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The research by Amarach Consulting showed that the Internet is failing to take off among the over 50s and among a majority of those in lower income households.
"This is primarily due to the fact that people especially over 50 do not see the relevance of the Internet to them and therefore see no reason to start using it," said Bettina MacCarvill, senior consultant at Amarach.
According to the company, the Irish consumer e-commerce market will be worth only IEP100 million which is 50 percent lower than was originally estimated. Amarach has also lowered its projections for the value of the Irish on-line market for 2003 by 50 percent to IEP260 million.
"The downgrading of forecasts is not due to any underlying economic slowdown. It is a result of lack of alternative payment systems, continued lack of confidence in the security of buying on-line and a lack of relevant on-line propositions that target the wider consumer market," said Gerard O'Neill, managing director of Amarach.
Around 15 percent of Irish people shopped on-line in the last three months, which is only half the level of the UK. The Amarach report said this is mainly due to the low level of credit card penetration in the adult population. Amarach estimates that 63 percent of the Irish adult population do not have credit cards.
However, Amarach indicates that the number of people shopping on-line will almost double from its current level of around 135,000 to around 250,000 by 2003. Over the last two years, Internet usage in Ireland has doubled with almost a third of Irish adults or 890,000 people currently using the Internet.
However, this rate of growth will not continue but Amarach said that it expects around 43 percent of the Irish adult population to be using the Web by 2003.
"The slowdown in Internet take-up is being driven by a number of factors. Internet use at work has almost reached saturation levels and little additional growth will come from first-time users accessing the Internet at work," said MacCarvill.
The report said the digital divide is not receding with low take up of the Internet among blue-collar workers.
Travel continues to be the most popular on-line purchase in Ireland but Irish consumer e-commerce still faces major obstacles. "Internet use is concentrated among young people, who for the most part don't own credit cards and therefore cannot buy at the vast majority of Web sites," said O'Neill.
"Older Internet users, especially 35-49 year olds are still dogged by security concerns and there are few on-line offerings that hold real appeal beyond small niche markets," he said. O'Neill said the future outlook for Ireland's on-line consumer market was good, but not spectacular.
The average amount spent on-line over the last three months was IEP180 making the value of on-line purchases made by Irish Internet users over the last three months is IEP20 million.
Amarach said Internet use access points need to be increased in places such as schools, libraries and community centres. The report said ISPs, banks, retailers, and cable providers should also work at encouraging their existing and potential customers to use the Internet.
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