The recently launched eShop and eInfo labels are meant to instill more trust between online merchants and online shoppers in Malta. While online shopping in Malta has expanded in recent years the sector still faces challenges as well as opportunities for growth.

Maltese internet users are not conservative

The last e-commerce survey commissioned by the Malta Communications Authority in 2010 revealed that the main reasons why people do not buy online are that they prefer to see and try on items, they are concerned about security and they are also afraid that the items will either not be delivered, or delivered damaged or different from those ordered. Other surveys revealed that some preferred going directly to the shops while others stated that not enough local websites were available, though the number of local online sites has steadily increased.

“With regard to prices, the MCA has no empirical information regarding the comparison of prices on local websites with those of foreign websites.

“It is clear, however, that any business that seeks to run a successful online operation must ensure that it provides customers with value for money, and that in this case, consumers will compare prices with those available from other online shops they trust irrespective of the jurisdiction where the online shop is based,” an MCA spokesman explained to i-Tech.

Indeed pricing is just one of a host of issues that Maltese e-shopping merchants have to face in this brave new virtual business world.

“Maltese internet users are not conservative,” insists Gege Gatt, the promoter of www.foodie.com.mt, a local website that connects food lovers with restaurants and food outlets providing meals. “They are active, engaged and are great product and price hunters. Local e-shops do not offer differentiated experiences or products, which is a marked bottleneck in the process. Beyond this, pricing and the service-culture around the product’s delivery is still generally lacking.”

The portal allows the user to purchase food based on the customer’s personal taste rather than selecting options based on known restaurant brands or localities. The technology is also integrated to the Google Maps API thus offering some intelligent geo-location matching, as well as exiting social-media touch points.

Launched around two years ago, foodie.com.mt was a pioneer in its sector and this brought its own set of challenges.

“Being first means that take-up is gradual until users alter their purchasing habits. Because volume is limited to the purchasing portion of the online community, and the consumer options available are plenty, the key struggle will always be differentiation. The local online space is teeming with supermarket sites, general e-shops and e-malls yet none strike me as being massively successful or interesting from a value point of view,” admits Dr Gatt. Klikk is a computer store in Birkirkara which also sells online and makes extensive use of social networks such as Facebook and Twitter to market its products. As such, Klikk is known as a “click and mortar” e-commerce venture but, as managing director Gordon Zammit explains, the physical shop is still the most important aspect of the business.

“You would need to make a huge investment to be able to provide the level of online service that we do, and that in itself would make a standalone online shop practically unfeasible. We can only afford to reach this level of quality because we are actually supporting the physical shop through the website www.klikk.com.mt , so the investment is shared. Indeed we see a lot of customers in the shop who would have researched their purchase online beforehand. They visit the shop simply to pick up their product and get a feel for it before they conclude.”

Mr Zammit’s experience confirms the Maltese still love to touch and feel the product in a real shop. However he does not think there’s the issue of lower prices from foreign websites.

“We get hundreds of enquiries and manage to match the price on more than 95 per cent of the requests, so it’s not a question of price. Of course you have to compare like with like with things like time of delivery, delivery cost itself, insurance and other costs factored in. The pre and post sales support one gets from a reliable Maltese supplier is also an important factor many people consider. So even if it’s slightly more expensive, it often pays to buy locally.”

As for choice, there is a wider choice online by far. But then it’s a question of which product you are after.

“Apart from the so far insufficient volumes, the biggest long term challenge for an e-shop is providing the personal service one gets from the physical store. So there are many benefits to having both an online shop and a physical store as one supports the other.”

Yet a computer hardware store like Klikk faces a very real rather than virtual challenge: the eco contribution tax. This is a fixed rate tax of €38.48 for every notebook sold in Malta and €13.74 on every printer and monitor to cover the correct disposal of packaging. This law was introduced in 2004 when €38 represented only two per cent of the price. Now it is representing up to 15 per cent of the cost of a notebook.

“This tax needs to be removed, especially in light of the fact that we have been disposing responsibly of our packaging waste for the last seven years. We are not asking for any preferential treatment, just a level ground where we can compete,” pleaded Mr Zammit.

E-commerce provides opportunities for innovative ways of reaching customers, and www.offertispecjali.com is one of them. The website does not sell anything but brings together merchants and customers through special offers. The transactions are carried on the merchant’s website, similar to international sensation Groupon.

“The online shopping industry is a very challenging environment and Maltese e-shoppers do their homework very well before they buy or order online, and likewise at local retail stores,” a representative from the website told i-Tech. “Although offertispecjali.com is not an e-shop, we understand that price plays an important role in consumer decision, especially in Malta.

“That’s why we aim to help out the online bargain hunter find special prices that are available instantly from local resellers without waiting for overseas delivery since businesses will ship locally or you can simply go and purchase yourself from the retail outlet running the offer.”

One again, trust is recognised as a challenge, the spokesman added, as customers need to believe the offers are genuine and merchants need to believe there will be a response in order to invest in such a venture. Marketing the website and keeping the content fresh are also a challenge.

Experience by different e-commerce sites in Malta shows there is room for growth and that the Maltese are willing to buying at the right conditions. Dr Gatt of foodie.com.mt has this important suggestion to boost the very roots of Maltese online business:

“E-commerce cannot be fuelled through one-size-fits-all portals as this reduces (rather than increases) the differentiated competitiveness needed to succeed online. I would invest in coaching and mentoring initiatives which energise SMEs to identify and develop innovative products which can appeal to a global (rather than local) audience.

“Such mentoring initiatives would stimulate the very grass-roots of our economy: SMEs.”