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Malaysia Ecommerce Landscape

Malaysia may be the second smallest Southeast Asian nation but it doesn’t lack ambition to develop itself into a powerhouse. Prime Minister Najib Razak recently out-hustled neighbour Indonesia to appoint China’s ecommerce tycoon Jack Ma to advise the country’s government on its route to develop a strong digital economy.

These ambitions don’t come out of thin air. In 2015, Malaysia’s ecommerce market was estimated at $1 billion, which constitutes 1.1% of country’s total retail sales (though these numbers may be skewed). Malaysia’s ecommerce market is on a par with Singapore not only in market size, but also in terms of the well-developed infrastructure within the country compared to the rest of Southeast Asia. This might explain why Malaysia is the origin for some of the biggest tech companies in the region such as the taxi hailing app Grab and Catcha’s iProperty Group.

In the next ten years, Malaysia is predicted to increase the online shopping market size eight-fold to $8 billion, but where does the country’s ecommerce stand now? ecommerceIQ shares ECOMScape: Malaysia to provide a quick overview.

1. Surprise, surprise, Lazada emerges as the leading mainstream platform

Lazada, Southeast Asia’s clone of Amazon, has emerged as the leading business-to-consumer (B2C) marketplace in Malaysia with around 20 million visitors per month while closest rival 11street.my, a South Korean marketplace, grew to become the second biggest online marketplace with more than 7 million visitors per month only a year and a half after launching.

Malaysia Ecommerce Landscape

Locally-run Lelong.my, which started as an electronics auction site but now turning itself into a B2C marketplace, gets around 6 million visitors per month.
While these companies are still competitors to Lazada, none of them pose a real threat to Lazada’s leading position, especially after its acquisition by Alibaba earlier this year (deep pockets)

2. Service providers are early online adopters

Malaysia’s online space is filled with service providers who choose to sell services through ecommerce to happy users. A smart move considering 50% of Malaysians in a recent PwC Survey said they shopped online because of convenience.

These early adopters include:

  • KFIT: started its fitness business in Malaysia offering a subscription model for unlimited access to various gyms, and has now expanded to other categories such as selling online spa and beauty procedures.
  • GoCar: car rental by the hour or day through mobile app that offers an alternative to car rental and car ownership in Malaysia’s capital Kuala Lumpur.
  • ServisHero: a mobile marketplace that allows search and booking of home service providers such as a plumber or repairman.

Malaysia Ecommerce Landscape

3. Mobile shopping platforms on the rise

66% of consumers surveyed in the PwC report have used their phones to make purchases. It implies that the majority of 50% of respondents who have started shopping online in Malaysia within the last three years are heading straight to mobile marketplaces.

Among Malaysia’s most popular shopping apps are companies such as local imSOLD, Singapore-based Shopee and Carousell, Japan’s Qoo10 and global players like Taobao and eBay.

Malaysia Ecommerce Landscape

As Malaysians on average spend 3 hours per day on social media, social commerce becomes quite popular – 31% of online shoppers in Malaysia have purchased directly via a social media channel. The most common being Facebook and Instagram, which is preferred by 41% and 22% of Malaysians, respectively.

4. Good banking system means one less problem for ecommerce

Malaysia has well-developed banking infrastructure and as a result, its residents are more accustomed to digital payments than most Southeast Asian nations. 37% of Malaysia’s population uses mobile banking, while nearly 20% made digital payments and used banking cards in 2014.

According to the global payments solution provider Adyen, the preferred payment method of 42% online shoppers is online banking where shoppers are redirected to their online banking environment to complete purchases.

Malaysia Ecommerce Landscape

Source: The Global Ecommerce Payments Guide by Adyen

As a result, there are plenty of payment gateway solution providers in Malaysia, yet few companies offer mobile wallet solutions as they would struggle to change Malaysian habits regarding using online banking.

Malaysia Ecommerce Landscape

5. Newcomers fight to grab a share of logistics

Successful ecommerce in Malaysia has contributed to increased competition among logistics service providers. The country does not have major infrastructure issues such as islands or bad roads like in the Philippines and Indonesia, posing less obstacles for startups to offer straightforward parcel delivery.

Malaysia Ecommerce Landscape

Traditional last mile delivery companies such as POSMalaysia, Nationwide Express and SkyNet have been somewhat lagging behind adopting new technology and are now being challenged by newcomers like Ninja Van, who proudly states it’s “powered by proprietary cloud-based technology”.

And it’s not only rookies in logistics fighting for their share. In Malaysia, the competition is quite tough among fulfillment service providers who focus on serving the needs of online merchants.

Companies such as DHL, SP Ecommerce, aCommerce, theLorry.com and others are battling for clients not only among themselves, but also with the biggest client – Lazada.

Malaysia Ecommerce Landscape

Lazada already pushed its own logistics service, Fulfillment by Lazada (FBL) in Malaysia, Singapore and the Philippines. The online marketplace offers end-to-end fulfillment solution at a fixed cost per item delivered. As the biggest player in the market and scaled operations, Lazada’s price may be hard to beat.

“Increasingly, having an online shopping functionality is becoming the norm, rather than the exception and it is only going to be more widespread,” said Jon-Paul Best, Head of Financial Services for Nielsen Malaysia.

Click here to download the full, high resolution version of ECOMScape: Malaysia and join the ecommerceIQ network to not miss out on ecommerce market trends and insights.

For more information on other ecommerce landscapes, take a look at:

ECOMScape: Indonesia

ECOMScape: Thailand

ECOMScape: Singapore

ECOMScape: Philippines

personal touch in Ecommerce Thailand

Source: Dario Pignatelli — Bloomberg/Getty Images

A global survey by PriceWaterhouseCoopers revealed that more than 51% of Thai online shoppers made their purchase via social media. In second place is India with 32%, followed by Malaysia and China at 31% and 27% respectively. This trend is driven by the key consumer trend, which is based on trust.

The importance of personal touch in Thailand ecommerce 

The “personal touch” that shopping via social media offers has been highlighted as a reason behind this environment of trust, which the larger ecommerce companies selling products via websites are unable to muster. LINE or Instagram accounts allow people to communicate directly with sellers, unlike the impersonal experience with web administrators of an ecommerce website, says Pavida Pananond, associate professor of international business at Bangkok’s Thammasat University.

Thailand’s B2C Stats

  • Products $14- $42  per order, accounted for  approximately $13.4 million of Thailand’s $59.7 billion of ecommerce sales in 2015
  • B2C sales in 2014 came to $11.6 million, out of $57.4 billion in total ecommerce sales

However, social commerce has also had its share of bad eggs. The mainstream media and online chats are occasionally peppered with reports of unscrupulous sellers trying to rip off unsuspecting buyers in this predominantly cash-based market, where cash still accounts for 90% of payments nationwide.

However, such setbacks barely dented the direction the online market is taking. The subsequent spread of ecommerce is reflected in the online trade countrywide, with once-dominant Bangkok now accounting for just 30% of the market, with the majority of ecommerce transactions now taking place in the provinces.

“In the provinces, it is not about the online experience but an easier way to get stuff you want,” says Santit Jirawongkraisorn, co-founder of Lalamove, a Bangkok-based logistics company.

A version of this appeared in Nikkei Asian Review on June 26. Read the full article here.

Walton Brown, a brand management company under The Lane Crawford Joyce Group and eCargo, a China-based ecommerce enabler have announced a strategic joint venture to capture the Chinese market in an official press release July 25.

The two companies will join forces to under WWE & Company Limited (WWE) and launch a social mobile, multi-brand, lifestyle eMarketplace — MyMM.com — in early 2017 offering a product range of fashion, beauty and lifestyle items from international brands exclusively to customers in China.

The new company is initially capitalized at $45 million (RMB300 million) and will be led jointly by Thomson Cheng, President of Walton Brown, and Christopher Lau, CEO and Founder of ECG.

The newly formed WWE brings together two companies with very specific and different specialties; Walton Brown is a brand management company and eCargo is a specialized logistics and tech ecommerce enabler for brands in China and Australia.

According to ‘The China Playbook’ by Boston Consulting Group,

The company will tap into China’s growing mobile ecommerce market, predicted to account for 74% of all online sales by 2020 

WWE promises to provide profitable opportunities for international brands to accelerate growth and a viable option for new brands to launch into China for the first time to capture new consumers, leveraging the government’s new regulatory direction to facilitate cross-border transactions.

The press release can be found here.

Service image of Gotcha!Mall Source: Trans-cosmos.co.jp

Service image of Gotcha!Mall Source: Trans-cosmos.co.jp

Transcosmos, the Japanese retail solutions provider for ASEAN apparently brought Japan’s Gotcha!mall to Thailand. Gotcha!Mall is an omni-channel web-based app that encourages consumers to purchase items at brick-and-mortar stores using coupons on their smartphones. The platform covers major retail stores and restaurants for everyday living, such as convenience stores, supermarkets, drug stores and fast food chain restaurants, according to its press release on May 22, 2016.

Transcosmos, together with a major conglomerate and Transcosmos strategic partner, SAHA GROUP, the largest consumer goods retailer in Thailand has a goal to win 40 million users and a special focus on Thailand, the core market within the region.

Gotcha!Mall launched in 2014 in Japan and now with a specific focus on mobile driven Thailand.Yet updates from the omnichannel platform in Thailand remains scarce.

Its  Thailand Facebook page has daily active posts but has only approximately 530 followers at the time of writing. In regards to news, there hasn’t been media coverage since its press release launch in May 2016. How significant or aggressive this player will be in the mobile commerce landscape of Thailand and Southeast Asia is largely yet to be seen and not worth ignoring.

By Anutra Chatikavanij