The rise of e-commerce in the Maldives

In an economy which is greatly dominated by tourism, the exotic archipelagic nation of Maldives holds vast potential in e-commerce. Its populace has adapted to the age of internet at a better rate than most South Asian countries; with an internet penetration rate of 76.5%, the Maldives have a higher digitalization index than India, Pakistan, and Sri Lanka. Out of its tiny population of 444,259 persons, 340,000 are estimated to be internet users. With a median age of 28.4 years, the Maldivian youth is bound to grow more tech-savvy by the day. Moreover, Maldives has a potential e-commerce market of MVR 15 billion, which is expected to grow even more in the upcoming years. However, certain obstacles still exist which hinders the Maldives from reaching its full potential in e-commerce.


Present Situation


In 2009, the Maldivian public saw the entry of, a first of its kind online marketplace. Nine years later, this June, Ms. Mariyam Wisam of Lanikea Trade officially launched, the most advanced online marketplace in the Maldives yet. Koo is designed to eliminate the third parties that connect sellers to consumers. It is equipped with updated security features, giving the sellers the ability to sell without creating a website, as well as flexibility and accountability for the sellers by allowing consumers to pick up their goods directly from the small businesses they buy from. It also offers sellers training in subjects like merchandising, buying, packaging, and cataloging, etc.

In addtion to marketplaces, even banks have joined the digital revolution in the Maldives.  Back in 2016, the Bank of Maldives collaborated with Epic Lanka to introduce BML Mobile Pay, which enables the user’s phone to make and receive payments. The developers also made sure to make the interface as user-friendly as possible without compromising any sensitive card or account information. The Maldives Monetary Authority, too, sensed a need for a mobile payment system. The MMA suggests that, owing to the Maldives’ dispersed geography, financial services via existing mobile networks would prove to be much more cost efficient compared to setting up conventional bank branches. For this, the MMA licensed ‘Ooredoo Maldives Private Limited', which allows customers to register for a "Mobile Wallet Account" to deposit, withdraw, pay and send money in Maldives instantly through mobile phones.


Challenges faced


While legislation which regulates mobile payment services and money transfers exists, there still needs to be a trustable online payment portal which the public can rely upon. Although websites such as Koo have come up with feasible payment methods such as Cash on Delivery, the people of Maldives will need time to adjust to the rapid digitalization.


The lack of a well-connected postal service is also a major drawback. Being a small island nation with thousands of tiny islands scattered in a vast area of sea, transportation is an important factor in sustaining an online marketplace. A similar situation is faced in Samoa, another island nation, where an assessment from the UNCTAD (United Nations Conference on Trade and Development) suggests that a lack of a postal addressing system limits the scope of e-commerce.


Developments required


A study conducted by UNCTAD of the relationship between e-commerce and tourism in China revealed significant differences in performance between the types of tourism websites, and online travel agencies were found to perform better than other types of traditional websites.

Similarly, Maldives should employ its already dominant tourism industry to bolster the development of e-commerce. This could be done by eliminating travel agents and setting up online travel agencies, thus giving the consumer access to greater products and the ability to compare among different platforms in an immediate and convenient fashion.

The UNCTAD study also suggests that better port facilities and increased transportation options would make e-commerce less expensive. Therefore, the Maldives needs to work towards building a better infrastructure for shipping goods between individual islands and a better postal delivery service. By adopting these minute developments, the Maldives can reach its potential in e-commerce and come forth as one of the most successful e-economies of South Asia.