Online commerce still limited among small businesses

The use of electronic commerce by Maltese small businesses is still limited despite a drive towards information technology in recent years, according to a document published by the Information Technology and Investments Ministry yesterday.

The document on the use of IT in business transactions in Malta, called e-Commerce Gap Analysis, was prepared by Pricewaterhouse Coopers (PWC).

Analysing statistics from a number of sources, including 2003 data by the National Statistics Offices, the report concludes that most SMEs find e-Commerce rather costly compared to the return.

The study is to serve as the basis for a policy document the ministry will publish later this year.

IT Minister Austin Gatt said that due to Malta's reality, electronic commerce can never be a replica of what happens in other countries. "Most businesses here are micro enterprises and that is a limiting factor. Yet, online commerce is still an opportunity for local entrepreneurs," he said.

The ministry, he added, was expected to launch an information campaign to increase awareness on the advantages of internet transactions.

According to the report, more than half of Maltese enterprises have a website. Data shows that retailers use the internet for marketing purposes, especially in the case of those sectors selling electronics, computer equipment and office supplies. A minority of websites allow the user to order products and pay online.

One retail sector that has seen some success is that which trades gifts and products available only in Malta, the report said. In this case, buyers pay for flowers, cakes and other gifts through the internet. These are then delivered to people living in Malta, say on birthdays, weddings or funerals.

"In other parts of retail, e-Commerce for SMEs is growing but is still not significant," the report states, adding that a number of online shops had been set up but could not be sustained because the effort involved was too great relative to the low volume of transactions.

In some sectors, the internet has disrupted the old way of doing business. The wider use of digital cameras, for example, made it possible, and often cheaper, to send photos by e-mail for printing in Britain (the prints are then returned by post). This has, in turn, negatively affected the business of photo developing outlets. Retailers selling books, music records, videos and newspapers have also seen a decline in sales as customers prefer buying online from overseas shops.

Yet, in most cases, the report says, businesses have increased their web presence and introduced e-Commerce facilities to retain customers by being present in the new environment.

When it comes to crafts, the share of firms selling online is only about three per cent in the European Union. Though there is room for improvement, several Maltese craft firms have tapped the international market through e-Commerce by marketing and selling products through a website.

However, according to a survey by the National Statistics Office published in 2003, only 13.5 per cent of craft firms received orders via the internet.

In the case of tourism, the internet has had a great impact, especially in transport and accommodation. In Malta, firms which make use of a website, including hotels, amount to more than 96 per cent.

The ICT services sector, which includes telecommunications, is ahead of all other sectors, with about 80 per cent of small companies in this sector purchasing online in the EU. An analysis of online payments made in Malta shows that over 80 per cent relate to payments for mobile phone top-up and internet service providers.

The government has also facilitated access to its services through the internet to make a better use of its resources. The 500 transactions paid by citizens through the e-government services in September 2003 increased to 5,000 monthly transactions by last September.