Only three in every ten small and medium sized business in Ireland can take sales orders through their website.
That is according to new research which also found that two thirds of SMEs do not promote their services online.
The SME Digital Health Index, a survey of 1,000 businesses by the IE Domain Registry, measures their attitudes to and use of digital technology used for selling online.
This includes websites, e-commerce and social media.
The index found nearly three quarters of businesses polled have websites, the highest figure recorded by the annual survey.
But it also found small firms lack the time and skills to put in place the necessary technology to optimise their online presence.
Poor internet connectivity is also another barrier to selling over the internet for a quarter of businesses.
The IE Domain Registry, which manages the .ie domain, has called for the Government to set up a National Digital Activation Campaign to demonstrate how e-commerce can help grow SMEs' business.
This would include workshops and new online education resources.
The IE Domain Registry has also recommended funding for SME digitisation is routed through established sector bodies and representative organisations to reduce the administration burden on the Government.
Currently the e-commerce sector here is worth €12.3 billion to Ireland's economy, with online spending rising at ten times the rate of offline shop based sales.
The survey also found more than half of small and medium sized businesses have a Facebook page, down slightly on last year.
Twitter use, at 21%, is up 2% on the same time last year.
But the use of data analytics software is still very low, at 6%, down by half year-on-year.