National ecommerce Strategy

Transcription

1 National ecommerce Strategy Final Draft Publication Date: 10 th July 2014

2 DOCUMENT REVISION HISTORY Date Revision Comments 06/01/ First Version Authors/ Contributors MCA Includes merged feedback received from: MCAST University of Malta Malta Chamber of Commerce, Enterprise and Industry General Retailers and Traders Union Malta Bankers Association Malta Enterprise Malta Tourism Authority Commerce Department / Crafts Council 06/01/ Second Version MCA / Stakeholders Sent to the following stakeholders for review: Malta Information Technology Agency (MITA) Malta Enterprise (ME) Malta Tourism Authority Commerce Department / Crafts Council 11/03/ Merged feedback received from; Malta Information Technology Agency (MITA) Malta Enterprise (ME) Malta Tourism Authority Commerce Department / Crafts Council MCA / Stakeholders 03/04/ Internal MCA review / Ministry review MCA / MEIB DISTRIBUTION Date Revision Comments 02/01/ MCA, Management Committee 08/01/ MCA, Board, Stakeholders 13/03/ MCA, Board 03/04/ Ministry 10/07/ General public Page 2 of 72

3 TABLE OF CONTENTS INTRODUCTION ECOMMERCE AT A GLANCE... 5 ASIA... 8 The MENA region - the fastest growing ecommerce market in the world ECOMMERCE IN MALTA The Supply Side The demand side ECOMMERCE TRENDS, BUSINESS MODELS AND MALTA S VALUE PROPOSITION ecommerce Trends SWOT ANALYSIS LOCAL ECOMMERCE INDUSTRY SWOT AND PESTLE ANALYSIS MALTA S VALUE PROPOSITION FOR ECOMMERCE BASED ENTERPRISES PestLE analysis STRATEGIC AND POLICY RECOMMENDATIONS APPENDIX 1 - FEEDBACK FROM STAKEHOLDERS APPENDIX 2 - PAST / CURRENT INITIATIVES TARGETTED AT ECOMMERCE APPENDIX 3 - MAIN EU INITIATIVES APPENDIX 4 PRELIMINARY WORK SCHEDULE - PROJECTS STARTING IN APPENDIX 5 PRELIMINARY PROJECT PROPOSAL SHEETS Page 3 of 72

4 INTRODUCTION ecommerce is the sale or purchase of goods and services, over computer networks, generally over systems specifically designed for that purpose. For a transaction to be classified as an ecommerce transaction, the payment and the ultimate delivery of the goods or services does not have to be conducted online. Online commercial activities that generate revenue are classified as ecommerce, even if the service is provided to the end user free of charge (e.g. free online newspapers that generate revenue from advertising are still considered to be ecommerce). Sales and purchases resulting from orders made by telephone calls, facsimile or manually typed are not classified as ecommerce. ecommerce can occur between businesses (B2B), businesses and consumers (B2C) and between businesses and governments (B2G). Other forms of transactions sometimes referred to as ecommerce are those between consumers (C2C) and between consumers and government (C2G & G2C). Despite the longstanding economic downturn, ecommerce continues to grow at unprecedented rates across the globe, driving radical change in consumer and business markets. This is true for all consumer markets ranging from general retail, to services, such as tourism, banking and postal services. It is also true for business markets including retail and wholesale markets. ecommerce is creating waves of disintermediation and re-intermediation as new service models emerge to replace those that do not survive in the online world. The Internet has enabled new business models to emerge related to the use of big data including location based data, software as a service and wearable technologies to mention but a few. Market disruption of this magnitude creates risks and opportunities that the Maltese economy must be in a position to mitigate and capitalise upon respectively. This requires the development of flexible and proactive national policies that facilitate investment and support start-ups related to ecommerce while enabling established industries to react effectively to change driven by ecommerce. This strategy addresses B2B, B2G and B2C ecommerce and aims to support the take up of ecommerce and the provision of ecommerce-related services by local businesses whilst also addressing, at a high level, the prospects for Malta to attract foreign companies providing ecommerce or ancillary services to establish operations in Malta. In line with the actions identified in the Digital Malta strategy it: identifies a set of measures to sustain and grow the local ecommerce market on both the supply and demand side; identifies a set of initiatives to assist and further drive the adoption of ecommerce by those business sectors having the potential to capitalise on web technologies to penetrate foreign/niche markets; considers those vulnerable industries that may need to undergo structural changes as a result of the widespread adoption of ecommerce by Maltese consumers; reviews and identifies opportunities whereby Malta may attract business activity operating or supporting the global ecommerce markets. Page 4 of 72

5 1. ECOMMERCE AT A GLANCE A GROWING GLOBAL PHENOMENON - ecommerce IS BOOMING ACROSS ALL REGIONS The global number of internet users at end 2012 was estimated at 2.4 billion and is forecasted to reach 3.5 billion (50% of the world population) in just a couple of years. Today, around 40% of global internet users shop online 1. It is estimated that global ecommerce (including B2B and B2C) has been growing, on average, 19% each year 2. In monetary terms 3 global ecommerce is expected to grow to 1.02 trillion by Cross-border ecommerce is also growing at tremendous rates. Around 93.7 million online shoppers in the world s largest ecommerce markets (USA, UK, Germany, Brazil, China and Australia) 4, are projected to have spent 77 billion shopping across-borders in The same study also forecasts that by 2018, the number of cross-border shoppers in these markets will go up to 130 million with a projected total annual spend of 227 billion. Online retail is estimated to be growing at much faster rates than traditional retail. Over the last three years, global online retail is estimated to have increased at an average rate of more than 18% annually compared to sales via other channels which only grew by 1.3% annually. Over this period, this phenomenon is mostly evident in Asia Pacific, Latin America and Eastern Europe 5. Mobile ecommerce is expected to grow at a faster pace than other types of ecommerce 6 with predictions that by 2014, 580 million consumers will purchase goods and services online using a mobile device. In developing, emerging, and maturing markets, mobile ecommerce is providing consumers with new payment methods making it possible for them to purchase goods and services online. In today s business models the boundaries between brick and mortar operations, ecommerce and mobile commerce, social media channels and others are fast disappearing as business seek to adopt fully integrated multi-channel business solutions to ensure that they can effectively meet clients needs, while servicing a diverse set of customers using different channels 7. EUROPE Despite the economic turmoil that has plagued a number of European countries and the EU as a region in these last five years, the European online retail market is still healthy. By way of example, Greece is estimated to have experienced a growth of around 40-50% in its online retail market in 2010 and In 2012, European consumer spending via e-commerce, including online travel bookings, events and other tickets and downloads, is estimated to have grown by 19% to reach billion, with 89% of 1 ecommerce Europe Europe B2C ecommerce Report Payvision Profitable Cross-Border e-commerce Industries Shanty Elena van de Sande Paypal Modern Spice Routes the cultural impact and economic opportunities of cross-border shopping 5 Cushman & Wakefield Global Perspective on Retail: Online Retailing - July IMRG - International Developments In E-Commerce - IMRG-CBT.pdf Page 5 of 72

6 these sales or billion originating in the EU28. In terms of online B2C sales, as at 2012 the European ecommerce industry is dominated by the UK ( 96 billion), Germany ( 50 billion) and France ( 45 billion) 9. According to a recent study by Mintel 10, an independent marketing research firm based in London, European online retail sales are expected to double to 323 billion by In terms of the country leader-board, the same report predicts that the UK, Germany and France will remain the leading countries in online retail sales, but countries such as The Netherlands, Spain and Poland will grow at a faster rate. ecommerce Europe estimates that the number of B2C websites in Europe reached 550,000 by the end of 2012, growing at a pace of 15% to 20% every year. It looks very likely that this trend will continue at an even higher rate given the growth foreseen in the emerging markets in Southern and Eastern Europe that are rapidly catching up with the more mature markets in North, West and Central Europe. In terms of jobs, ecommerce Europe estimates that the B2C ecommerce sector has generated, directly or indirectly, two million jobs in Europe. It projects that this will continue growing in line with the ongoing increase and penetration of the internet and the projected growth in B2C ecommerce. It is also estimated that 3.5 billion parcels per annum are being delivered domestically and across borders to other European countries, with this figure expected to continue growing in line with the forecasted growth for B2C ecommerce 11. The growth of ecommerce in Europe is mainly attributed to a very high penetration of credit and debit cards, coupled with a high banking, internet and mobile penetration 12. The following provides a snapshot of two largest European ecommerce Markets - UK and Germany: UK The UK is the most mature ecommerce market in Europe. With 77% of the population buying online in 2013, the UK boasts the highest ecommerce penetration within the EU 13. The UK s online consumers have helped digitise the economy, as the Internet contributes a larger share to GDP than in any of the other European countries. It is not surprising, in light of the strength of the domestic demand for ecommerce, that UK retailers are extending their operations overseas and successfully attracting many European cross-border shoppers. 14 The UK s ecommerce market is estimated to have grown from 1 billion in 2000 to over 90 billion in 2012 of which 41 billion was e-retail 15. The UK s cross-border sales for 2013 were expected to reach 12 billion 16. It is expected that by 2018, online retail sales will rise from 12.7% (2012) to 21.5% of the UK retail market. In terms of cross border sales, the UK online retail market has proven to be one of the great success stories of the past decade, recording strong growth each year. A recent Nielson research for PayPal 17 places the UK (37% of online shoppers buy from the UK) only second to the US (45%) when it comes 9 ecommerce Europe Europe B2C ecommerce Report ecommerce Europe Europe B2C ecommerce Report Payvision Profitable Cross-Border e-commerce Industries Shanty Elena van de Sande The Paypers Cross-Border ecommerce Report UK IMRG - International Developments In E-Commerce - IMRG-CBT.pdf 16 UK cross-border sales to hit 10bn in 2013: IMRG imrg/). 17 Paypal - Modern Spice Routes - the cultural impact and economic opportunity of cross-border shopping - Page 6 of 72

7 to the most popular overseas online shopping destinations, followed by mainland China (26%), Hong Kong (25%), Canada (18%), Australia (16%) and Germany (14%). As at 2012, 74% of UK retailers were selling cross border, with 21% of UK retailers selling to over 100 countries. Interestingly, in 2011, 93% of Maltese online shoppers bought from UK sites. The crossborder appeal of UK sites is however not restricted to Maltese shoppers, with 74% of Irish and Cypriot shoppers buying from UK sites, and between 30% and 50% of online shoppers in nine other EU Member States buying from the UK 18. IMRG 19 estimates that by 2020, 40% of sales of UK eretailers will be selling cross border as against 17% this year 20. Revenue from mobile commerce in the UK is expected to reach 7.8 billion in 2013, accounting for 15% of UK s online retail sales. According to Capgemini and IMRG, 23% of online sales during the second quarter of 2013 originated from mobile devices 21. The UK s long history of distance-selling through catalogues, could have given the UK a strong headstart in ecommerce. This was further fuelled by the UK ICT-savvy population, a strong supporting infrastructure, together with a number of globally recognised brands 22. In addition, the fact that English is widely spoken in a number of countries worldwide and in the EU, has surely helped it to tap markets beyond its borders. 23 Germany Germany is the second largest online market in Europe. It ranks 5 th in the world in terms of B2C ecommerce sales. Internet usage has increased significantly in Germany in recent years with social media platforms becoming particularly popular and increasingly used for marketing purposes. Total ecommerce turnover is estimated to have reached 45 billion in 2012 with B2C sales accounting for 36.5 billion in the same year. B2C turnover is expected to have increased to 41 billion in % of German online shoppers buy cross-border, while 30% of German e-retailers sell cross-border. NORTH AMERICA The US online retail market is currently valued at around billion. Its value is expected to double by According to ComScore 25, the most sought after product categories are digital content and subscriptions, accessories (jewellery and watches), consumer electronics, toys & hobbies and computer software. As at 2012, 78% of the population used the internet 26 whilst 71% of US internet users shop online. 450 retailers make up more than 70% of the US online market, with Amazon and ebay leading the way The Paypers Cross-Border ecommerce Report UK The Paypers Cross-Border ecommerce Report UK IMRG - International Developments In E-Commerce - IMRG-CBT.pdf 23 Payvision Online Shopping Infographic; Cross-Border ecommerce in the UK 24 AT Kearney The 2013 Global Retail ecommerce Index Online Retail Is Front and Center in the Quest for Growth Page 7 of 72

8 Omni-channel retailing is at the top of US retailers agenda and significant investments are being made to integrate offline and online distribution networks in light of consumer demand for multichannel retail services allowing them to shop via the channel of their choice. ASIA The countries that are considered to be leading the way in ecommerce in this region are Japan, South Korea, Hong Kong, Singapore and Taiwan. Notwithstanding this, because China and India are both densely populated countries and internet penetration is still low in both countries, they are considered to be very attractive emerging markets for ecommerce. China China ranks first in A.T. Kearney s Global Retail ecommerce Index 28, which lists the most attractive countries for online retail based on online market size, technology adoption, consumer behaviour, infrastructure and growth potential. The size of China s online retail market is expected to triple over the next three years, with sales reaching billion by A.T. Kearney 30 attributes this to improvements in infrastructure, better access to the internet in non-urban areas, increase in the standard of living and a growing inclination to spend. When considering that in China, out of a population of 500 million, around 43 million internet users made their first purchase online in 2011 and that only 40% of the country's population has access to the internet 31, China s potential for ecommerce is undisputed 32. According to the statistical data of iresearch, the total value of China s cross-border ecommerce market reached 280 Billion in 2012, up 31.5% from 2011 (this statistic includes both import and export). Cross-border ecommerce transactions in China are expected to reach 708 billion in 2016, representing an 18.5% share of the total import and export market. Japan Japan has approximately 100 million internet 33 users with an internet penetration of around 80% 34. It is estimated that in 2012, Japan s total ecommerce sales amounted to 46.5 billion, 20% of which are attributed to mobile commerce. Forrester Research Inc. predicts that by 2016, total online sales could reach 70.5 billion. B2C sales grew by 11.5 million between 2011 and 2012 and this ensured that it remained the largest B2C online market in Asia throughout However, it is being predicted that China will have surpassed Japan by end of Japan is considered to have a very efficient ecommerce eco-system due to its advanced financial and logistical infrastructures AT Kearney The 2013 Global Retail ecommerce Index Online Retail Is Front and Center in the Quest for Growth 28 A.T. Kearney The 2013 Global Retail Development Index Global Retailers: cautiously aggressive or aggressively cautious? 29 Payvision Profitable Cross-Border e-commerce Industries Shanty Elena van de Sande 30 A.T. Kearney The 2013 Global Retail Development Index Online Retail is Front and Centre in the Quest for Growth 31 Internet World Stats The Paypers - Chinese online shopping market may exceed USD 1 trillion by 2020 Sept A.T. Kearney The 2013 Global Retail Development Index Online Retail is Front and Centre in the Quest for Growth 34 The Paypers Cross-Border ecommerce Report Japan The Paypers Cross-Border ecommerce Report Japan A.T. Kearney The 2013 Global Retail Development Index Online Retail is Front and Centre in the Quest for Growth Page 8 of 72

9 THE MENA REGION - THE FASTEST GROWING ECOMMERCE MARKET IN THE WORLD Internet penetration in the MENA region 37 has increased, from under 3 million in 2000 to around 129 million in The highest penetration rate is registered in the GCC countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates [UAE]) with over 53% of the population having access to the internet 38. In addition, the MENA region (as against, individual countries where China is by far the leader) is deemed to be the fastest growing ecommerce region worldwide with an estimated 45% year on year growth 39. According to IMRG 40, in 2011 total B2C ecommerce sales in the MENA region (including Pakistan) are estimated to have grown to between 6.6 and 7.4 billion, of which 2.6 billion in North Africa, 4 billion in the Middle East and an estimated 294 million in Pakistan. In addition, PayPal 41 reported a 29% increase in ecommerce in the Middle East and estimates that this region s online commerce market will reach 11 billion by Leading the way in B2C ecommerce are Egypt (estimated e-sales in 2011: 2.3 billion) and the UAE ( 2 billion). The region has also registered an increase in the use of Facebook in the last two years. Yet again, Egypt tops the list, followed by Iran, Saudi Arabia, Morocco, Algeria, Tunisia and the UAE 42. Cross-border ecommerce is booming in the MENA region, with more than 70% year on year growth reported by PayPal. This growth is attributed to the limited choice currently available in the MENA region. Cross border online purchases are mainly from the US (35%) followed by Asia (30%), Europe (25%), and 10% being intra-mena region ecommerce. The items mostly bought online, in order of preference, include airline tickets, books, software, clothing/accessories/shoes, hotel and tourism reservations, electronic equipment, videos/dvds/games, computer hardware and sporting goods 43. Mobile ecommerce in this region is expected to gain ground given the growth in the use of smartphones 44. Shopping via mobile devices is estimated to represent 10% of ecommerce (similar to the rest of the world) according to PayPal 45. This is predicted to grow to close to 20% in the Middle East by CONCLUSIONS ecommerce is a major global economic reality and no country can afford to miss the opportunities brought about by this phenomenon. Moreover, ecommerce is fuelling major shifts in cross border trade with clear and important risk implications for the local retail markets and ancillary businesses. ecommerce has become indispensible for some industries. Particularly important in this regard, for Malta, is the tourism industry which has been revolutionised by ecommerce and which is one of the pillars of the Maltese economy. Malta must stay ahead of the game on this front. 37 The Middle-East and North Africa (MENA) region includes Algeria, Bahrain, Egypt, Iran, Iraq, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Pakistan, Qatar, Saudi Arabia, Syria, Tunisia, United Arab Emirates & Yemen (as per IMRG Report) 38 IMRG MENAP B2C e-commerce Overview 2012 Focus on Middle East, North Africa and Pakistan_September IMRG MENAP B2C e-commerce Overview 2012 Focus on Middle East, North Africa and Pakistan_September IMRG MENAP B2C e-commerce Overview 2012 Focus on Middle East, North Africa and Pakistan_September Paypal - PayPal Insights e-commerce in the Middle East September IMRG MENAP B2C e-commerce Overview 2012 Focus on Middle East, North Africa and Pakistan_September Paypal - PayPal Insights e-commerce in the Middle East September IMRG MENAP B2C e-commerce Overview 2012 Focus on Middle East, North Africa and Pakistan_September Paypal - PayPal Insights e-commerce in the Middle East September 2013 Page 9 of 72

10 2. ECOMMERCE IN MALTA THE SUPPLY SIDE The research undertaken for this study revealed that there is no macro data related to the value of the local ecommerce market, either in terms of overall online sales, or in terms of B2C sales. Such information is necessary as it enables policy makers and industry to take into account the extent of ecommerce activity when formulating relevant strategies and action plans. The following provides an overview of the data that is available. ecommerce by SMEs and large enterprises 2013 Eurostat data provides the following insights into the ecommerce activities of Maltese small to medium and large enterprises (10 employees and above). - Sales via websites 15% of SMEs and large enterprises are selling online to consumers via a website. The EU average for this indicator is 10%, with the best performing member states for this statistic being Lithuania and the Czech Republic having 17% of SMEs and large enterprises selling online to consumers via a website. With regard to selling online within own country, Malta is still far behind the best performing member states (in Denmark 29% of enterprises sell online) with 15% of SMEs and large enterprises selling locally over the internet. This, however, is just below the EU average of 16%. Malta fares less well with respect to SMEs and large enterprises selling online to business and government via a website; 11% when compared to the best performing member state, the Czech Republic, where 17% of such enterprises conduct this activity. The EU average for this indicator is 9%. - Sales via computer networks In 2013, 18% of local SMEs and large enterprises received orders via computer networks, with the indicator remaining stable from The best performing EU country for this indicator was Denmark, with 30% of enterprises receiving orders via computer networks. 15% of such enterprises conducted electronic sales within Malta. The EU average for electronic sales within the own state is 14% with the best performing country, once again, Denmark, reporting that 29% of enterprises conduct such activity. On the other hand, 13% of such enterprises conduct electronic sales to other EU countries. The EU average for this indicator is 7%. The best performing EU state is Luxembourg with 15%, just 2 percentage points ahead of Malta. Malta also fares particularly well with regard to electronic sales to the rest of the world with 10% of businesses conducting such activity as against the EU average of just 4%. The best performing EU member state for this indicator is again Luxembourg, just 2 percentage points ahead of Malta at 12%. Page 10 of 72

11 Chart 1: ecommerce sales to own country (SMEs & large enterprises) - Percentage of revenue from ecommerce In Malta, SMEs and large enterprises reported that 13% of revenue came from ecommerce, with an EU average of 14% for this statistic. By far the best performing EU member state for this indicator was Ireland with enterprises declaring an average of 31% of total revenue from ecommerce. Online and electronic commercial activity by all enterprises, including micro enterprises There are around 25,000 micro enterprises in Malta representing 94.1% of all Maltese businesses 46. For this reason, the MCA s study of ecommerce activity of the entire local industry including micro enterprises provides important insights into the Maltese economy. This study found that in 2013, 12% of all Maltese enterprises are selling online as follows: 10% of micro enterprises, 13% of enterprises having between 10 and 49 employees, 12% of enterprises having between 50 and 249 employees and 22% of large enterprises. The survey also revealed that Maltese ecommerce providers sell via their own websites, with less than 1% claiming to sell through other websites. 46http://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/performance-review/files/countriessheets/2013/malta_en.pdf Page 11 of 72

12 Chart 2: Online sales via own website and other means As demonstrated by the chart below, by far the most predominant reason given for not selling over the internet was that the product is not suitable for ecommerce. This indicates a possible lack of understanding of the potential of ecommerce and its versatility as a sales medium. Chart 3: Reasons for not selling online Page 12 of 72

13 The study also provides information about the issues encountered by companies engaging in ecommerce as follows: Chart 4: Challenges/difficulties with selling online The study found that the best performing local industries for ecommerce are the real estate industry with 36% of businesses conducting ecommerce; followed by the hospitality and tourism industry (34%) and the transport and storage industry (32%). The worst performing industry was the community, social and personal services sector where virtually no ecommerce is conducted. CONCLUSIONS With respect to the supply of ecommerce services, Malta generally performs in line with the EU average. However, it trails significantly behind the best performing EU member states in relation to web-based trade. On the other hand, it is the second best performing member state for sales via electronic data interchange. These findings demonstrate the need for targeted and sustained policy action to reform those industries that are not responding adequately to today s reality of online global trade and to push Malta towards the top half of the European leader board for ecommerce. Such action is also required to support those industries that have the potential to capitalise on the opportunities provided by ecommerce and to build on those areas where Malta is already performing relatively well. Action is also required to better inform and enable the local brick and mortar retail industry and its commercial eco-system to adjust to the inevitable transformation that it will have to undergo over the coming years. Targeted action is required to enable enterprises (in particular those in the retail industry) to become familiar with all aspects of ecommerce enabling enterprises to respond in an effective and timely manner to market shifts brought about by online trade. Support is also required for those businesses which build a credible business case for the roll-out of ecommerce services but have difficulties during the start-up phase of the operation, or wish to extend an established and viable ecommerce activity but need financial or other assistance to be able to do so. Furthermore, targeted action is necessary to ensure that those industries which have either become dependent on ecommerce (e.g. the tourism industry) or which have the potential to extend their markets via ecommerce (e.g. the local crafts industry) are able, and have the required support, to embrace ecommerce. Page 13 of 72

14 Finally, Malta should also seek to capitalise upon the experience of those local enterprises using electronic means to receive orders and conduct sales, with a view to developing wide-spread use of this business model amongst local supply chains as a means of increasing efficiency and competitiveness. THE DEMAND SIDE Desk research undertaken during the development of this strategy found no macro data related to the value of ecommerce purchases by Maltese consumers. However, later this year, the National Statistics Office (NSO) shall be conducting a pilot study with a view to collating data related to online spending by Maltese consumers (excluding services such as booking of event tickets, flights, accommodation, etc as the NSO is already in possession of such data) in order to obtain an estimate of the amount being spent online by Maltese consumers and an indication of the frequency with which they purchase. This may be further complemented by data that will be captured in next year s Household Budgetary Survey which could provide more precise information about the items being bought online and the amounts being spent per category of goods. Such information is necessary as it enables policy makers and industry to take into account the extent of ecommerce activity when formulating related strategies and action plans. The data presented below is extracted from three sources: the 2013 Eurostat data on the Information Society, the EU digital agenda scoreboard 2012 and the MCA ecommerce household survey of Internet penetration and ecommerce take up Malta boasts a broadband coverage of 100%, with 79% of households and 95% of businesses having internet access 47. Over the past seven years the Maltese market has caught up fast with the rest of the EU in terms of online shopping, and today 46% 48 of the Maltese population shops online, just below the EU average of 47%. Chart 5: ecommerce take up in Malta and the EU The data refers to individuals who had made an online purchase in the 12 months preceding the survey. Page 14 of 72

15 Having said this, a comparison with the UK, the best performing European market for this indicator, where 77% of the population shops online, indicates that there is still much room for growth in this regard, with the attendant future implications for Maltese consumers and the local retail market. What age groups are buying online? 2013 Eurostat data reveals that Maltese 16- to 24-year-olds are significantly more active in terms of ecommerce than their counterparts in the rest of Europe. This gap declines up to the 35- to 44-year age bracket where online shopping in Malta is at the EU average. In line with the digital divide figures for Malta which indicate a significant gap in ICT take up by people aged 45 and above, when compared to the EU averages, online shopping in Malta by people aged 45+ is significantly less prevalent than in the rest of the EU. Chart 6: Individuals buying online by age group The chart below provides an insight into Maltese use of ecommerce by education, level and gender. Malta surpasses the EU average in respect of ecommerce by individuals with medium or a high level of education, but trails behind with respect to education by individuals with low levels of education. With respect to ecommerce by gender, Malta generally is in line with the EU average. Chart 7: Use of ecommerce by education and gender Page 15 of 72

16 Frequency and value of ecommerce purchases In terms of frequency of online shopping, the chart below, taken from the MCA ecommerce household survey of 2012, indicates that Maltese consumers are buying online more often with 28% of ecommerce shoppers using this channel more than 10 times in six months in 2012 as against 9% in This same study found that over a six-month period, 46% of ecommerce users spent up to 120 in online purchases, 43% of ecommerce users spent between 121 to 600, whilst 11% had spent over 600 in online purchases over the same period. Chart 8: Number of online purchases by individuals Items bought online According to Eurostat data, in 2013, the most frequently bought items by Maltese individuals were items of clothing and sports goods, followed by films and music, and travel. The data reveals that Maltese individuals are less active in most categories of online shopping than those in other EU member states with the exception of clothing and sports goods. Chart 9: Goods or services bought online by Maltese individuals in 2013 Page 16 of 72

17 The balance between domestic & cross border ecommerce purchases Chart 10: % of the population shopping online / cross-border - Eurostat In 2013, 44% of the Maltese population bought online from foreign merchants, second in the EU after Luxembourg where 60% of the population buys cross-border. Only 7% of the Maltese population buys from local ecommerce providers, as against 23% in Luxembourg and 72% in the UK. According to the MCA ecommerce survey, as at May 2012, the items bought online most from Maltese shops were concert/event tickets (27% of online shoppers bought such items in the six months preceding the study) insurance and financial services (25%), followed by books (14%) and flights (11%). Difficulties encountered with online shopping 26% of local online shoppers encountered at least one problem during the six month review period, with 10% reporting delays in delivery, 6% reporting undelivered items and goods delivered not being as shown on website. Encouragingly, out of all those who shopped online in the previous six months, only 5% reported to still have unresolved issues. None reported problems related to payment or incorrect charging. Reasons for not buying online The 2012 MCA study reveals that 23% of Maltese individuals who do not buy online, do not do so, because they are not familiar with the process, while 29% and 30% prefer to handle things prior to buying and are not interested, respectively. This indicates that there is still a significant portion of the population, who could resort to online shopping given sufficient information on the subject. Cross-border ecommerce The imbalance between local online shopping and cross border online shopping poses challenges to local industry that is losing business to foreign competitors whilst also impacting, to some extent, government s tax revenues. With respect to tax revenues, according to the VAT Directive (2006/112/EC), traders exceeding the distance selling threshold in any one member state would need to apply the destination principle and register for VAT in that member state. This rule is of particular interest to Malta since a substantial number of Maltese internet users carry out online purchases from suppliers in other member states (in particular the UK). However, there are instances where customers purchasing from foreign traders established in other member states have their goods delivered by a third party (this is usually due to Page 17 of 72

18 the foreign trader not offering international delivery) and hence the VAT of the member state of destination would be applied in such cases. The threshold adopted by Malta is that of 35, meaning that a trader established in another member state and whose sales turnover to Malta exceeds that amount, would need to account for VAT in Malta, at the rate applicable here. CONCLUSIONS The use of ecommerce by Maltese consumers is directly related extent of internet usage. This in turn is primarily influenced by two factors, age and level of education. With nearly 80% of young people in the 16 to 24 age bracket buying online it is safe to say that Malta s performance in this regard will continue to improve over time. Notwithstanding this, Malta cannot afford to wait for this statistic to improve. Action is therefore required on two fronts: increase the take up of internet use, which remains stubbornly at around 70% of the population; better inform those individuals of all ages, who are internet users but who do not shop online, about the benefits and convenience derived from ecommerce and how one can safely conduct such activity. 49 Refer to Thresholds Page 18 of 72

19 3. ECOMMERCE TRENDS, BUSINESS MODELS AND MALTA S VALUE PROPOSITION AVAILABILITY OF SKILLS IMPACTING ecommerce The availability of a labour market with an adequate supply of skills required by ecommerce businesses is a determinant factor, both in relation to the ability of local enterprises to successfully adopt these models as well as with regard to Malta s value proposition as a potential destination for enterprises conducting ecommerce or servicing the ecommerce industry. The skill sets required by any enterprise are dependent on the business models adopted. It is therefore important to examine major trends impacting ecommerce and the most commonly found business models in ecommerce. ECOMMERCE TRENDS There are a number of important trends that are shaping the ecommerce landscape as it evolves. Some of these were touched upon in earlier sections of this report. These trends impact the business models adopted by ecommerce providers as well as the skill sets required by the industry. They therefore need to be taken into account when developing actions that Malta needs to take to further develop its ecommerce market. Multichannel retailing Major retailers are today moving into multichannel retailing providing their clients with a holistic and comprehensive retail experience. This involves the use of brick and mortar, PC-based, mobile, appbased, kiosk, and other channels. It is also requiring retailers to develop high-quality content using text and video as a means of engaging with customers via these multiple channels, including social and other media channels. New technologies on the radar New technologies such as smart watches and Google Glass, are heralding a new world of wearable technology. Retailers will need to come on board quickly to use these technologies in conjunction with mobile commerce services as they become more mainstream. Legal compliance for cross border operations With the rise of cross border ecommerce, service providers need to ensure compliance with the varied legal regimes across the globe. Firms that operate globally will need to stay abreast of the various regulations and ensure they meet or exceed any compliance deadlines. This is creating a demand for related legal services and support. Big data and related new monetisation models Big data analytics is expected to become a core activity for ecommerce providers. This phenomenon is expected to continue to evolve providing ever more complex mechanisms designed to identify consumer preferences, shopping and usage patterns and enabling service providers to tailor and personalise the individual s retail experience. Service providers can today collect data about their clients and provide services tailored to match the individual clients. These technologies are also creating new monetisation models allowing retailers to convert one-time purchases into recurrent revenue via the sale of related over the top services. Software-as-a-Service Software-as-a-service (SaaS) is enabling business to change their revenue models and better engage and reward users for using their applications. Page 19 of 72

20 Increased integration with social media Companies are adopting solutions that seek to better integrate online purchasing with social media activity making the shopping experience a seamless part of the user s online presence. Localisation Although demand for foreign goods is strengthening across the globe; consumers still look for a localised ecommerce experience. This requires cross-border retailers to localise payment methods, currency support as well as marketing and merchandising campaigns. Boutique shops remain popular Despite the growth of the large global suppliers, a survey carried out by Deloitte in 2013 found that smaller outlets that offer unique products and a local shop experience will remain popular with consumers. BUSINESS MODELS ON THE INTERNET A vast number of business models have developed on the internet. All of these generally entail some form of ecommerce. The majority of the business models do not generate revenue directly from sale of goods, but rather from the provision of related services. MODEL Brokerage Model DESCRIPTION Brokers are market-makers: they bring buyers and sellers together and facilitate transactions. Usually a broker charges a fee or commission for each transaction it enables. The formula for fees can vary. Brokerage models include: Marketplace Exchange -- offers a full range of services covering the transaction process, from market assessment to negotiation and fulfillment. Exchanges operate independently or are backed by an industry consortium. [Maltapark.com] Buy/Sell Fulfillment -- takes customer orders to buy or sell a product or service, including terms like price and delivery. []uktomalta.com Demand Collection System -- the patented "name-your-price" model pioneered by Priceline.com. Prospective buyer makes a final (binding) bid for a specified good or service, and the broker arranges fulfillment. [Priceline.com] Auction Broker -- conducts auctions for sellers (individuals or merchants). Broker charges the seller a listing fee and commission scaled with the value of the transaction. Auctions vary widely in terms of the offering and bidding rules. [ebay] Transaction Broker -- provides a third-party payment mechanism for buyers and sellers to settle a transaction. [PayPal] Distributor -- is an operation that connects a large number of product manufacturers with volume and retail buyers. Broker facilitates business transactions between distributors and their trading partners. Search Agent -- a software agent or "robot" used to search-out the price and availability for a good or service specified by the buyer, or to locate hard-to-find information. Virtual Marketplace -- or virtual mall, a hosting service for online merchants that charges setup, monthly listing, and/or transaction fees. May also provide automated transaction and relationship marketing services. [TrolleyMania.com; Merchant Services at Amazon.com] Page 20 of 72

21 MODEL Advertising Model Infomediary Model DESCRIPTION The web advertising model is an extension of the traditional media broadcast model. The broadcaster, in this case, a web site, provides content (usually, but not necessarily, for free) and services (like , IM, blogs) mixed with advertising messages in the form of banner ads. The banner ads may be the major or sole source of revenue for the broadcaster. The broadcaster may be a content creator or a distributor of content created elsewhere. The advertising model works best when the volume of viewer traffic is large or highly specialised. [timesofmalta.com; maltatoday.com] Portal -- usually a search engine that may include varied content or services. A high volume of user traffic makes advertising profitable and permits further diversification of site services. A personalised portal allows customisation of the interface and content to the user. A niche portal cultivates a well-defined user demographic. [Google] Classifieds -- list items for sale or wanted for purchase. Listing fees are common, but there may also be a membership fee. [maltapark.com] User Registration -- content-based sites that are free to access but require users to register and provide demographic data. Registration allows inter-session tracking of user surfing habits and thereby generates data of potential value in targeted advertising campaigns. [NYTimes] Query-based Paid Placement -- sells favourable link positioning (i.e., sponsored links) or advertising keyed to particular search terms in a user query, such as Overture's trademark "pay-for-performance" model. [Google] Contextual Advertising / Behavioural Marketing -- freeware developers who bundle adware with their product. For example, a browser extension that automates authentication and form fill-ins, also delivers advertising links or pop-ups as the user surfs the web. Contextual advertisers can sell targeted advertising based on an individual user's surfing activity. Content-Targeted Advertising -- pioneered by Google, it extends the precision of search advertising to the rest of the web. Google identifies the relevant ads when a user visits that page. [Google] meaning of a web page and then automatically delivers Intromercials -- animated full-screen ads placed at the entry of a site before a user reaches the intended content. Ultramercials -- interactive online ads that require the user to respond intermittently in order to wade through the message before reaching the intended content. Data about consumers and their consumption habits are valuable, especially when that information is carefully analysed and used to target marketing campaigns. Independently collected data about producers and their products are useful to consumers when considering a purchase. Some firms function as infomediaries (information intermediaries) assisting buyers and/or sellers understand a given market. Advertising Networks -- feed banner ads to a network of member sites, thereby enabling advertisers to deploy large marketing campaigns. Ad networks collect data about web users that can be used to analyse marketing effectiveness. Audience Measurement Services -- online audience market research agencies. Incentive Marketing -- customer loyalty programme that provides incentives to customers such as redeemable points or coupons for making purchases from associated retailers. Data collected about users is sold for targeted advertising. Metamediary -- facilitates transactions between buyer and sellers by providing comprehensive information and ancillary services, without being involved in the actual exchange of goods or services between the parties. Page 21 of 72

22 MODEL Merchant Model Manufacturer (Direct) Model Affiliate Model DESCRIPTION Wholesalers and retailers of goods and services. Sales may be made based on list prices or through auction. Virtual Merchant --or e-tailer, is a retail merchant that operates solely over the web. [Amazon.com] Catalogue Merchant -- mail-order business with a web-based catalogue. Combines mail, telephone and online ordering. [Lands' End] Click and Mortar -- traditional brick and mortar retail establishment with web storefront. [Agendamalta.com] Bit Vendor -- a merchant that deals strictly in digital products and services and, in its purest form, conducts both sales and distribution over the web. [Apple itunes Music Store] The manufacturer or "direct model" is predicated on the power of the web to allow a manufacturer (i.e., a company that creates a product or service) to reach buyers directly and thereby compress the distribution channel. The manufacturer model can be based on efficiency, improved customer service, and a better understanding of customer preferences. Purchase -- the sale of a product in which the right of ownership is transferred to the buyer. Lease -- in exchange for a rental fee, the buyer receives the right to use the product under a terms of use agreement. The product is returned to the seller upon expiration or default of the lease agreement. One type of agreement may include a right of purchase upon expiration of the lease. License -- the sale of a product that involves only the transfer of usage rights to the buyer, in accordance with a terms of use agreement. Ownership rights remain with the manufacturer (e.g. with software licensing). Brand Integrated Content -- in contrast to the sponsored-content approach (i.e., the advertising model), brand-integrated content is created by the manufacturer itself for the sole basis of product placement. In contrast to the generalised portal, which seeks to drive a high volume of traffic to one site, the affiliate model provides purchase opportunities wherever people may be surfing. It does this by offering financial incentives (in the form of a percentage of revenue) to affiliated partner sites. The affiliates provide purchase-point clickthrough to the merchant. It is a pay-for-performance model - if an affiliate does not generate sales, it represents no cost to the merchant. The affiliate model is inherently well-suited to the web, which explains its popularity. Variations include banner exchange, pay-per-click, and revenue sharing programmes. [Barnes & Noble, Amazon.com] Banner Exchange -- trades banner placement among a network of affiliated sites. Pay-per-click -- site that pays affiliates for a user click-through. Revenue Sharing -- offers a percent-of-sale commission based on a user clickthrough in which the user subsequently purchases a product. Page 22 of 72

23 MODEL Community Model Subscription Model DESCRIPTION The viability of the community model is based on user loyalty. Users have a high investment in both time and emotion. Revenue can be based on the sale of ancillary products and services or voluntary contributions; or revenue may be tied to contextual advertising and subscriptions for premium services. The internet is inherently suited to community business models and today this is one of the more fertile areas of development, as seen in rise of social networking. Open Source -- software developed collaboratively by a global community of programmers who share code openly. Instead of licensing code for a fee, open source relies on revenue generated from related services like systems integration, product support, tutorials and user documentation. [Red Hat] Open Content -- openly accessible content developed collaboratively by a global community of contributors who work voluntarily. [Wikipedia] Social Networking Services -- sites that provide individuals with the ability to connect to other individuals along a defined common interest (professional, hobby, romance). Social networking services can provide opportunities for contextual advertising and subscriptions for premium services. [Facebook] Users are charged a periodic -- daily, monthly or annual -- fee to subscribe to a service. It is not uncommon for sites to combine free content with "premium" (i.e., subscriber- or member-only) content. Subscription fees are incurred irrespective of actual usage rates. Subscription and advertising models are frequently combined. Content Services -- provide text, audio, or video content to users who subscribe for a fee to gain access to the service. [timesofmalta.com] Person-to-Person Networking Services -- are conduits for the distribution of usersubmitted information, such as individuals searching for former schoolmates. Trust Services -- come in the form of membership associations that abide by an explicit code of conduct, and in which members pay a subscription fee. Internet Services Providers -- offer network connectivity and related services on a monthly subscription. Utility Model The utility or "on-demand" model is based on metering usage, or a "pay as you go" approach. Unlike subscriber services, metered services are based on actual usage rates. Traditionally, metering has been used for essential services (e.g., electricity, water, long-distance telephone services). Internet service providers (ISPs) in some parts of the world operate as utilities, charging customers for connection minutes, as opposed to the subscriber model common in the U.S. Metered Usage -- measures and bills users based on actual usage of a service. Metered Subscriptions -- allows subscribers to purchase access to content in metered portions (e.g., numbers of pages viewed). Table 1: ecommerce business models Reproduced from: Michael Rappa; Institute for Advanced Analytics at North Carolina State University FUNCTIONS INVOLVED IN ecommerce The business models described earlier comprise a broad range of functions that require specialised expertise and skills. This is creating an ever-growing demand for outsourced specialised services related to ecommerce. The availability of industries capable of providing such outsourced services, as well as the availability of a sufficient pool of talented individuals available for recruitment, is a very important consideration for businesses considering whether to locate their services in Malta. Similarly it is unlikely that the local ecommerce industry will be able to flourish in the absence of sufficiently developed supporting industries and skilled employees. Page 23 of 72

24 The following section focuses on those generic functions / skills that online businesses require. It does not address those sector specific functions / skills that are driven by the nature of the activity conducted online. FUNCTION Search Management Work Flow Management Event Notification Collaboration Payment system Catalogue management Content management Access control and security Profiling and personalisation Online marketing Multichannel management DESCRIPTION This activity aims to direct potential customers using the main search engine, to the website. This requires the use of specialised techniques to achieve a higher ranking on the search results pages when potential customers are conducting online searches, taking account of the key words and phrases potential customers are likely to use. In ecommerce the processes involved in providing the service to the client need to be defined, and consistently monitored and improved. These are executed, managed and monitored via a dedicated computer system. Successful ecommerce services must be able to respond to all events that are of relevance to customers, suppliers, employees, etc. Event notification software is required to work in conjunction with the workflow management process. It monitors and records all relevant events and automatically notifies interested parties of the event. The event notification software will, for example, notify a client that an order has been placed, or that goods have been shipped. It will also notify management of unexpected changes or problems that might arise. Collaboration between businesses is vital in an ecommerce setting. Business practices such as Vendor Managed Inventory (VMI) and Continuous Replenishment Programmes (CRP) where customers and suppliers working together via automated systems are examples of collaborative systems used by ecommerce providers. Most ecommerce sites accept electronic payment for online transactions. The provision of online payment systems requires merchants to comply with stringent rules to ensure that the required security measures are in place. This service is generally outsourced to companies providing payment gateway platforms with a backend system accessible to the merchant to monitor activity etc. The online catalogue of goods or services is the basis of most typical ecommerce transactions. Catalogue management involves creating the catalogue, uploading content and updating the catalogue and ensuring that the catalogue is designed in response to business needs, while allowing prospective customers easily search, browse, compare produces / services. This function addresses all information on the website as well as all communications with customers via blogs, etc. This function ensures that the ecommerce system is secure by authenticating users, authorising access and putting in place security features. It also ensures the security of the information provided by users including sensitive personal data that may be provided for example for the conclusion of an online transaction including passwords and credit card details. The function is also responsible for protecting the site from external attacks. Profiling and personalisation involves gathering data on a person who has visited an ecommerce site in order to build an electronic profile of the person thereby enabling more targeted and customised services including product recommendations and personalised web advertising. Profiling uses tools such as website behaviour tracking software, cookies as well as user feedback. The data collected feeds into the marketing processes of the activity including relationship management and planning and website planning. Online marketing is a complex activity involving user profiling, search engine optimisation, search engine marketing, multichannel marketing, location based marketing and others. This involves the merging of operations to enable transactions via diverse channels such as physical retail stores, online stores, mobile stores, mobile app stores, telephone sales, etc. Page 24 of 72

25 FUNCTION DESCRIPTION Logistics Logistics are fundamentally important for ecommerce as in this model consumers are not responsible for the last mile in the distribution chain as is the case in traditional retailing. ecommerce providers can act as distribution centres doing away with the rents associated with maintaining a stocked shop in a location accessible to its customers. On the other hand, ecommerce providers must put in place an efficient system that allows goods to be delivered to consumers at a competitive price whilst addressing all the information (track and trace / returns) needs of the consumer. Table 2: Functions involved in ecommerce business models SKILLS UNDERPINNING ANY ecommerce ACTIVITY These various functions discussed in the previous section require that the ecommerce service provider either possesses or has access to, an extensive range of technical skills as shown below. FUNCTION SKILLS REQUIRED Marketing Marketing Security Multi channel management Online payment services Information management Website development and management LiveChat technologies Search Engine Optimisation (SEO) Search Engine Marketing (SEM) Website Analytics Customer behaviour modelling Banner & other Digital Image marketing Pay Per Click marketing (PPC) Content management and marketing Online Brand and Reputation Management Product categorisation Product and price tiering A/B and multivariate testing marketing Online viral marketing Word of mouth (WOM) marketing Technical customer support Fraud detection: methods and approaches Channel management use of related tools and techniques Payment server gateway services and management Database management and analysis Web design / architecture Copy writing services Programming skills Table 3: Skills required by the ecommerce industry Page 25 of 72

26 Local supply of technical skilled labour The detailed skills analysis undertaken as part of the digital gaming strategy for Malta 50 indicates that in terms of its technical skills base, Malta possesses a moderate supply of skilled individuals in the key functions required to support an ecommerce operation. One notable exception in this regard is the lack of availability of mobile programming skills. ROLE NAME AREAS OF EXPERTISE AVAILABILTY LEVEL IT Administration Player Analytics and Data scientists Database Programmers Tools Programmers Network Programming Simulation programming Mobile programming Desktop support, server maintenance, equipment purchase and setup, application install/config/maintain, backups, networking Statistical analysis and strong maths skills, gained from the igaming industry; some programming involved but not always essential in this role, Work closely with sales and marketing experts. High High High High SQL, webforms High High User interface rich applications in many technologies e.g. MFC, C#/.NET, Java Client server models, performance, bandwidth optimisation, real time synchronisation Scientific, business simulation Native applications for iphone / Android Medium Medium Low Low High Medium Low Low Embedded systems programmers Web programmers C++ Programmers Systems Architecture Customer Support Technicians Typically have some mix of java, javascript, HTML(5), Flash, SQL, PHP, AJAX Senior systems designers, analysts capable of dealing with customers and business cases Capable of fielding technical problems, solving or escalating back to core development teams Low High Medium Medium High Low High Medium Medium Medium Table 4: Technical roles and labour supply in Malta. Source: Digital Gaming Strategy for Malta Report report.pdf Page 26 of 72

27 In addition, the same study found that the igaming industry employs over 3,500 people including customer support, fraud and payment officials, marketing personnel, systems administrators, and payment gateway administrators. These skills are all relevant to ecommerce-based business activities. Supporting industries essential to the establishment of a thriving ecommerce-based industry Once again the findings of the digital gaming strategy for Malta have been used as reference for this strategy. This strategy found that the local ICT and marketing industries are well established and offer a range of web solutions and related services including marketing, web hosting, server hosting and data centres 51. The strategy noted that, in terms of development skills, the level of expertise is high enough to adapt to most kinds of development work and that there is a good supply of talent in this area. The study also found that the industry works with teams of designers and creative consultants and some of the companies in this industry are expanding their services outside Malta. In terms of other supporting industries, the same study found that Malta is well-positioned to provide translation services, customer support, legal services, accountancy services, as well office space. Notwithstanding this positive finding from a value proposition aspect for foreign operators, in relation to the take up of ecommerce by local enterprises, it is recognised that outsourcing the above discussed services is costly and time consuming and may be seen as a barrier to micro enterprises or start ups with limited resources. Furthermore, micro-enterprises may lack the technical skills to understand the nature of the services required to sell online. They may therefore, at least initially, be wary of outsourcing such services. 51 Section 4.4 of the Digital Gaming Strategy for Malta (2012) - Page 27 of 72

28 Shipping Shipping is of particular concern to Maltese enterprises wishing to sell goods online to foreign destinations. It is fundamental, in this regard, that the products or services for sale are suited for ecommerce. Ideally, and especially in light of Malta s geographic location, physical products should be small, light and easy to ship or digital goods / intangible services (as demonstrated by the Gaming industry). In order to assess whether shipping costs could be a barrier to ecommerce in Malta, a comparative exercise has been conducted between the cost of standard postage of a parcel under 1 Kg and 2 Kg in weight to popular destinations from Malta and from the UK. This simple exercise indicates that using the standard postal service to deliver a parcel weighing up to 1 Kg or 2 Kg is generally more expensive in Malta than in the UK. On the other hand, the UK tariff for domestic parcels weighing up to 2 Kg is more expensive than the Maltese tariff. Notwithstanding this, it is unlikely that a Maltese consumer would be willing to pay a delivery charge of 8 when buying online from a local merchant. PRODUCT MALTA UK Domestic Parcel up to 1 Kg Domestic Parcel up to 2 Kg Parcel weighing up to 1 Kg UK / Malta Australia Canada US Parcel weighing up to 2 Kg UK / Malta Australia Canada US Table 5: Local standard postal tariffs for small packages comparison of Malta and UK tariffs Page 28 of 72

29 No. of parcels Furthermore, the graph below shows that whilst inbound parcel post is increasing year on year, outbound seems to be declining. Therefore, the high shipping costs shown in the above example could be deterring retailers from trading with customers abroad Domestic (Malta to Malta) Outbound (From Malta) Inbound (To Malta) Chart 11: Parcel Volumes to/from and within Malta (2012) Source: MCA Page 29 of 72

30 4. SWOT ANALYSIS LOCAL ecommerce INDUSTRY The following table summarises the strengths, weaknesses, opportunities and threats that local enterprises face when considering whether to start or expand into an online commercial activity targeting local businesses or consumers. The findings are based on the research conducted as well as the views expressed during the interviews with stakeholders. STRENGTHS WEAKNESSES Geographic size and density of Malta reduces cost of delivery. Brand awareness if business is already established. Established customer base if business is already established. 15% of local SMEs and large enterprises conduct electronic sales. Market size and diseconomies of scale Geographic size consumers may be more willing to shop from retail outlets Very poor World Bank ranking in relation to ease of doing business (103 out of 189, trailing other EU states by far). 52 Micro enterprises tend to lack resources, skills and capacity to adopt ecommerce strategies. Businesses have insufficient skills and expertise in relation to development, management and marketing of an ecommerce site. Lack of readily available and cost effective support services for certain specialised services, (eg. in relation to catalogue management). General and persistent reluctance to publish prices online. Resistance to change traditional business models. General reluctance to form clusters. There is no government entity with a clear mandate at law to promote and advance ecommerce in Malta, therefore a specialised focal point for support and assistance is lacking. Standard domestic parcel post / letter mail tariff likely to be prohibitive for domestic consumers. Widespread perception that product / service not suitable for online sales Page 30 of 72

31 OPPORTUNITIES THREATS 46 % of Maltese population buys online. 78% of Maltese aged between 16 and 24 buy online. 45% of Maltese use social media. Maltese shopping more often online each year. Online marketing generally less expensive than traditional marketing. Possibility of offering payment upon delivery as a value added service. Possibility of offering tailored and value added services. Gift wrapped parcels, delivery with personalised note, etc. Easier to return products than in the case of crossborder purchase. Possibility of building trust via word of mouth. Possibility of forming clusters or consortia to pool resources / gain economies of scale. Liberalised postal market. Specific products (especially local crafts and products) could be sent as gifts overseas. B2B ecommerce may obviate need for full ecommerce site via electronic data interchange (EDI) provided by local players. Strong financial industry providing related payment and financing services. The small size of Malta s economy makes it easier for supply chains to be digitised. This is evidenced by the success of the efreight project in Malta. 14% of Maltese enterprises sell online. Boutique shops continue to be popular. Consumers prefer localised services. 45% of Maltese consumers buy online cross-border. Cross-border retailers enjoy economies of scale. Consumers unlikely to purchase if ecommerce site does not have all the features available in large scale sites operated by international firms. Over 50% of the population does not buy online. 23% of Maltese who do not buy online do not do so because they are not familiar with the process. 30% of Maltese who do not buy online are not interested in shopping online. Competition by foreign online entrants. Page 31 of 72

32 5. SWOT AND PESTLE ANALYSIS MALTA S VALUE PROPOSITION FOR ecommerce BASED ENTERPRISES A SWOT and PESTLE analysis in relation to Malta as a location for businesses providing ecommerce or ancillary services to operate from Malta, has been undertaken. The following tables summarise the results. The findings are based on the research conducted as well as the views expressed during the interviews with stakeholders. SWOT ANALYSIS STRENGTHS WEAKNESSES Stable Government and economy. Government s commitment to ICT driven economic development. Success stories in high-value, ICT intensive industries such as remote gaming. English speaking. Availability of a wide range of languages useful for localisation services Technology neutral legislation. Excellent climate and standard of living Easy access to most European ICT hubs and capitals. Strong in the service industry. Strong telecommunications industry. Smart City as a showcase for technology. EU member. Strong cultural ties with MENA region. Strong banking sector. General availability of technical skills, data analysis, business intelligence marketing and other support services. Attractive fiscal incentives. Freeport and geographic location could render Malta ideal for transit shipments to MENA region. Poor World Bank ranking in relation to ease of doing business (103 out of 189, trailing other EU states by far). 53 Geographical location higher freight costs unlikely to be suitable for warehousing activities (other than possibly in relation to the MENA region). International connectivity (quality and cost) in relation to intangible and high end content market (although the remote gaming industry success proves otherwise). Small size of local market. Relatively immature capital investment market. Limited presence of Business Angel Networks, Venture Capital Investors. Low score in Innovation Scoreboard. Malta s ranking drops to 41 st out of World Economic Forum - The Global Competitiveness Report Page 32 of 72

33 OPPORTUNITIES THREATS 26 th out of 155 in terms of the information society ranking by the ITU as at Malta networked readiness 28 th out of Global competitiveness ranking 47 out of Strong investment in the service sectors dependent on ICTs (banking, remote gaming). Strong growth in international ecommerce in the UK could generate some opportunities for Malta to offer ancillary services. Chinese Government making a strong drive to assist ecommerce providers to enter the export market. Malta could be an attractive destination to Chinese online enterprises seeking to penetrate the global market ideally placed to serve EU and MENA regions 58 Freeport ideally located to serve MENA region. Well placed in terms of eskills. Many ecommerce business models not impacted by limitations related to physical exports. Possible opportunities as a fall-out of European jurisdictions facing economic difficulties. Online enterprises need to gain security and trust could offer a niche opportunity for Malta. Rate of technological change provides new niche opportunities on an on-going basis. Next generation networks enable new business models that Malta could tap into. Still limited cross-border ecommerce within the EU. Various jurisdictions competing to attract ecommerce related FDI. Rate of technological change. Lack of stability in North Africa / Middle East despite high growth rates of ecommerce Promoting online sales abroad has become an increasingly urgent task for Chinese exporters and manufacturers, admits an anonymous source from the Ministry of Commerce contacted by China Daily. Page 33 of 72

34 PESTLE ANALYSIS Political Government commitment to roll-out of fibre to the home. Increased availability of online services. Active EU thrust towards Single Digital Market. EU commitment to implement einvoicing by SEPA to be fully in place by February 2016 / already implemented by Banks. Government commitment to making Malta a centre of excellence for ICT. Favourable financial incentives to attract investment. Stable political environment. Close ties with MENA countries and other emerging ecommerce markets. Economic Economic recession limited propensity to invest (drop of 18% in the global FDI between 2011 and Rate predicted to remain at 2012 levels in 2013). 59 Although FDI flows are predicted to start recovering, reaching 1.18 trillion in 2014 and 1.33 trillion in 2015, structural weaknesses in the global financial system, the possible deterioration of the macroeconomic environment, and significant policy uncertainty in areas crucial for investor confidence might lead to a further decline in FDI flows. A number of member states in the south of Europe facing deep recession. Potential investors able to drive a harder bargain with Governments and Unions (Spain overtook Germany for FDI in the second half of 2012). 60 Increased investment into Europe from emerging markets including BRIC countries, China and India. Social Continuing impressive growth in ecommerce. The latest generation is digital native. Cross border ecommerce increasing steadily. Payment solutions increasingly pervasive. Social media boom. Increased take up of mobile broadband. Consumers increasingly sophisticated users of online channels. Consumer preference for localised services. Consumer expectation of personalised online service prospects---evaluating-europes-fdi-story Page 34 of 72

35 Technology Technology is changing at unprecedented rates. Wearable technology (e.g. smart watches / Google glass). Software as a service. Next generation networks. Increased take up of high speed broadband. Increased availability of mobile broadband Long Term Evolution (LTE) / 4G. Legal Cloud computing and big data. The rise of enterprise resource planning (ERP) systems. Social media technologies and integrated strategies. Take up of esignatures. Upsurge in the availability and consumption of intangible goods. A plethora of laws apply to ebusiness: ecommerce Directive Data Protection Directive (Currently under review at EU level) Provisions on Distance Contracts Payment Services & emoney directive (SEPA) Consumer Protection laws Industry specific legislation Quality and safety laws Liability of Defective Products General Product Safety law Intellectual property law & digital rights Electronic Signatures (currently under review at EU level) VAT Rules einvoicing and eprocurement Rules Cross border ecommerce requires compliance with different rules applicable in different countries. Environmental Environmental impact of ecommerce generally considered to be positive: Reduces shoppers travelling to retail outlets Online shops more energy efficient than traditional retail outlets Reduces amounts of paper used Enables resale of used products Shifts in physical retailing expected to generate shifts in the rental markets for warehousing space and shops. Page 35 of 72

36 6. STRATEGIC AND POLICY RECOMMENDATIONS In light of the preceding analysis, the following actions are recommended. These proposed actions are framed within the following policy stance. This policy is being recommended given the limited resources available and the need to develop measures that will have tangible and measurable results. POLICY DIRECTION Within the context of the policies for digital business set out in the Digital Malta Strategy ( ), in developing policies aimed at increasing ecommerce take up by enterprises, Government will take into account: the horizontal nature of this business model; the broad range of possible applications of ecommerce across product or service value chains; the diversity of enterprises that may benefit from ecommerce; and the increasing deployment of B2B solutions across value chains, having the potential of improving the competitiveness of enterprises all along the digitised value chain. Measures adopted will fall into the following categories: generic measures having a broad reach designed to take diversity into account with a view to maximising effectiveness. targeted measures that address industries with the greatest potential to benefit from ecommerce. All measures will seek to encourage ecommerce adoption only when a clear business case for ecommerce exists. In recognition that ecommerce is a horizontal field, measures will necessarily be undertaken in full collaboration with the relevant government agencies, sector specific regulators, industry associations, and other stakeholders. RECOMMENDED ACTIONS This strategy is framed within the overall umbrella of the Digital Malta Strategy ( ) which identifies the following measures in relation to the ecommerce market: Government and key industry stakeholders will: develop a set of measures to sustain and grow the local supply and demand sides; implement a set of initiatives to assist and further drive the adoption of ecommerce by those business sectors having the potential to capitalise on web technologies to penetrate foreign / niche markets; consider those vulnerable industries that may need to undergo structural changes as a result of the widespread adoption of ecommerce by Maltese consumers; review and identify opportunities whereby Malta may attract business activity operating or supporting the global ecommerce markets. Furthermore, a significant number of broad actions that are to be implemented under the Digital Malta Strategy could address issues or contribute towards the development of ecommerce in Malta. Page 36 of 72

37 MEASURE OWNED BY DEADLINE ACTION REFERENCES 1 To be decided in consultation with the Digital Malta Governing body TBD 2 To be decided in consultation with the Digital Malta Governing body and Malta Enterprise TBD With respect to the retail industry, this action will include a particular focus on ecommerce and the use of social media with a view to helping enterprises identify and capitalise on opportunities provided by ecommerce, whilst taking into account and mitigating against the business risks posed by cross border online purchasing trends of Maltese consumers and businesses. The need for ongoing awareness raising initiatives in this regard will be taken into account. In collaboration with sector specific authorities, the social partners and trade organisations, and under the auspices of this Forum, an incentive scheme aimed at supporting the establishment of digital supply chains will be developed 61. This will also seek to facilitate the implementation of EDI solutions by SMEs to improve supply chain efficiency, whilst streamlining the procurement cycle. Linked to the Digital Malta, Action 12: Jointly with industry representatives, government will organise a series of initiatives targeting vulnerable sectors such as manufacturing, construction and retail with a view to challenge existent practices whilst inducing ICT enabled entrepreneurial shifts. Linked to the Digital Malta, Action 13: This Forum will seek to identify common strategies and awareness raising programmes to help industries become more profitable through the use of ICT. MCA (in consultation with ME and Digital Malta Governing Body) 2014 The following areas will be explored: The possibility of an incentive scheme to encourage implementation of EDI solutions (e.g. cloud-based EDI solutions [SaaS]) by micro-enterprises. The possibility of introducing a support scheme for industryled initiatives aimed at developing industry-wide strategies in relation to export-oriented ecommerce. Linked to the Digital Malta, Action 13: This Forum will seek to identify common strategies and awareness raising programmes to help industries become more profitable through the use of ICT. 61 The European ebusiness Support Network identified a policy trend aimed at supporting SMEs to develop their ebusiness strategy in full cooperation with their business partners, namely their suppliers, customers, or knowledge providers, along the entire value chain. Emphasis is given to the productive use of ICT by an entire group of enterprises that are interacting in daily business transactions, either within the same sector or between interacting sectors. SMEs do not operate in isolation: they maintain complex business links with business partners, customers and providers, often from different industrial or services sectors and spread all over the world. Page 37 of 72

38 MEASURE OWNED BY DEADLINE ACTION REFERENCES 3 To be decided in consultation with the Digital Malta Governing body and ME This action will also cater for start-ups providing niche ecommerce services or providing specialist ancillary services related to ecommerce, taking into account the existence of the Innovative Start Up scheme operated by Malta Enterprise. (See Appendix 2 for more information on this scheme). Linked to the Digital Malta, Action 16: Facilitate improved access to capital programmes for start ups, micro and small firms including but not limited to the setting up of a business angels network, incentivising crowd-funding and other investor schemes. 4 To be decided in consultation with the Digital Malta Governing body and ME This action will include measures targeted towards enterprises that have an established ecommerce operation which is proven to be commercially viable. The incentives will be aimed at assisting these enterprises to expand their business either locally or overseas. This action will take into account the following schemes already in operation: Tax credit for Digital Applications Development Investment Aid Tax Credits Gateway to Export Microinvest Linked to the Digital Malta, Action 16: Provide incentives to firms that deploy advanced ICT services, such as interest free credit, subsidies, attractive loans. (See Appendix 2 for more information on these schemes) Page 38 of 72

39 MEASURE OWNED BY DEADLINE ACTION REFERENCES 5 To be decided in consultation with the Digital Malta Governing body and ME Special attention will be given to corporate packages designed to attract: ecommerce service providers from an emergent market (e.g. China); ecommerce service providers aiming to penetrate the MENA region; ecommerce providers whose business model does not include the direct export of physical goods; ecommerce back-end services such as data analytics, etc. Linked to the Digital Malta, Action 17: Set up a multi-stakeholder committee responsible for designing a corporate package specifically intended to attract FDI targeting ICT multinationals. Implement specific measures to attract companies and create the positive externalities needed to transform Malta into a regional ICT hub. 6 To be decided in consultation with the Digital Malta Governing body 7 To be decided in consultation with the Digital Malta Governing body The committee shall assess whether a specific corporate package is required for Gozo. In this regard, special attention will be given to the following ecommerce trends: Mobile ecommerce, emoney and financial transaction services related to ecommerce, ecommerce providers whose business model does not include the direct export of physical goods, ecommerce back-end services such as data analytics etc. As part of this action, explore opportunities for the provision of training and consultancy services in relation to the legal frameworks in support of ecommerce. Linked to the Digital Malta, Action 20: Enable ICT clusters to flourish, with technology development, innovation and internationalisation being the main focus clustering activity. Linked to the Digital Malta, Action 20: Develop training and consultancy services to countries where there are cultural and traditional links with Malta. Page 39 of 72

40 MEASURE OWNED BY DEADLINE ACTION REFERENCES 8 ME/MTA/ Crafts Council with MCA input Establish an SME and micro business innovation framework The following schemes / programmes will be developed and implemented subject to availability of EU funding. In particular the possibility of using the ICT innovation voucher scheme in this regard will be explored 62. a specifically designed support service such as a mentoring and hand holding service for micro-enterprises adopting ecommerce strategies; a training programme for micro enterprises wishing to enter into ecommerce or to improve their ecommerce strategies.the programme will include a module on security measures and card fraud related issues; an advisory service that will facilitate practical inter-firm knowledge-transfer on ecommerce; in conjunction with the Crafts Council, a tailored training programme coupled with a consultancy service for local crafts producers; in conjunction with the Malta Tourism Authority a tailored support service for enterprises in the, tourism and hospitality industries building on the Webcheck scheme already piloted in Malta 63. Linked to the Digital Malta, Action 20: Design incentive schemes to enable local SMEs and cooperatives to benefit from free or subsidised consultancy services to help them adopt digital technology and innovative business models to establish themselves online and internationalise their products and services The models adopted and the results achieved by the TourismLink project sponsored by the European Commission will be taken into account. The possibility of Malta participating in this project in the future will also be explored Page 40 of 72

41 MEASURE OWNED BY DEADLINE ACTION REFERENCES 9 MCA 2014 An online directory of entities providing ancillary services to ecommerce providers such as catalogue development and management services, photography services, script writing services, etc, will be created. The possibility of providing evening courses in relation to services ancillary to ecommerce as described above, will be examined with MCAST. Linked to the Digital Malta, Action 22: Develop a set of measures to sustain and grow the local ecommerce market on both the supply and demand side. 10 Craft Council / MTA with MCA input 2015 Sector specific plans related to export oriented ecommerce in the hospitality, and crafts industries will be drawn up and implemented in conjunction with the Crafts Council and the Malta Tourism Authority. With respect to the strategy for local crafts, the possibility of introducing a dedicated subsidy scheme for related postal charges will be examined. Linked to the Digital Malta, Action 22: Develop a set of measures to sustain and grow the local ecommerce market on both the supply and demand side. 11 MCA The information sessions for consumers on online banking, ecommerce and Social Media will be extended to cover all local councils and will also be converted into an online tutorial targeted at Maltese users of social media. Linked to the Digital Malta, Action 22: Develop a set of measures to sustain and grow the local ecommerce market on both the supply and demand side. This action will seek to build the required confidence in ecommerce in individuals having lower levels of education. 12 MCA MCA in conjunction with Academia, MITA and MCST shall conduct a number of foresight studies related to disruptive innovations and global trends which influence the retail market, where these are not already available. These studies will better equip the nation in providing measures that provide industries with greater stability, agility and timely response to shifting market needs. Linked to the Digital Malta, Action 57: Foresight projects will be launched to identify how important ICT driven themes, such as identity and social networking, can be best used for stimulating economic growth. Page 41 of 72

42 MEASURE OWNED BY DEADLINE ACTION REFERENCES 13 MCA Ongoing Monitoring EU related developments in ecommerce The MCA will continue to monitor these developments in particular the proposed European trust-mark for ecommerce providers with a view to ensuring its easy accessibility and eventual take up by local businesses. In light of the proposed new European scheme the current eshop scheme run by the MCA will be discontinued. Linked to the Digital Malta, Guiding Principle B: Legislative measures and regulatory strategies pursued in other jurisdictions will be monitored and evaluated to see if local legislation needs improving. 14 MCA Q2/Q (and on-going in subsequent years) Enabling informed policy making in relation to ecommerce in Malta The MCA will carry out an exercise to ensure that to the extent possible comprehensive data related to ecommerce activity in Malta is compiled on a regular basis enabling informed policy analysis and action. 15 MCA Ongoing Promoting and Showcasing Best Practice Use of ICT by Maltese Enterprises Strengthen the ecommerce Forum and ebusiness Awards to serve as platforms for showcasing best practice use of ICT. Establish an awareness raising programme that will focus on: Use of social networking as a business tool, Application of the benefits from NGN internet services, Supply chain management, Use of egovernment services by businesses ebusiness (CRM, ERP, SEO etc) Multi-channel Retailing; Use of APPs; Use of mobile technologies. The MCA will seek to promote international programmes supporting mobility and exposure for Maltese entrepreneurs to benefit from programmes such as Erasmus for Entrepreneurs. Page 42 of 72

43 APPENDIX 1 - FEEDBACK FROM STAKEHOLDERS TOURISM Malta Tourism Authority There is a segment within this industry (3/4 star hotels and guesthouses) which tends to shy away from using online tools to market and further its business despite the potential benefits of online marketing and the risks associated with lack of take up of these ubiquitously used tools. This is mainly attributable to lack of resources (mainly manpower) and knowledge of the potential benefits associated with investing in web technology. Interestingly, these laggards are not totally absent from the online world because besides subscribing to dedicated portals, they also rely heavily on agents, travel agencies and tour operators, which in turn are increasingly turning to the internet to market their services. The MTA believes that the WebCheck project has been an excellent exercise for assisting hotels in improving their online presence and related marketing techniques. It was suggested that any further extensions of the WebCheck project should put more focus on Gozo and possibly treat Gozo separately from Malta. BANKING The Malta Bankers Association The Malta Bankers Association raised longstanding concerns that cheques are still the preferred payment method in Malta. It stressed that this poses a high administrative burden on the local banking industry, while maintaining operational costs for businesses unnecessarily high. Banks strongly believe that shifting to electronic payments would reduce business costs whilst making them more competitive. It was suggested to set up a common central platform/ web portal and payment gateway for SMEs to overcome the financial barriers that small businesses encounter when seeking to penetrate foreign markets due to the high costs associated with trading online. For micro-enterprises some of these costs can be prohibitive. The view was expressed that sharing of infrastructure is critical (even for the banking industry) in order for local industries to reduce costs and remain competitive. It was noted that there is a need for a culture change in this respect. More than 50% of sales (in terms of value) are still carried out in cash. Internet banking is still mostly used for viewing accounts rather than for carrying out transactions, by both business and consumers. More education on card fraud for business was encouraged. RETAILERS/BUSINESS ASSOCIATIONS Malta Chamber of SMEs (GRTU) & Malta Chamber of Commerce, Enterprise and Industry According to business associations/representatives, the problems that are stalling domestic and cross-border ecommerce by local retailers include: high postage/delivery costs; the eco-tax which is putting local retailers at a disadvantage with their foreign counterparts; lack of resources and time in maintaining an ecommerce website; costs related to payment gateways are still pretty high and at times prohibitive for micro businesses; Page 43 of 72

44 the high cost of outsourced services; retailers reluctance in embracing ecommerce and a lack of response to developments that are shaping the retail market, both locally and globally and especially the change in the Maltese people s buying behaviour; retailers failure to capitalise on opportunities for reaching more customers whilst retaining existing ones (e.g. TrolleyMania). Some recommendations and potential initiatives that were put forward included: Encourage retailers to invest in a website that portrays their products and services, without necessarily selling over the internet. Retailers need to be aware and fully understand the benefits that can be gained through investing in web technology. People are increasingly resorting to the internet for obtaining information about any products or services they are interested in. More concrete assistance to start-ups. Prospective entrepreneurs are many a time discouraged due to lack of financial assistance by banks and other institutions. There is a pressing need to provide venture capital to finance high-potential start-ups and innovative projects. Encourage further adoption of B2B ecommerce practices in Malta by making businesses aware of the efficiency gains that could be achieved by investing in web technology. Provide business advisory services to assist retailers by providing tailor-made advice as to whether investing in ecommerce technology would be beneficial for their business and to provide the necessary guidance to those that decide venture into ecommerce. Provide guidance with regard to digital marketing, use of social networks, SEO, etc (e.g. Google Ads); Organise seminars and training sessions targeted at (micro) retailers to explain the benefits of ecommerce; Create a niche market for host families aimed at accommodating adult tourists wanting to experience Maltese-life firsthand. The following sectors were identified as having the potential to successfully benefit from engaging in ecommerce: Wine; Supermarkets; Tourism. Page 44 of 72

45 COMMERCE DEPARTMENT It was noted that various initiatives have been put in place to seek to promote the local crafts industry: Awards - Premju Ġieħ l-artiġjanat Malti (including a Special Award for the Most Promising Innovation awarded to the innovation with the most potential for commercial development) - to encourage the development of innovative ideas and products which have a degree of potential that is both unique and sustainable; Malta Crafts portal promoting Crafts made in Malta on the internet; A conference aimed to encourage Crafts people to invest in ecommerce was held in The following proposals were discussed with regard to ecommerce: The feasibility of creating a web portal for crafts to enable local artisans reach foreign markets; The need to focus on certain sections of the crafts industry and to support those that have most potential to succeed first in order to continue building on their success; The difficulty to ascertain the authenticity of certain products due to lack of resources, in terms of expertise and time. EDUCATION MCAST & University of Malta The MCA met up with both educational entities to gain insight into the programmes, modules and credits offered by these institutions in support of ecommerce and related services such as marketing, SEO etc. and entrepreneurship. The latter is more than ever being recognised as one of the fundamental factors for the long term sustainability of ecommerce. The educational community is cognisant of the changing needs of industry and is continually collaborating with the latter to ensure that the curricula continually reflect this reality. Both MCAST and the University of Malta offer a range of academic and training programmes to ensure that the labour market is continuously supplied with individuals with the right set of skills and expertise to enable local enterprises to successfully exploit and adopt the different business models that web-based technology is offering. MALTA ENTERPRISE Discussion focused on: initiatives and schemes offered by Malta Enterprise (see Appendix 2); the possibility of providing advisory services through Malta Enterprise s Business First, the Point of Single Contact for businesses in Malta, in support of ecommerce start ups. In this regard it was noted that in the past, ME had supported companies in implementing ecommerce solutions via their business advisory unit. Currently, this function is not available and ME is considering including such experts on its advisory list. Page 45 of 72

46 APPENDIX 2 - PAST / CURRENT INITIATIVES TARGETTED AT ecommerce MALTA ENTERPRISE SCHEMES SCHEME DETAIL FUNDING BENEFICIARIES STATUS Tax Credit for Digital Applications Development To encourage companies to take up digital technologies. Open to companies that commission a digital game as a marketing tool to promote their products or services online. A tax credit equivalent to 100% of the total subcontracted costs incurred, up to a maximum of 15,000. Open Investment Aid Tax Credits Open to SMEs & large enterprises tax credits calculated as a percentage of the value of the investment project for qualifying expenditure, including the value of wage costs for jobs directly created by the initial investment project. Tax credits: - 30% for Large Enterprises, - 40% for Medium-sized Enterprises - 50% for Small Enterprises. Open Eligible areas: - I.C.T. developmental activities, - software development, - Information Technology (IT) enabled services including call centres and ecommerce, - Research and development, and innovative start-ups; - Eco-innovations, waste treatment and environmental solutions; - Biotechnology; - Filming and audio-visual industries; - Pharmaceuticals. Gateway to Export An 18-month programme which combines training, business advisory, assessment etc. to help companies become export ready. Helps enterprise address identified gaps in their business processes and operations. Open Page 46 of 72

47 SCHEME DETAIL FUNDING BENEFICIARIES STATUS Innovative Start up scheme To support start ups in the ICT sector seeking to offer ecommerce solutions. Up to 15,000 Open Microinvest Supports micro enterprises and self-employed that invest in their business, innovate, expand, implement compliance directives and/or develop their operations. A tax credit (up to 40% of eligible exp.) representing a percentage of the eligible expenditure and wages of newly recruited employees and/or apprentices. Maximum tax credit capped at 25,000. Open Micro Guarantee To provide eligible undertakings with the possibility to access funds required for the acquisition of tangible investments, intangible assets and working capital linked to such acquisitions. The Micro Guarantee may only be used to support a new loan, used to finance investment costs. Up to a max. 100,000 Under review SME Development Grant Scheme Eligible enterprises could seek expert support, for example in ecommerce. Up to 10,000 in one calendar year. Closed ecommerce Tax credits Open to SMEs and sole traders in all sectors. To support SMEs to acquire, develop and invest in e- commerce systems. Eligible costs included investment in hardware and software and expenses for upgrading and updating websites. Up to a max. of 12,000 - A tax credit equivalent to 100% of eligible costs as approved by ME. 378 certificates were issued during the duration of the incentive Closed ERDF ebusiness Development Grant Scheme To support SMEs to invest in ICT that will assist growth through the diversification of the enterprise s products and services and contribute to significant changes to the enterprise s production process. Also, SMEs that invest in ICT projects that integrate business functions, streamline work flows and enhance interaction between clients and suppliers. Co-financing of hardware and software costs. - 50% of eligible costs for Small Enterprises; - 40% of eligible costs for Medium-sized Enterprises; - 30% of eligible costs in the case of SMEs active in the transport sector; 80 enterprises - spread over a series of three competitive calls Closed Page 47 of 72

48 SCHEME DETAIL FUNDING BENEFICIARIES STATUS ERDF Small Start Up Grant Scheme Open to start-ups (with less than 50 employees) that were in operation for less than three years in the manufacturing, Information and Communication Technology (ICT), Research & Development & Innovation (R&D&I), waste treatment & environmental solutions and biotechnology sectors. Part-finance costs incurred by small enterprises in relation to: - Wages of employees; - Renting / leasing of equipment that is required by the enterprise to operate; - Renting / leasing of production facilities; - Water and electricity. 29 enterprises - spread over a series of three competitive calls Closed TROLLEY MANIA TrolleyMania, an online shopping mall, was set up in 2010 on the initiative of the then IT Ministry. This online platform was aimed at all local businesses wishing to take up ecommerce. The project is a public-private partnership between government and Alert Communications Ltd. Through the TrolleyMania platform, participating retailers could set up an ecommerce site at a start up fee of 250 (excl. VAT), a 232 (excl. VAT) fee per annum and a transaction charge of 0.25% (excl. VAT) on sales. Originally launched with 37 online shops, there are currently 26 eshops on TrolleyMania. eshop In 2010, the Malta Communications Authority launched a review and rebranding of the existing trust mark (Eurolabel), whereby the related code of conduct, procedures and practices were reassessed and updated. This was done with the intent to ensure that the trustmark addresses the needs of the online community, both from a business and a consumer perspective. The new trust-mark, eshop, launched in October 2011, is intended to reward those sites which are fully compliant with legal obligations and adhere to the trust-mark s Code of Conduct, reassuring consumers that they will get all the information they need to make an online purchase with confidence. Currently there are 13 websites bearing the eshop logo. ECOMMERCE FORUM The purpose of the Forum is facilitate informal discussion and information sharing between stakeholders in the ecommerce sector, the MCA and where appropriate, other interested parties. The Forum aims to contribute towards a better understanding, on the part of the MCA and where appropriate other regulatory or policy-making bodies, of developments in the industry and matters of concern to stakeholders. The main aim behind this forum is to create an ecommerce community where industry players and other stakeholders can meet on a regular basis to discuss topics of mutual interest and to share experiences and knowledge. It is becoming critical today for all stakeholders in Page 48 of 72

49 the industry to be aware of international developments taking place in ecommerce and other related areas. During these sessions, attendees have the opportunity to interact and build partnerships that help grow this industry. The Forum is aimed at business, entrepreneurs, government agencies, students and the general public. The first ecommerce Forum was held in 2007 and to-date, 10 fora have been held. ECOMMERCE GUIDES The MCA developed the ecommerce Guides for Business with the aim of creating a clear and comprehensive reference point for those businesses that are already engaged in ecommerce as well as those that are interested in setting up ecommerce platforms. The work involved extensive research as well as consultation with a number of entities and competent authorities that either play a regulatory role in matters related to ecommerce or ecommerce service providers involved in different aspects of the supply chain. The guides tackle all areas necessary to get started, such as legal and authorisation requirements and procedures, electronic contracts, online security, payment gateways and good business practices. The guidelines were launched in September WEBCHECK WebCheck, an initiative of the Malta Communications Authority (MCA) supported by the Malta Tourism Authority (MTA), was intended to assist hotel and guesthouse operators in improving their web presence. Participants in the scheme were assigned an e-business specialist tasked with reviewing their website and internet strategy. Participants received free expert advice on ways to capitalise on Information and Communications Technology (ICTs) and to develop further their ICT strategy. Page 49 of 72

50 APPENDIX 3 - MAIN EU INITIATIVES ROADMAP FOR COMPLETING THE SINGLE MARKET FOR PARCEL DELIVERY Following the European Commission s Communication on ecommerce in January 2012 and the subsequent Green Paper consultation on the delivery of parcels in November 2012, the Commission has set out a roadmap with the intent of ensuring that tangible improvements are made as quickly as possible and puts forth further actions to address delivery problems and challenges faced by consumers and e-retailers in the EU. It outlines three main objectives which the Commission aims to accomplish in this area, and it attributes specific tasks and roles to various stakeholders in order to achieve these objectives. The Commission will facilitate this collaborative process through dedicated fora and workshops, and will closely monitor progress. It will take stock after 18 months in order to assess whether additional measures are needed. The roadmap has three main objectives: Increased transparency and information for all actors along the ecommerce value chain; Improved availability, quality and affordability of delivery solutions; Enhanced complaint handling and redress mechanisms for consumers. Trust-marks According to the European Commission, online trustmarks boost consumer confidence when shopping online because they inform consumers if the online retailer s website complies with a series of quality and security service requirements. Trustmarks can provide information on a range of topics, such as compliance with (consumer) regulations, the financial situation of the webshop and privacy and security measures taken to protect the transactions and personal data of consumers. They can also offer different services like dispute resolution in case of conflict between webshops and consumers, insurance, money back guarantees and even information on payment and delivery methods. Current situation in Europe with regard to trustmarks: the absence of a pan-european trustmark; the majority of trustmarks in Europe only operate at national level. Only two are operating in different EU countries, i.e. Tüv Süd, and Trusted Shops; different certification processes based on different standards; no independent supervisory body monitors the trustmarks, except in the UK with the Trading Standards Institute; different services: the main one is dispute resolution, but trustmarks often offer various, nonstandardised services. The Commission is currently assessing how to reach an EU-wide trustmark scheme and to establish cooperation platforms on the governance of the trustmark systems. At the October 2013 Forum Europe conference on e-commerce, the European E-commerce and Distance Selling Association (EMOTA) announced that it is developing a pan-european trustmark. The idea is to harmonise the existing national codes of conduct on trustmarks and to standardise certification requirements. To achieve this, EMOTA would like to become, with the endorsement of the EU institutions, the European competent supervisory body of national trustmarks. Page 50 of 72

51 Taxation On December 12, 2013 the EU Commissioner responsible for taxation and customs has opened the first meeting of the High Level Expert Group on Digital Taxation. This working group has been created to find a solution on how to tax the digital economy in a way that ensures fair taxation without hampering the growth of the sector (the major global internet players are established in Ireland or in Luxembourg where the corporate taxes are the lowest). The group will identify the key challenges related to digital taxation and assess the different possible policy options. These options are expected to be reported back to the Commission by summer The Commission is committed to develop rapidly the necessary initiatives to improve the European tax framework for the digital sector. Page 51 of 72

52 APPENDIX 4 PRELIMINARY WORK SCHEDULE - PROJECTS STARTING IN 2014 Following are the initiatives that will be undertaken during Appendix 5 includes a high level overview of the individual projects which are currently in planning stage: ACTION OWNER TENTATIVE TIMEFRAME ecommerce Macro Data (demand & supply) The MCA will be collating, on a regular basis and to the extent possible, macro data related to ecommerce activity in Malta so as to enable informed policy analysis and action. This will be done through its ecommerce surveys which are held on a periodic basis. Internet & ecommerce Use by Individuals Survey 2014 The MCA will conduct a quantitative research studies to evaluate the level of use of the internet and ecommerce across the Maltese islands. Schemes and Initiatives managed by ME A framework encompassing a set of complementary measures will be developed, based on the needs and capabilities of targeted sectors and/or subsectors with the aim of assisting micros and SMEs to embrace ecommerce in order to further grow and internationalise their business. Online Directory of ecommerce Service Providers A business directory will be developed aimed at providing micros and SMEs with easy access to information on service providers providing ancillary services to online businesses such as catalogue development and inventory management services, photography services, script writing services, etc MCA ebusiness Awards The ebusiness Awards complement the MCA s efforts to drive the take-up of ICT and promote ebusiness, whilst at the same time offer a platform for participants to showcase their innovative solutions to the business community and the general public. By rewarding those organisations that have distinguished themselves in the field of ICT, the MCA endeavours to encourage more businesses and entities to follow suit. ecommerce Forum The ecommerce Forum hosted on a periodic basis by the MCA seeks to create an ecommerce community where industry players and other stakeholders can meet on on a regular basis to discuss topics of mutual interest and to share experiences and knowledge. MCA MCA MCA/ME MCA MCA MCA START DATE March 2014 END DATE Ongoing START DATE March 2014 END DATE June/July 2014 START DATE March 2014 END DATE July 2014 START DATE March 2014 END DATE September 2014 START DATE March 2014 END DATE November 2014 START DATE March 2014 END DATE December 2014 Page 52 of 72

53 ACTION OWNER TENTATIVE TIMEFRAME Initiatives developed under the auspices of the Digital Malta Governing Body A programme of activities aimed at promoting the benefits of online technologies with enterprises and assisting these in developing their ebusiness strategies based on the needs and capabilities of the targeted sectors. An ecommerce Action Plan for the Crafts Industry A review of the Crafts sector to take stock of the state of play of this industry with respect to the use of online technologies and how these can assist this industry reach global markets. This will assist in the formulation of an effective strategy and action plan aimed to support the industry and ensure that it fully capitalises on the opportunities provided by ecommerce. Internet & ecommerce Use by Business Survey 2015 The MCA conducts periodic quantitative research studies to evaluate the level of use of the internet and e-commerce by local businesses. Information Sessions for Consumers A series of information sessions will be held addressing the use of ICT and aimed at increasing the awareness and use of specific ICT applications that contribute to the take up of ecommerce by the general public, especially individuals with lower levels of education. These will be carried out in collaboration with the local councils and community technology and learning centers CTLCs and will mainly focus on online banking, ecommerce and social media. An ecommerce Action Plan for the Tourism and Hospitality Industry A study on the use of online technologies in respect of business-to-business and business-to-consumer transactions in order to establish a detailed understanding on the state of play and level of ecommerce adoption by the Tourism and Hospitality industry; and formulate a strategy and action plan aimed to support the industry and ensure that it fully capitalises on the opportunities provided by ecommerce. MCA/Digital Malta Governing Body MCA/Crafts Council MCA MCA (IS Information Management & Development Unit) MCA/MTA START DATE March 2014 END DATE TBD in conjunction with the Digital Malta Governing Body. START DATE March 2014 END DATE February 2015 START DATE March 2015 END DATE March/April 2015 START DATE Jan 2015 END DATE December 2015 START DATE March 2014 END DATE December 2015 Page 53 of 72

54 APPENDIX 5 PRELIMINARY PROJECT PROPOSAL SHEETS This section contains the project preliminary proposal sheets for the work planned to initiate in Page 54 of 72

55 ecommerce Macro Data (demand & supply) (Measure 14) 01. Introduction ecommerce macro data indicators are necessary especially when formulating strategies and action plans because they give an indication of the current status and extent of the ecommerce market whilst enabling policy makers and industry to monitor ecommerce activity on a year on year basis. 02. Background The research undertaken as part of the process for drafting the strategy revealed the lack of macro data about the value of the local ecommerce market, both from the supply side (e.g. the share that it contributes to GDP, the revenue that it generates etc.) and the demand side (e.g. value of online spending by Maltese consumers, value of cross-border sales by country/region etc.). 03. Scope and terms of reference The MCA will be collating, on a regular basis and to the extent possible, macro data related to ecommerce activity in Malta so as to enable informed policy analysis and action. It shall seek to gather estimates on the following: 1. Supply - Total online sales revenue; - Online sales as a % of total sales. 2. Demand - Total online spending by Maltese consumers; - Total online retail as a % of total retail. 04. Deliverables and timeframes Deliverable The collection and publication of ecommerce data on a regular basis. Timeframes 2014 ongoing 05. Stakeholders Digital Malta Governing Body Retail industry ecommerce industry players Economic Policy Department Page 55 of 72

56 Internet and ecommerce Use by Individuals Survey 2014 (Measure 14) 01. Introduction The MCA conducts periodic quantitative research studies to evaluate the level of use of the internet and ecommerce across the Maltese islands. 02. Background The MCA in its dual role to regulate the ecommerce sector and facilitate ecommerce take-up, carries out regular market research relating to the ecommerce sector in Malta These surveys provide an insight into the problems experienced by users and the concerns that deter people from purchasing online. By identifying the issues, the MCA can better contribute towards building a more robust ecommerce framework. The data also serves to better inform the ecommerce industry. 03. Scope and terms of reference The research will: 1. assess the extent of Internet & ecommerce use; 2. identify trends and changes in buying behaviour patterns; 3. gain an understanding of the public s perception of e-commerce, including any difficulties, barriers, etc. 4. enable an estimate of the following macro values using the data collected: - the total value of online spending by the Maltese population per year; - online retail as a % of total retail. 04. Deliverables and timeframes Deliverable Survey instrument; Analysed data; Presentation; Publication of results (press release). Timeframes Stakeholders Business Community Page 56 of 72

57 Schemes and Initiatives managed by ME (Measures 2, 3, 4 & 8) 01. Introduction The strategy recommends the establishment of a set of initiatives to support and assist enterprises in adopting ecommerce-based business models to further grow their business both locally and abroad. The implementation of such initiatives generally falls under the responsibility of Malta Enterprise (ME). 02. Background ME, supports the growth of businesses located in Malta through a range of schemes that assist them throughout all stages of growth. ME also runs advisory services aimed at supporting industry players. Although currently no ecommerce experts are on the ME s advisory list, in the past, ME had supported companies in implementing ecommerce solutions via its business advisory unit. Following consultation with ME it has been agreed that a joint exercise will take place between the MCA and ME to examine the proposals put forward in the ecommerce strategy and develop initiatives in line with these proposals as necessary. 03. Scope and terms of reference The following areas shall be further elaborated jointly with ME to determine possible schemes and initiatives that could be implemented: 1. a specifically designed support service, such as, a mentoring and hand holding service for micro-enterprises adopting ecommerce strategies; 2. a training programme for micro enterprises wishing to enter into ecommerce or to improve their ecommerce strategies. The programme will include a module on security measures and card fraud related issues; 3. access to capital programmes for micros and start-ups (e.g. Innovative Start Up Scheme); 4. the possibility of an incentive scheme to encourage implementation of EDI solutions (e.g. cloud-based EDI solutions (SaaS) by micro-enterprises; 5. the possibility of introducing a support scheme for industry-led initiatives aimed at developing industry-wide strategies in relation to export oriented ecommerce; 6. incentives for enterprises that have an established and commercially viaible ecommerce activity and that are seeking to expand their business locally or abroad (e.g. Tax credit for Digital Applications Development, Investment Aid Tax Credits, Gateway to Export and MicroInvest). 04. Deliverables and timeframes Deliverable Page 57 of 72

58 A framework encompassing a set of measures based on the needs and capabilities of targeted sectors and/or sub-sectors with the aim of assisting micro enterprises and SMEs within the selected groups to embrace ecommerce in order to further grow and internationalise their business. Outputs High level concepts for schemes/incentives and related timelines; Decision on options for EU funding / Budgets; Programme of schemes: Timeframes Stakeholders Malta Enterprise Scheme Beneficiaries Digital Malta Governing Board Page 58 of 72

59 Online Directory of ecommerce Service Providers (Measure 9) 01. Introduction Stakeholders have identified the creation of an online directory of ecommerce service providers as one of the measures that will help assist and further drive the adoption of ecommerce by business. 02. Background Despite the small size of Malta, this study has identified a lacuna in terms of the easy availability of information on enterprises providing support services to businesses doing ecommerce. An online directory will provide start-ups or established businesses seeking to tap into online trading, with an easy to access list of entities that can supply them with the products/services required to set up and run a successful online business. The online directory will seek, to the extent possible, to offer an exhaustive list (without any order of preference) of the entities that offer ancillary services to online traders. Inclusion in this directory will be on a voluntary basis and, under no circumstances, will the MCA be held responsible for the level of service offered by these ecommerce service providers. 03. Scope and terms of reference This exercise will: 1. establish a methodology for the collation and maintenance of data on ancillary service providers; 2. collate contact details and brief descriptions of the products/services offered by the service providers; 3. establish an online database with the collated information which provides an easy means of identifying suppliers based on a number of different criteria, eg, locality, name, service category etc; 4. develop and implement a marketing campaign for the directory; 5. maintain this directory up-to-date as per the information made available to the Authority by the ecommerce service providers. 04. Deliverables and timeframes Deliverable A list of up-to-date ecommerce Support Service Providers accessible online. Outputs Call of interest in the media; A fully functional online database; Page 59 of 72

60 Press launch. Media Campaign Maintenance framework. Timeframes Stakeholders ecommerce Service Providers Page 60 of 72

61 MCA ebusiness Awards (Measure 15) 01. Introduction The ebusiness Awards complement the MCA s efforts to drive the take-up of ICT and promote ebusiness, whilst at the same time offer the ultimate platform for participants to showcase their innovative solutions to the entire business community and the general public. By rewarding those organisations that have distinguished themselves in the field of ICT, the MCA endeavours to encourage more businesses and entities to follow suit. 02. Background The Malta Communications Authority (MCA) held the first edition of the ebusiness Awards in 2011, and it has since become a yearly appointment in the Authority s calendar. 03. Scope and terms of reference The ebusiness Awards aim to: 1. promote entrepreneurship, technological innovation and knowledge transfer amongst local enterprises; 2. stimulate entrepreneurial creativity by showcasing best practice innovative solutions; 3. give exposure to best solution providers that may contribute to the development of business and the industry. 04. Deliverables and timeframes Deliverable Award framework; Adjudication of award categories; Event ceremony; Dissemination of winning solutions in the media and social networks. Timeframes Q2 / Q Stakeholders Business Community. Page 61 of 72

62 MCA ecommerce Forum (Measure 15) 01. Introduction The ecommerce Forum hosted on a periodic basis by the MCA seeks to create an ecommerce community where industry players and other stakeholders can meet on a regular basis to discuss topics of mutual interest and to share experiences and knowledge. 02. Background The MCA took on full responsibility for ecommerce in 2005, and along the years it has aimed to forge and foster effective working relationships with and between market players in this sector. The first ecommerce Forum held was in 2007 and since then, a number of fora have been held each year. 03. Scope and terms of reference The Forum aims to : 1. foster effective working relationships with market players; 2. offer a platform for discussion on various ecommerce topics; 3. provide opportunities for all stakeholders to share experiences and knowledge; 4. facilitate partnerships that may serve to grow the industry; 5. provide direct interaction between industry players. 04. Deliverables and timeframes Deliverable At least, one ecommerce Forum is held per year. Timeframes Stakeholders Business Community Page 62 of 72

63 Initiatives developed under the auspices of the Digital Malta Governing Body (Measures 1, 2, 5, 6 & 7) 01. Introduction The strategy recommends the establishment of a set of initiatives to help industries (e.g. retail, tourism, etc.) profit from ecommerce based business models and achieve efficiencies through the implementation of supply chain technologies. It also identifies opportunities for Malta to attract ecommerce business providers to establish operations in Malta. 02. Background This strategy is framed within the overall umbrella of the Digital Malta Strategy ( ) which identifies measures in relation to the ecommerce market. A number of proposed initiatives will be developed in line with the parameters set by the Digital Malta Governing Body. 03. Scope and terms of reference The following actions are directly linked to actions that will be undertaken under the broader framework of the Digital Malta Strategy and as such, they shall be further elaborated in consultation with the Digital Malta Governing Body: 1. Ongoing awareness-raising, focussing on the use of ecommerce and social media with the aim of helping enterprises identify and capitalise on opportunities provided by ecommerce; 2. An incentive scheme aimed at supporting the establishment of digital supply chains will be developed in collaboration with sector specific authorities, the social partners and trade organisations, and under the auspices of the Forum for the transformation of industries established under the Digital Malta strategy. This will also seek to facilitate the implementation of EDI solutions by SMEs to improve supply chain efficiency, whilst streamlining the procurement cycle; 3. The possibility of devising corporate packages designed to attract FDI targeting: - ecommerce service providers from an emergent market (eg. China); - ecommerce service providers aiming to penetrate the MENA region; - ecommerce providers whose business model does not include the direct export of physical goods; - ecommerce back-end services such as data analytics, etc. 4. Facilitating ICT clusters, with special regard to the following ecommerce trends: - Mobile ecommerce, - emoney and financial transaction services related to ecommerce, - ecommerce providers whose business model does not include the direct export of physical goods, - ecommerce back-end services such as data analytics etc. 5. Exploring opportunities for the provision of training and consultancy services in relation to the legal frameworks in support of ecommerce. Page 63 of 72

64 04. Deliverables and timeframes Deliverable A programme of activities as outlined above Outputs Meetings with the Digital Malta Governing Board, High level concepts for schemes/incentives and related timelines, Decision on options for EU funding / Budgets. Programme of activities: Timeframes TBD in conjunction with the Digital Malta Governing Body. 05. Stakeholders Scheme Beneficiaries Digital Malta Governing Body Page 64 of 72

65 An ecommerce Action Plan for the Crafts Industry (Measure 10) 01. Introduction This strategy identifies the need for a national ecommerce plan for the Crafts industry with the aim of supporting this industry to extend its markets via ecommerce. The strategic plan will be based on an analytical review of the Crafts sector that will take stock of the state of play of this industry with respect to the use of online technologies and how these can assist this industry in reaching global markets. This data will provide the groundwork needed for policy makers to formulate an effective strategy and action plan aimed to support the industry and ensure that it fully capitalises on the opportunities provided by ecommerce. 02. Background This strategy has prioritised actions on the basis of the potential of ecommerce to contribute to the development of a particular industry. The Crafts industry was identified as one of the key priority areas for intervention. 03. Scope and terms of reference To carry out a review of the Crafts sector, take stock of the state of play of this industry with respect to the use of online technologies and how these can assist this industry reach global markets and make recommendations regarding measures to enable the industry to benefit from ecommerce. Terms of reference: 1. develop a methodology enabling the collation of detailed information on the level of adoption of ecommerce by the Crafts industry; 2. identify the different categories within the Crafts industry and their inherent characteristics in terms of ability to take up ecommerce; 3. identify growth opportunities for the Crafts industry that can be better exploited via the use of ecommerce; 4. examine feasible ecommerce models for the Crafts industry; 5. make recommendations on markets that this industry could tap into; 6. carry out a consolidated analysis of the data gathered in previous sections in order to develop a set of recommendations for policy makers as to the actions to be taken to ensure effective adoption of online technologies. 04. Deliverables and timeframes Deliverable Contribution to the widespread and effective use of online technologies by the Crafts industry to expand its reach to new customers. Page 65 of 72

66 Outputs Terms of Reference; Decision on options for EU funding; Application for EU funding, if necessary; Tender document; Tender adjudication; A Strategic Analysis of the Use of ecommerce by the Crafts industry; An ecommerce Action Plan for the Crafts industry. Timeframes Stakeholders Crafts Council (Commerce Department) Crafts industry Page 66 of 72

67 Information Sessions for Consumers (Measure 11) 01. Introduction This strategy has identified the need to further extend the knowledge base of Maltese consumers in relation to ecommerce. It is proposed that the information sessions for consumers are revised in order to assist and further drive the adoption of ecommerce by the general public, especially individuals with lower levels of education. 02. Background A significant portion of Maltese people aged 45 years and over and those with a low level of education are reluctant to shop online. In both instances, Malta s ecommerce figures are significantly lower than the EU average. 03. Scope and terms of reference 1. To hold a series of information sessions addressing the use of ICT and aimed at increasing the awareness and use of specific ICT applications that contribute to the take up of ecommerce by the general public. 2. These will be carried out in collaboration with the local councils and CTLCs and will mainly focus on the following topics: - Online Banking, - ecommerce, - Social Media. 3. To convert the information sessions into an online tutorial targeted at social media users. 04. Deliverables and timeframes Deliverable Information sessions; Awareness campaign. Outputs an increase in the use of the internet for shopping and banking; and an increase in the number of individuals accessing social media. Timeframes Stakeholders Page 67 of 72

68 Local councils and CTLCs Consumers Page 68 of 72

69 An ecommerce Action Plan for the Tourism and Hospitality Industry (Measure 10) 01. Introduction This strategy identifies the need for a national ecommerce plan for the Tourism and Hospitality industry with the aim of facilitating the take-up of ecommerce by this industry. The strategic plan will be based on an analytical study of the Tourism and Hospitality industry that will take stock of the state of play of this industry vis-a-vis ecommerce and the global developments in terms of ecommerce that are shaping this industry. This data will provide the groundwork needed for policy makers to formulate a strategy and action plan aimed to support the industry and ensure that it fully capitalises on the opportunities provided by ecommerce. 02. Background The strategy has prioritised actions on the basis of the potential of ecommerce to contribute to the development of a particular industry. The Tourism and Hospitality industry was identified as one of the key priority areas for intervention. A similar study had been carried out in 2007 by the then Ministry of Tourism and Culture leading to the drafting of a national Tourism ebusiness action plan for Malta. 03. Scope and terms of reference To carry out a study on the use of online technologies in respect of business-to-business and business-to-consumer transactions in order to establish a detailed understanding on the state of play and level of ecommerce adoption by the Tourism and Hospitality industry. Terms of reference: 1. Develop a methodology enabling the collation of detailed information on the level of adoption of ecommerce by the Tourism and Hospitality industry and barriers to adoption / effective use of this commercial model; 2. Carry out an information gathering exercise; 3. Examine business models that are changing the modus operandi in the Tourism and Hospitality sector; 4. Identify the new channels of distribution that are shaping the industry (including social media, mobile, etc) and the level of adoption by local industry; 5. Identify economic opportunities for the Tourism and Hospitality industry and how these can be better exploited; 6. Explore the possibility of establishing a digital supply chain for the Tourism and Hospitality industry; Page 69 of 72

70 7. Carry out a consolidated analysis of the data gathered to develop a set of recommendations for policy makers as to the actions to be taken to further drive the adoption of ecommerce by the Tourism and Hospitality sector. 04. Deliverables and timeframes Deliverables Study on the Adoption of ecommerce by the local Tourism and Hospitality industry; An ecommerce Action Plan for the Tourism and Hospitality Industry. Outputs Terms of Reference; Decision on options for EU funding; Application for EU funding, if necessary; Tender document; Tender adjudication; A Strategic Analysis of the Use of ecommerce by the Tourism & Hospitality Industry; An ecommerce Action Plan for the Tourism and Hospitality Industry. Timeframes 2014 / Stakeholders MTA MHRA Tourism and Hospitality operators Page 70 of 72

71 Survey on Internet and ecommerce Use by Business (Measure 14) 01. Introduction The Malta Communications Authority (MCA) conducts periodic quantitative research studies to evaluate the level of use of the internet and e-commerce by local businesses. 02. Background The Malta Communications Authority in its dual role to effectively regulate the ecommerce sector and facilitate ecommerce take-up, has carried out a number of market research studies relating to the ecommerce sector in Malta. In December 2006 the MCA had conducted a qualitative study to analyse the provision of ecommerce services in Malta and to identify possible barriers to the provision of such services and make recommendations to government with regard to possible actions to facilitate the uptake of ecommerce, with a follow-up conducted in In 2011, the Authority had carried out its first quantitative ecommerce usage by business and commissioned M. Fsadni and Associates to gauge the level of ICT adoption by local businesses, with special focus on Internet and ecommerce usage. 03. Scope and terms of reference The purpose behind this research study was to obtain an indication of the level of Internet and ecommerce usage by the local business community and its potential for growth. This survey will: 1. gauge the level of ICT penetration across the different business sectors/industries; 2. obtain an indication of the use of ecommerce as a distance selling tool across the different business sectors/industries; 3. take stock of the amount of local businesses that have a presence on the Internet; 4. gain insight of the B2B activities that companies are engaging in across the different business sectors/industries; 5. measure the use of the Internet as a marketing tool; 6. obtain a rough estimate of the following values using the data collected: - Online sales generated in a year; - Online sales as a % of total sales. Page 71 of 72

72 04. Deliverables and timeframes Deliverables Presentation; Publication of results (press release). Timeframes Stakeholders Business Community Page 72 of 72