Ecommerce in Malaysia: The Driving Forces Behind the Surge

Ecommerce is a proliferating and ever-changing industry. Every year, several new trends come up that can help businesses grow and outdo competitions, and 2021 is no different. Yet, this has to start by adopting a digital-first mindset. Ecommerce is the way forward in today’s tech-savvy world no matter where you are.

Just about two decades ago, ecommerce was just a distant thing. It wasn’t even a word that spits out at the tip of our tongues. Fast forward today, this word is by far the word of everyday life. Everyone knows what ecommerce is today, from school kids right up to retirees enjoying their lives. Especially with the 2020 coronavirus pandemic, ecommerce has taken a sudden leap in fame. With the lockdowns and work from home orders, from startups to small businesses right through to big brands, everyone is jumping in on the bandwagon. What’s more, today’s convenience focused society is all about buying and selling without lifting a finger, thus making ecommerce a flexible solution for both business and buyers.

What is Ecommerce truly mean?

Ecommerce is an umbrella term that includes all business or commercial transactions. It defines the exchange of goods and services across the internet, without time and distance as barriers. Online auctions, payment gateways, internet banking, and online ticketing also come under ecommerce. It all started back in the early 90s when the internet opened for business. It was the first step towards opening up a shop online. Giants Amazon and Alibaba jumped in and capitalised on the growing digital marketplace in the mid-90s to become what we know of them today. Ecommerce has entirely revolutionized the business landscape. It went from being an essentially non-existent business model to becoming a potential threat to the traditional brick and mortar stores as we know it.

In true modern-industry fashion, ecommerce hasn’t just grown exponentially. It has evolved and transformed over time to meet the ever-changing whims and needs of the modern-day consumer. Truth be told, ecommerce comes with a lot of benefits. It broadens the brand’s visibility with presence in markets you never dreamed of, it is convenient as it is available all day, greater marketing tools that allow for a huge number of marketing techniques to work alongside the business, flexibility in consumer experience as well as business growth with the ability to adding more lines and payment options even customisation. Ecommerce offers businesses a whole range of opportunities, from marketing and branding opportunities to increasing your products ranges to generating more sales.

ecommerce in Malaysia

How has the pandemic changes the landscape of eCommerce in Malaysia

That said, closer to home and in the current pandemic times, where social distance is vital, ecommerce has become a must. Going digital is what most businesses must adjust to post-pandemic. In Malaysia, ecommerce is on the rise, in fact, Malaysia is one of the top countries in Southeast Asia with a booming ecommerce trend. Malaysia’s tryst with ecommerce started in 2004 with the launch of eBay Malaysia. This was followed by Lelong in 2007, a platform that attracts more than 9.56 million visitors per month. As how trends are, more companies joined in thereafter, namely Mudah, and the now giants Lazada, Zalora, and Shopee. It comes as no surprise when you start seeing other new names such as Vettons, Instahome, CakeTogether, GoGet popping up in almost all industries possible. Malaysia’s ecommerce market is worth US$ 4.3 billion and is expected to reach MYR51.6bn (US$12.6bn) by 2024, increasing at a compound annual growth rate (CAGR) of 14.3% between 2020 and 2024. The immense ecommerce growth in Malaysia can be attributed to the pandemic as with the rest of the world. The closure of physical stores due to lockdown and social distancing measures have led consumers to ramp up online shopping, gradually shifting from offline buying trends. With a population that is digitally-savvy, trend-conscious, and with a huge appetite for all things technological advancement starving for international recognition and competitiveness, it is really an acceleration that is bound to happen. The country’s rapid economic growth and advanced digital technology infrastructure also make it an attractive market for ecommerce. Having the most extensive internet penetrations in Southeast Asia (85.7%) and its mobile penetration accounting for about 140%, Malaysia holds the crown of fastest emerging ecommerce markets across the Southeast Asia region.

Contributing Factor in The Growth of Ecommerce in Malaysia

Surge of FMCG eCommerce

A surge in FMCG ecommerce is also a factor driving the rapid growth with more people purchasing groceries online. Preferred digital payment options have also seen the rise in e-wallet platforms such as Boost, Touch N Go, GrabPay, BigPay, AliPay, even cryptocurrency payment options, and so forth. Consumer comfort in digital payments has made Malaysia an outlier with bank transfer and digital payments accounting for a whopping 93% ecommerce transactions. Prior to the pandemic, government initiatives have not been excruciatingly supportive though there have been a few here and there, however with the economic slowdown brought upon by coronavirus, this momentum has sped up tenfold with the government rolling out ecommerce strategic roadmaps and initiatives to increase internet accessibility to rural areas, improving e-wallets technologies, and introducing campaigns to drive ecommerce adoption among small businesses.

ecommerce in Malaysia

Increase of Mobile User

A large mobile-audience population in the country also contributes highly to the ecommerce growth. Consumers in Malaysia have been quick to adapt to mobile commerce and 80% of smartphone users now use their devices to shop online. Within the mobile category, apps are the most preferred ecommerce channel and used for 64% of transactions. This has made it a lot easier for businesses to reach their target markets. Coupled with data-driven marketing techniques and the evolution of the digital landscape, businesses are now more equipped to customise and cater to specific demographics via social media channels and email marketing with content that aim for high conversion rates. Price points, mega sales, and low shipping costs also play an important role in driving the ecommerce boom in Malaysia. Known as the super shopping day, ecommerce events in Malaysia like 11.11 and 12.12 that offer higher discounts (as high as 90%) are key motivators driving the highest sales.

Social Media Penetration

Of course, the biggest contributor is the extensive social media growth. Being inexpensive, social media platforms such as Instagram, Facebook, and TikTok are more efficient in spreading even the slightest information to the end audience. There were 26 million social media users in Malaysia in January 2020. The number of social media users in Malaysia increased by 1 million (+4.1%) between April 2019 and January 2020. Social media penetration in Malaysia stood at 81% in January 2020 and is expected to grow exponentially. Thus, bringing in an excellent opportunity for ecommerce retailers in Malaysia. The digital world is constantly reinventing itself with new apps, new data collection techniques, and new innovations practically on a daily basis. Simply put, the world is moving more and more into the digital realm every day. With the growing impact of the digital community affecting the way business is done, now is the time to start thinking about an ecommerce solution. It has grown to be invaluable for businesses today in order to survive the competitive market. It is essential for a positive ROI and will help in acquiring not just local customers but also individuals on the other side of the world. The Malaysian ecommerce market has been registering growth during the last few years, and further accelerated by the coronavirus pandemic. This, coupled with the growing consumer preference for online shopping, availability of customised online payment options and government support, it is without a doubt that the ecommerce market in Malaysia will only continue to surge to greater heights.

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