founded retail businesses that have a strong online presence, offering free delivery within Ireland.
Many customers believe Amazon is the cheapest option when buying goods online, but as Mr Kenny argues, this is not always the case.
“A book you buy for €10 on Amazon will cost only €7 or €8 on a seller’s own website. That is because Amazon charges businesses that sell on their platform.”
“To sell your products on Amazon, the company charges you a monthly subscription fee, a fulfilment fee, a referral fee, so for every sale a business makes, they pay three to four separate costs for it, meaning they likely have to increase prices.”
“if they just sell on their own website, they can bypass these fees and sell for a cheaper price.”
While many SMEs have embraced Amazon’s Irish website launch, Mr Kenny remains cautious, telling the Irish Examiner that while many industries will be impacted by Amazon’s expansion, “across our sector, bookshops are terrified”.
“For the high-street shops looking to get a start on Amazon, how many of them realise that that is the very thing that could put them out of business?”
“Amazon goes after competition so often and that could make Ireland look very different in the next five to 10 years.”
Addressing these concerns, a spokesperson for Amazon said: “Small- and medium-sized businesses account for more than half of all physical-product sales on Amazon and many sell their products in shops, as well as online.
“The launch of a dedicated store in Ireland will provide great opportunities for small- and medium-sized Irish businesses to reach customers both at home and abroad.”
“Over 1,000 small and medium-sized Irish businesses already sell on Amazon, and generated over €150m in export sales in 2022 alone.”
As businesses brace for the full impact of Amazon’s expansion, one question remains: Can the charm and resilience of Ireland’s brick-and-mortar establishments withstand the Amazon effect?