The allure of online shopping and the risk to small businesses

Recently, online shopping sites like Temu and Shein introduced shipping to Maldives, giving rise to a new trend amongst consumers. Many now lean towards ordering clothes, household items, electronics and other products online from ecommerce sites as opposed to relying on local businesses.

In fact, this became so popular that a few months ago, Maldives Post was struggling to meet the demand, with customers facing huge delays in receiving packages due to a backlog the Post Office was working extended hours to cope with. This has since been resolved with Temu adding new shipment options, such as CPEX and RedBox.

Some have raised concerns that this new trend of ordering online from retail giants poses a threat to small businesses operating locally.

Others, however, cite marked up prices in local businesses, which often resells items brought in from the very same sources, as well as the vastly higher range of products on offer on the apps.

Bank of Maldives, meanwhile, raised the foreign transaction limit on debit cards from USD 250 to USD 500 in July, but at the same time imposed a 30% charge on transactions on a number of e-commerce websites including Temu and Shein. This charge, however, does not apply for credit card users.

“There’s no longer as much demand for clothes and other such regular products that we put up for sale,” one small business owner told The Edition.

“But if we bring more quirky products, like band merch or interesting gadgets, they still sell up fast,” they said.

Another seller who used to run an Instagram page selling fast fashion said that she had to shut down her page due to being unable to make a profit through apparel sales anymore.

“We used to bring in clothes online, as well as from nearby Sri Lanka and India. But obviously, the choices we offer are limited, in terms of design and even available sizes. People can just go online and order from such a variety of cheap clothing options now, so they no longer opt to settle for choices from the limited collections a shop like ours can offer.”

Another seller, who runs a small shop in capital Male’ City, said that there are still some customers who prefer to physically see the items they buy rather than choose through photos and reviews.

“That is pretty much the only advantage we can offer right now. People can try on clothes, check the products for themselves before buying them. There’s also the fact that the products are immediately in their hands upon purchase. Oftentimes, sales at our shop now are from people looking to make last minute purchases, like a dress for a wedding this weekend, or gifts for a fast approaching birthday.”

“We see pages on Instagram trying to sell us stuff for three, five hundred rufiya when the exact same thing is available on these sites for like USD 2 (MVR 30). I can understand the need to add a profit, and to cover overheads and shipping charges and such, but the markups in price are ridiculously extreme,” said Hamna, who now does most of her shopping online.

Ismail, meanwhile, said that his preference for online shopping stems from the easier availability of clothes sizes.

“I’ve always struggled to find plus size clothing in Male’ that fit with my style. With the advent of online shopping, this is no longer an issue for me.”

Isha, meanwhile, had only one thing to say, “It’s my money. I earned it. I can spend it wherever I like. It’s not my responsibility to prop up businesses, especially those owned by the rich and powerful, when their business is basically bringing in stuff for cheap and selling it at inflated prices. Now, if we are talking about small businesses that are also local creators, then yes, absolutely buy from them. I believe they’re the people who need public support, artists and entrepreneurs offering original products.”

Others argue that it is an irresponsible use of foreign currency to buy products online at this time when Maldives is in the midst of an ever worsening dollar shortage.

The response to this from those who are regular online shoppers is that, especially with the transaction limits imposed by the bank, it is only a small dip that online shopping would cause to dollar supply. They believe that the use of dollars in this context is justified by the better options that are received by customers.

Bank of Maldives, meanwhile, have said that Maldives spends over USD 45 million per month on foreign purchases, 75 percent of which is used for online e-commerce transactions. The bank said that Temu alone makes up over USD 7 million a month.