High delivery costs and return fees are putting online shoppers off using Irish websites, according to a new survey.

The survey by PayPal shows we spent €2.7 billion over the last year on foreign websites, amounting to 84% of all Internet shopping done here.

The survey shows that 2.2 million Irish customers bought something from an overseas website, compared to 2.1 million from an Irish site.

Nearly one-in-five shoppers, meanwhile, purchased goods exclusively from sites outside Ireland.

34% of those surveyed said delivery costs from Irish sites put them off, while 21% highlighted return shipping costs.

PayPal is now launching a new service where it will cover the cost of return shipping for all customers who use the payment service.

Louise Phelan - PayPal’s Vice President for Continental Europe, Middle East and Africa - says Irish businesses need to change their online practices.

She observed: "A lot of overseas [shopping] is free return shipping, so Irish consumers feel the cost for return shipping is too high.

"The other [thing] is that Irish shoppers are using mobile 65% of the time to purchase - so it's not an option any longer that the website is not mobile friendly."

She added: "In just two years’ time, ecommerce is going to be worth over €10BN in Ireland. Irish businesses have a tremendous opportunity in front of them to attract more customers and increase their online sales."