E-commerce has been defined as “any form of business transaction in which parties interact electronically rather than by physical exchanges or direct contact”.
Today e-commerce refers to a wide range of online business activities that offer products and services mainly to retail customers.
Traditional retailers are facing formidable challenges. They realise that the good old days when shoppers just turned up in their shops during opening hours, viewed their limited range of products, haggled on the price and ultimately bought the product they wanted are becoming a thing of the past.
The chinks of busy cash registers are becoming less common as more consumers buy goods and services from their home, or indeed from wherever they may be with their smartphones or iPads.
The publication of a survey by the Malta Communications Authority revealed how these changing technological trends are affecting the retail industry in Malta, albeit at a slower rate than in other Western economies.
Forty-six per cent of local consumers shop online, even if the €40 million spent is miniscule in the context of the total sales made by retailers.
Parliamentary Secretary for Economic Growth José Herrera reflected the frustration that many local consumers experience when he said: “We can’t not act when we see that the majority of Maltese sites not only fail to offer the facility to shop directly from their site, but nor do they offer a product catalogue or a price list.”
The government is right in taking the initiative to accelerate the adoption of e-commerce by local businesses by issuing a consultation document that outlines a national strategy on the future of electronic business.
But businesses also have an important role in the development of this sector.
Most consumers find the websites of many local businesses uninteresting compared with those of international businesses, so they decide to buy their goods from foreign online retailers.
True entrepreneurs that are able to read the trends developing in the retail market need little encouragement to invest in new ways of delivering goods and services to their clients.
They need no fiscal incentives to build up competitive advantage by, for instance, investing in attractive and functional websites that promote their services to a worldwide customer base.
In the past, e-commerce was slow to take off because of perceived as well as real issues relating to payment security.
Many of these have now been resolved and there are ways whereby online payments can be made in a secure way.
But banks need to continue to educate the public on how best to make electronic payments to avoid bad experiences that may lead to a loss of trust in e-commerce by consumers.
The advantages of investing in e-commerce facilities are indisputable both for the retailer and the consumer.
Start-up costs for a new e-commerce business are low when compared with setting up a traditional retail outlet.
Retailers that adopt an e-commerce model do not need a large inventory or even big and expensive premises.
For some consumers physical retail outlets remain their preferred option for buying goods and services. So businesses that adopt a ‘clicks and bricks’ delivery strategy can have the best of both worlds.
But retail businesses that fail to invest in e-commerce facilities risk missing the opportunity to win the hearts of today’s consumers.