The Noughties started off in a haze of euphoria about how the internet was going to change the world as we know it. Expectations were sky-high and pundits predicted that the new medium would generate major new business opportunities - and that therefore existing business models would change dramatically overnight.

Vast amounts of money were invested during the 1996 to 2001 dot.com boom era, only for it to go down the drain when the bubble burst in 2001 and 2002.

The dot.com implosion may have left some industry players disillusioned, however, in retrospect, it was an important wake-up call for all those who believed in the internet. The net may be one of the most groundbreaking technological innovations of our time, but that does not mean that conducting business online is not subject to the same principles as those that normal bricks and mortar business operate under.

Online businesses are just as likely to fail as other businesses are - in fact possibly even more so because the internet levels the playing field and competition online can be fiercer than that in the "real world". After 2001 it became clear that in order to be successful online it was not enough just to have a good business idea - a strong business plan, experienced management team and cash flow management were essential in order to succeed.

In Malta the dot.com bubble was something we read about in the news and not something that affected our day-to-day life. The great majority of Maltese businesses at the turn of the century had still not seriously considered how the internet could change and improve their business. The intrepid few had invested in a brochure website and e-mail, but other than that appeared to be unaware of other potential uses of the internet.

As the years passed and we started hearing news of major success stories on the web, it became clear that the internet had particular potential for sectors such as tourism, real estate, IT services and all other businesses where selling a product/service does not involve high shipping and communication costs.

The impact of e-commerce was particularly felt in the travel sector, with Maltese companies firmly embracing the internet as an important avenue for growth and sales. Studies have shown that hotels with online booking systems have higher occupancy rates than those which do not have them. In addition direct bookings made over the internet are more lucrative than those made through a tour operator. That is why nowadays the great majority of hotels in Malta have their own online booking systems and manage a wide variety of sales channels on the web.

The retail sector in Malta, however, has not been quite as innovative and very few local businesses have set up shop online. It sometimes appears that local shops have still not realised that their competitors are not only local, but are now international. The bookshop on the corner is not just competing with other bookshops in Sliema or Valletta, but also with the likes of Amazon and Play.

Maltese consumers who want to shop online find that there is a very limited selection of local e-stores they can shop from and the result is that they end up ordering their books, DVDs, games, toys and miscellaneous purchases from overseas. This is clearly a missed opportunity for local businesses, as was highlighted by the statistics issued recently by Eurostat.

In Malta only 11 per cent of company turnover comes from sales via websites, a clear indicator, if any was needed, that there is still a lot we need to do to reap the full benefits of e-commerce. Of these online sales, only seven per cent originate from local consumers. The message is clear - local retailers and businesses are not offering potential Maltese customers a viable alternative. Let's face it, seven per cent of the 11 per cent means that local companies are only getting 0.77 per cent of their turnover from sales made online to local customers.

In an effort to encourage local businesses to increase their use of e-commerce, the government has partnered with the private sector in order to roll out an e-commerce platform for the island. The idea is to make it possible for local companies to set up their own online store at minimal cost, thus reducing the risks and barriers to entry to e-commerce to the absolute minimum. The e-Mall www.trolleymania.com is to be launched in October 2010 and feedback from industry has already been very encouraging.

In conclusion there is no doubt that the internet has had a major impact on Maltese businesses and also on Maltese consumers. It has changed the way we make our purchasing decisions and how we source goods. There is no doubt that the web revolution has reached our shores and is changing the way we interact with the world.

This is an article in a series looking back at how technology changed our lives in the past decade, known as the Noughties.

Ms Cassar is the managing director of Alert Communications Ltd, a local web development company (www.alert.com.mt).