According to Eurostat 54% of the Maltese population bought something online in the last 12 months (2018) this is below the EU average of about 60%. The high ranking countries in the survey were Denmark 84%, UK 83% and Sweden 78%.
Malta is a small country within the EU located south of Italy, with an official population of about 430 000 and 2.6 million tourist visitors during 2018. Malta was also the fastest growing economy in the EU at 6.6%.
So does this mean that people in Malta doesn’t want to shop online? In most other countries the shift from bricks and mortar retail to e-Commerce has been a gradual one, and we can expect to see the same in Malta. Meaning that there still is opportunity in the market.
The most popular items to be purchased online in Malta are according to the National Statistics Office in 2018 were clothes (76%), holiday accommodations (62%) and travel (54%). These categories are not unique to Malta, in most other countries travel and clothes comes first.
In an older survey from 2014 €40 million euros were spent online, but only 7% of the goods bought was purchased by consumer from Maltese companies. 44% came from online shops in other EU-countries (cross-border).
Are Maltese companies too slow to take advantage of the e-Commerce trend? Are they giving away their business to other EU-businesses who have come a longer way in customer service, payments, deliveries and assortment?
The short answer is yes, but the situation is not unique to Malta. A few popular online shopping alternatives that ships to Malta is Amazon and ASOS. Since Malta is considered a small market for many of the other big e-Commerce players in the EU there is still room to compete. For example H&M doesn’t ship to Malta neither do Zalando.
So what can Malta businesses then do to capture e-Commerce growth?
Leverage your local presence
The competition in e-Commerce is fierce for Maltese businesses, but it’s coming from other EU countries, not to mention Amazon. The only way to compete is to offer something that the foreign players cannot, and that is a local presence.
Having a local presence with store locations means that you can leverage inventory to deliver faster than outside competitors. Given that Malta is one of the smallest countries in the EU a few hours of delivery time should be possible (yes the traffic can be bad but it’s still feasible).
Another benefit of being local is offering quicker returns, better customer service and support people in finding the right items. In many businesses this requires a cultural shift from being a pure point of sale to putting the customer first.
All over the world stores are becoming experience centers, where people can try out new products, ask experts, pick up their orders, do returns etc. See for example Freshippo (Hema) in China or pure player Casper opening their Sleep Shops in the US (and partnering with Target).
Invest in user experience and content
In some sectors the user shopping experience is below par with what can be expected in 2019. This without a doubt affect sales and is especially evident in the DIY and grocery sector on Malta where updates are needed to the experience. A few examples are loading times, product content texts, product imagery, product recommendations, categorization etc.
These are basics for any website, the shopping journey need to be verified and optimized before any substantial advertising or marketing begins. Driving traffic to a website with a below standard experience is only a waste of money and brand equity.
Facebook + e-Commerce
Malta is a Facebook centric country, often information on websites are outdated compared to what is found on Facebook. Many businesses already have active Facebook pages with substantial followings. Making a bigger effort to use Facebook shopping and connect Facebook accounts with shopping in everyday posts is a low cost way to drive relevant traffic and sales.
Going cross-border to expand the market
Often I get questions from small businesses on Malta how they can sell to other EU-countries. My first answer to this question is that you need to sell something that is unique or not available in other EU-countries. This can be fashion items locally produced, with local patterns, arts and crafts or other items that are somehow unique.
It doesn’t make sense to sell the same type of sneakers or electronics that is sold in other EU-countries, since it’s difficult to achieve a feasible margin for things that are already sold through distributors and wholesalers.
Keep in mind that the offering can be a differentiator and that differentiation is not only down the product.
Selling cross-border will expand the addressable market quite significantly, but it also comes with a few challenges. One of them being language, most of the markets close to Malta (like Italy and Spain) will require localized websites, marketing and customer service.
Selling cross border within the EU also requires the business to be registered for VAT in the country they sell into (there are some thresholds when the regulation kicks-in.
Fulfillment will also have to be adapted to handle shipping to other countries. Although shipping is usually straightforward in the EU it may require backend changes in systems and processes.
A way to sell cross-border with less effort is to utilize marketplaces, such as Amazon or Ebay.
e-Commerce is a long game
While it is possible to reach overnight e-Commerce success, it is not likely. Most initiatives where a business goes B2C will take a few years to grow, with continued investment in marketing, customer service and experience.
In the sales graph there will be high and lows (depending on seasonality and other buying patterns). The first period will see growth, often double-digit, to then reach a level of single digit percentage points each year.
It’s important to instill this mindset in the organization when shifting from physical to digital, there are no overnight successes.
Malta still has a lot of opportunities in e-Commerce for traditional retail businesses and for startups. Hopefully with these tips you can get a flying start.