MCA research finds low rate in Maltese B2C e-commerce
Only 23 per cent of Maltese businesses are selling to individual consumers online. However, business-to-business online transactions seem to have taken off and are the norm in some sectors.
This is the picture drawn by quantitative research focusing on local businesses by M. Fsadni & Associates and commissioned by the Malta Communications Authority earlier this year. The study’s objective was to evaluate businesses’ computer and internet usage and obtain quantitative findings on their e-commerce activity.
The business sectors participating in the study are manufacturing and construction; financial intermediation, business activities and communications; community and social activities, personal service activities and health and social work; wholesale and retail; real estate and renting; transport and storage; and hospitality and tourism.
Compared to a similar survey published by the MCA last May, e-commerce is up from just 15 per cent at the time. Indeed the latest survey shows Maltese businesses are keener to sell online.
The rate of product sales over the internet to individual customers remains low, with an average 23 per cent of respondents engaging in online commerce. The tourism sector is the most active, with 41.5 per cent selling from their own website, 3.8 per cent through another Maltese website, and 3.8 per cent through an international website. Community and social services (91.2), manufacturing (91.1), real estate (89.5), wholesale and retail (81.1) are among the low usage brackets. Their major reason for not selling online was unsuitability of the product or service.
The most popular methods of payment are credit cards (62.6), cash on delivery (40.2), and debit cards (28). Third-party payment methods like PayPal only come fourth (25.2).
A relative majority, 39.3 per cent said online sales are less than 10 per cent of their total. Only 3.7 per cent say it’s more than 90 per cent. There are distinctive variations between the different sectors, especially the tourism, real estate, transport and storage, and financial sector where the highest percentages are registered. A staggering 23.4 per cent of respondents do not know how much of their total sales are made online.
In terms of business-to-business e-commerce, real estate and rental is 100 per cent dependent on such online business transactions, followed by manufacturing and transport and storage. In terms of sales, the tourism and hospitality sector sells a little over 60 per cent of its products to other businesses online.
Market access and reach are cited as the most important advantage of e-commerce, followed by reducing costs and increasing revenue. The major challenges and difficulties in e-commerce depend on the individual sector. For manufacturing, it is providing the right price and retaining customers. For tourism, it is pricing and engaging customers. For transport and storage, it is engaging and retaining customers. Interestingly, respondents from the financial sector either do not know or mentioned other issues, although security was given as an option to respondents.
Asked about the sales channels used to sell products and services, internet is highest in hospitality and tourism with 52 per cent, followed by financial sector with 20 per cent. The lowest rate was registered in the community and social activities with barely three per cent and which, as expected, is the most dependent on customers visiting the company/premises.
Once again the tourism sector is the keenest on having a website, with 94 per cent, followed by the financial sector. The lowest is the real estate and rental with 63 per cent. The most common reasons for not having a website is not feeling the need or having the time to do it.
Although the reasons given for having a website vary across the different sectors, the most important factor seems to be to attract customers and to promote products and services; 45.3 per cent still base their marketing on traditional mass media and only 14 per cent use exclusively digital channels like websites and social media; 23 per cent use a mixture. The most popular online marketing channels are Facebook (76.4), e-mail (38.8), display advertising on website (32.7), links with other website (27.8) and search engines (27).
The main reasons given for using digital marketing are reaching global markets, flexibility in the running of the campaign, and it is less expensive than traditional campaigns.
Almost a third of respondents feel they’re not informed or fairly informed about the legal obligations of e-commerce: 58 per cent admit they don’t know who is the regulating authority in Malta on e-commerce, but 31 per cent were spot on by saying it is the MCA.
The full results are available at www.mca.org.mt.