Published on and written by Cyril Jarnias
Online commerce is growing everywhere in Portugal, and the archipelago of Madeira is no longer immune to this wave. Long considered a peripheral market dominated by tourism and local trade, the territory is gradually shifting toward a model where physical stores, websites, marketplaces, and social media intertwine. This transition is neither happening at the same pace as in Lisbon or Porto, nor under the same constraints, but it is already shaping new opportunities for local businesses, especially the SMEs that form the backbone of the regional economy.
Madeira in the Portuguese e‑commerce landscape
The Portuguese e‑commerce market shows sustained momentum, with annual growth estimated between 8 and 11% depending on the analysis period. The total volume of online sales already runs in the billions of euros, and projections point to a doubling of market value within the next decade. In this expanding national context, Madeira lags behind but is clearly on the move.
Percentage of e‑commerce users in the autonomous region of Madeira, well below the national average.
Yet signs of catching up are clear. The growth of e‑commerce is spreading to peripheral and island regions, including Madeira, driven by improved internet coverage, accelerated 5G deployment, and a national policy firmly focused on digital transformation. The issue for Madeira is no longer whether e‑commerce will take hold, but how the territory can benefit from it without being overwhelmed by logistical constraints and competition from international giants.
An economy dominated by SMEs
In Madeira, small and medium-sized enterprises account for 99.9% of all companies in the autonomous region. They provide the bulk of employment and wealth creation in a territory where services, largely driven by tourism, weigh the most in the regional GDP. This configuration makes the region particularly sensitive to shocks—as the pandemic showed—but also highly responsive when simple, affordable digital tools are made available.
Research reveals that virtually no specific studies on e‑commerce adoption by Madeiran SMEs existed before recent work. This statistical gap led public policies and support programs to act without precise data. Programs like DIGITAL Madeira and Smart Islands Hub were launched to fill this knowledge and skills deficit.
The profile of online consumers in Madeira
A field study conducted in the autonomous region, based on an online questionnaire with 100 respondents, provides initial insights into the role of online commerce in residents’ daily lives. Despite the small sample size, the most striking result is: approximately 92% of respondents report having made at least one online purchase.
This indicates that the main obstacle is no longer discovering the digital channel, but rather frequency of use, average basket size, and the types of products purchased. The study explored several dimensions: product types, spending levels, perception of advantages and disadvantages, the role of the pandemic, and the influence of socio-demographic variables.
Perceived advantages and barriers
Residents of Madeira cite three main strengths of e‑commerce:
Discover the main benefits of online purchases, particularly relevant for island residents.
Enjoy rates often more advantageous than local stores.
Order anytime without leaving home.
Access a much wider selection than what is available locally on the island.
Conversely, three barriers consistently appear:
– the inability to test or try products before purchase,
– shipping costs, often higher to the archipelago,
– and delivery times, longer than on the mainland.
These limitations are not only perceived: they reflect well-documented logistical realities. Deliveries to Madeira can cost up to twice as much as to a mainland address, with surcharges of 3 to 5 euros per order and average delivery times of two to three days. Nationally, the additional cost of the “last mile” in rural and island areas like Madeira has an estimated impact of –1.9% on the annual growth of e‑commerce.
Socio-demographic profiles and purchasing behavior
Statistical analysis of the responses gathered in the autonomous region reveals several nuanced trends.
Contrary to the stereotype, each additional year slightly increases the probability of spending more online (approximately +0.8% odds ratio per year). The rise of older age groups is gradually changing the profile of the digital buyer in Madeira.
Next, gender has a measurable effect: all else being equal, women have higher chances than men of spending more online. The study estimates that the probability of higher spending is about 1.175 times greater for female residents than for male residents.
During the pandemic, unvaccinated individuals or those who reduced their Covid-19 preventive behaviors paradoxically showed a stronger tendency to increase their online spending than vaccinated or more cautious individuals. This illustrates that e-commerce does not simply replace physical interactions out of fear of risk, but coexists with complex trade-offs between health, budget, and lifestyle habits.
A more unexpected aspect: those who say they use more cash also see their chances of spending more online increase, as do people who maintain a stable use of cash. This suggests that, in the Madeiran context, cash usage does not necessarily oppose digital channels, but hybrid behaviors are emerging, particularly thanks to local payment solutions like MB Way.
Finally, households’ economic situation strongly influences purchasing behavior. Residents who report greater difficulty making ends meet significantly reduce their online spending, while those who received public transfers or support bonuses show a greater propensity to consume online.
A tourist island in digital transition
To understand e‑commerce trends in Madeira, one must consider the enormous weight of tourism in the local economy. According to various estimates, tourism accounts for about 21 to 23% of regional GDP and between 14 and 15% of employment. The archipelago welcomes roughly one million tourists per year, with more than 7.5 million overnight stays recorded in recent reference years.
To ensure the long-term sustainability and resilience of the tourism sector, it is crucial to strengthen it over time with adapted infrastructure (such as a deep-water port for large ships) and a sustained, regular international promotion strategy, following the model of Madeira’s successful development.
What tourists buy… and what it implies online
The purchasing behaviors of visitors provide a valuable clue about what could develop through e‑commerce. A survey conducted in 2021 on the products most frequently bought by tourists highlights the success of Madeira wine and small souvenirs (magnets, postcards), cited by more than 65% of respondents. Next come the traditional bolo do mel (honey cake), other alcoholic beverages, tropical fruits, plants and seeds, cork products, ceramics, azulejos, and hand-embroidered fabrics.
The following table summarizes the main purchases cited by tourists in this survey:
| Product most often bought by tourists | Share of respondents citing the product* |
|---|---|
| Madeira wine + small souvenirs (magnets, cards) | 65.76% |
| Bolo do mel (honey cake) | 60.87% |
| Other alcoholic beverages | 45.11% |
| Tropical fruits | 33.15% |
| Flower/plant seedlings and seeds | 28.80% |
| Natural cork products | 27.72% |
| Aguardente, ceramics, azulejos | 26.09% |
| Embroidered fabrics and textile crafts | 25.54% |
| Traditional clothing and headwear | 18.48% |
Data from a survey of tourists visiting Madeira.
Today, the majority of these purchases take place offline, in markets, specialty stores, wine cellars, and craft shops. But the rise of Portuguese e‑commerce, combined with European aid directed toward inland and island regions, paves the way for a digital extension of these traditional sectors.
Portuguese market observer
Artisans from remote mainland regions already sell wine, olive oil, or local products across the territory thanks to online stores and marketplaces. Madeira can join this movement by leveraging its strengths: strong identity products, a positive tourist image, and an international clientele attached to the destination.
Island logistics: the double penalty of cost and time
The main structural weakness of Madeira in the e‑commerce race remains logistics. National analyses highlight that the archipelagos of the Azores and Madeira face persistent delivery surcharges, longer delays, and structural constraints linked to geographic remoteness.
The main points emerge as follows:
| Logistics indicator for Madeira | Situation observed |
|---|---|
| Average delivery cost compared to mainland | Up to x2 |
| Surcharges applied per order to the islands | 3 to 5 € |
| Typical delivery times | 2 to 3 days |
| Impact of “last mile” costs on national e‑commerce growth | Approximately –1.9% CAGR |
Added to these structural constraints are seasonal peaks linked to tourism. During high season, the influx of visitors creates pressure on all infrastructure—airport, port, roads, delivery services—exacerbating the risks of delays, missing packages, or additional costs.
For Madeiran merchants, these realities translate into difficult trade-offs: offering free delivery or not, absorbing part of the extra costs, limiting shipping to certain products or areas, or pooling logistics through specialized platforms. Players like Celeritas, which claim national coverage including the archipelagos, attempt to bridge this gap with adapted services (pick-up points, simplified returns, cash on delivery). But the cost differential remains significant.
A rapidly improving digital infrastructure
If logistics remain the Achilles’ heel, the digital infrastructure is improving quickly. Nationally, Gigabit coverage already exceeds 94%, fiber-to-the-home about 92%, and 5G covers more than 98% of the population. The obligations imposed during the 5G auctions also provide for targeted coverage improvements in all parishes of the autonomous regions of Madeira and the Azores.
Portugal is one of the European countries best placed to achieve near-total very high-speed broadband coverage well before the EU’s 2030 deadline. This reliable connectivity is essential for the mass adoption of online services by businesses and consumers.
In Madeira, this momentum is reinforced by specific programs:
Discover the main programs and initiatives that help Madeiran businesses digitalize and innovate through grants and expert support.
Supported post-Covid recovery by funding the purchase of computer equipment, software, the setup of digital storefronts and e‑commerce processes for SMEs. Non-repayable grants of up to 60% of eligible expenses.
Offers up to 45% non-repayable grants for high-value-added projects, including in the digital domain.
Digital innovation hub led by ARDITI and a consortium of eight partners. Supports companies in adopting advanced technologies (IoT, AI, cybersecurity) and redesigning their business models around digital.
These initiatives anchor Madeira in the Portuguese network of digital innovation hubs, which aims to irrigate the entire national economic fabric, not just major metropolitan areas.
Madeiran SMEs: from survival to omnichannel strategy
The Covid‑19 pandemic served as an accelerator shock. Many local businesses in Madeira saw their turnover drop by more than 60%, with some forced to close temporarily or permanently. For others, the shift to digital became a matter of survival.
A national survey of 652 companies shows that 56% of them did not sell online before the pandemic but started doing so after the health crisis. Among those that made this shift, a significant portion saw meaningful sales increases, up to +40% for a minority. Sales through digital channels represent on average 23% of turnover for companies that diversified into e‑commerce.
In Madeira, local commerce, heavily dependent on tourism, had to adapt quickly to new constraints. Within months, it implemented solutions such as online stores, order taking via social networks or WhatsApp, local delivery, click-and-collect, and presence on marketplaces, accelerating its digital transformation.
Platforms and tools: an already available toolbox
Madeiran SMEs rely on a landscape of now well-established solutions:
Percentage of e‑commerce payments made via MB Way in Portugal at the end of 2025.
Beyond technology, the crisis also highlighted the need to equip small businesses with analytical tools (sales statistics, customer data, campaign tracking) and digital marketing skills. Programs like #5 DIGITAL SME JOURNEY explicitly aim to raise this “digital maturity level” by accompanying SMEs at each stage: awareness, diagnosis, roadmap, training.
Digitalization, circular economy and e‑commerce: the case of Madeira Beer Company
One of Madeira’s specificities is the growing connection between digital transition and circular economy. The Madeira Circular platform already lists dozens of examples of local businesses that have integrated circular practices, with an increase of about 60% in the number of referenced cases in 2021. This momentum is boosted by digitalization, which facilitates traceability, material flow management, consumer information, and the implementation of new business models (rental, reuse, exchange platforms).
Madeira Beer Company implemented a deposit system for glass bottles, preventing millions of containers from going to landfill and reducing CO₂ emissions by about 240 tons. The company uses sophisticated systems to sort, inspect, and wash returned bottles, and has also lightened the weight of its PET bottles to reduce plastic waste.
At events like the Funchal Market Night, the company also innovated by introducing reusable cups, eliminating approximately 600 kg of plastic waste. This type of initiative fully integrates into the logic of circular platforms where digitalization—deposit management, flow tracking, real-time communication with customers—is a performance lever.
A local brand focused on sustainability and circular innovation has a strong commercial argument for developing its e‑commerce. This advantage allows it to effectively target both local residents and tourists wishing to purchase its products remotely, even if specific quantitative studies for the sector remain to be clarified.
Mobile, digital payments and purchasing behaviors
At the national level, Portuguese e‑commerce has entered a “mobile first” phase. Smartphones already account for more than 70% of online transaction volume, and annual growth of payments via digital wallets exceeds 13%. MB Way has established itself as a standard, while bank cards retain a significant share (about 43.7% of e‑commerce payments).
In Madeira, smartphone penetration is near-total among 18-54 year-olds and 5G coverage is improving rapidly. These factors favor omnichannel purchasing behaviors, such as comparing prices on mobile in-store, ordering online for in-store pickup, or using review platforms and social networks to choose a product or restaurant. However, no specific statistical data for the archipelago has been published.
Globally, studies confirm the rise of mobile wallet payments, which are expected to account for more than half of online transactions worldwide, supported by enhanced security features (biometric authentication, tokenization, PSD2 compliance). For a tourist region like Madeira, this means that adapting payment systems to international habits (Apple Pay, Google Pay, PayPal, etc.) becomes a strategic issue, whether online or on-site.
Social media, tourism and local commerce: the Madeiran experience
The relationship between e‑commerce and social media is particularly evident in Madeira. A case study conducted in Funchal followed 128 traditional stores over one year, from March 2010 to March 2011. After a diagnosis and support to deploy Facebook pages, YouTube videos, Google Ads campaigns, and newsletters, more than 85% of these shops had changed their marketing practices.
To compete with large chains, merchants can use social networks for precise targeting (age, location, interests) and rely on customer feedback to co-create their offering, capitalizing on the close relationship.
International studies confirm the power of these levers: about 70% of consumers say they are influenced by social networks in their purchasing decisions, 71% are more likely to buy a product after a recommendation on these platforms, and more than half have already interacted with a brand via Facebook. Moreover, the probability of making a purchase within the same day increases significantly after exposure to targeted commercial content.
In Madeira, where the image of the destination is paramount, a restaurant or craft shop well-referenced on Instagram, with positive reviews and attractive content, can not only capture tourist spending on-site but also extend the commercial relationship through subsequent online sales.
Attractive taxation and international business center: a lever still to be exploited for e‑commerce
Beyond infrastructure and demand, Madeira benefits from another advantage often cited in analyses: a more favorable tax regime than the mainland. The corporate income tax rate applied in the autonomous region is 14% compared to 19% in mainland Portugal, with a proposed reduction to 13.3% conditional on the adoption of a regional budget. Added to this is the Madeira International Business Centre (MIBC) regime, extended until 2033, offering a 5% tax rate for certain internationally oriented activities.
The archipelago aims to become a platform for companies engaged in non-financial activities, such as international trade, holding participations, intellectual property management, or information technology. Some companies there already develop software, applications, or consulting services, demonstrating the region’s ability to host high-value-added digital activities.
For now, there is no indication that the MIBC has been massively used to structure large-scale e‑commerce platforms, but the potential exists. By combining this tax advantage, improved digital infrastructure, the offering of digital innovation hubs, and a harmonized European framework (Digital Services Act, Digital Markets Act, GDPR), Madeira could attract regional e‑commerce operators or those specialized in certain niches (sustainable tourism, crafts, wine, circular economy).
Long-term challenges: skills, trust, and logistical fragmentation
Despite the many strengths, several obstacles remain on the path to truly inclusive e‑commerce in Madeira.
Online sales by local SMEs are hampered by several factors: a lack of digital skills (site management, digital marketing, cybersecurity), high perceived risk by consumers (fraud, privacy), logistical constraints due to insularity, and strong competition from large international platforms and national leaders.
Toward a Madeiran model of e‑commerce
The observed trends converge on the idea that the future of e‑commerce in Madeira will be deeply hybrid. It will not be about replacing markets, downtown shops, or wine cellars with anonymous warehouses, but about building bridges between physical presence, digital storefront, social media, and logistics adapted to insularity.
Several key elements are emerging:
Strategic axes identified to develop a resilient local economy turned toward the future, integrating digital at the service of businesses and territories.
The physical store becomes a point of sale, a mini-warehouse, and a showroom for national or international orders.
Visitors can find the brand and order from their home country via a multilingual site, marketplace, or social media.
Driven by resale and reuse platforms, meeting environmental expectations and logistical constraints.
Streamline the purchasing journey for residents and tourists, online and offline.
Use of RRP, Madeira 2030 and innovation hub programs to fill skills gaps and secure investments.
In this changing landscape, the central question is not whether Madeira will catch up with Lisbon in sales volume, but how the archipelago can invent a model of e‑commerce that suits it: rooted in tourism, proud of its traditional products, environmentally conscious, and agile enough to leverage the most advanced digital infrastructure in the country.
This model will not be built overnight, but the pieces of the puzzle—taxation, infrastructure, public initiatives, consumer behavior, inspiring examples—are already in place. The challenge of the coming years will be to assemble them coherently, so that e‑commerce in Madeira becomes not a threat to local commerce, but a natural extension of what makes the island unique: its ability to welcome, to tell stories, and to build loyalty.
Analysis on the future of e-commerce in Madeira
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Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
