Malta’s E-Commerce Explosion

Malta’s E-Commerce Explosion

A few months ago, I sat across a table from one of Malta’s middleweight importers to talk about selling their products online. I asked him whether he thought there was money to be made through online sales and delivery. His response embodied the general sentiment of Maltese business towards going digital: “Yes I imagine it will be, but that’s years away, so I wouldn’t bother right away.”

It’s easy for us locals to adopt a narrative in which Malta is always five to 10 years behind the rest of the world and that Malta isn’t ready for things that are commonplace abroad. But that all changed two weeks ago, at least where e-commerce is concerned. The coronavirus crisis has forced local businesses, kicking and screaming, towards e-commerce.

What we see today is a growing handful of half-baked delivery services, cobbled together in haste. But given time, these ramshackle solutions will be upgraded and turned into Malta’s first wave of true e-commerce businesses. Thankfully, the foundations for this have been well laid in the last few years with the proliferation of courier companies making same day, or same hour deliveries at low cost.

“It’s easy for us locals to adopt a narrative in which Malta is always five to 10 years behind the rest of the world.”

Getting the recipe for an online business right is harder than many people realise, and local entrepreneurs will need to learn what works and what doesn’t. Traditional brick and mortar retailers will need to learn how to replace footfall traffic with digital marketing traffic. And business owners will need to learn how to create profit models that work given the added costs of delivery and digital marketing.

The e-commerce model is awash with tough decisions about minimum orders and profit margins, as well as a slew of new variables such customer acquisition costs, transaction costs and customer churn. It takes a lot more than adding a delivery fee to make a business work online.

Add to that the fact that retailers who have invested in outlets on the high street and other top locations will suddenly experience the ‘delocalisation’ of their stores. People will no longer visit them because of their proximity to shopping centres, offices and cafes. They will visit them on the strength of their platform, brand, and price model. Because of this shift of power, there are opportunities for the nimble ingenuity of smaller players to turn the commercial establishment on its head.

Today, the internet is a wild fracas of players competing for dominance of the online delivery market, but when the dust settles only a handful of winners will emerge to divide the spoils. The rest will either fold their digital fronts, or sell their products through aggregator sites that take a commission on every sale in exchange for offering marketing, platform and delivery services.

The future of business in Malta, with its choked-out roads and impenetrable high streets, was always going to be digital shopfronts and delivery to your door. We just didn’t think the future would come all at once, in the way it did. Either way, it’s here, and the winners will be those that recognise that it is here to stay.