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In a short span of 10 years, eCommerce as an industry has boomed within Southeast Asia. For a country like Malaysia, it has hit what many call an inflection point1 which can mean unprecedented growth in eCommerce. While ranking fifth in the world2 for eCommerce growth rates, Malaysia’s eCommerce skincare revenue has also increased by 8% in current value terms in 2018, reaching MYR3.2 billion.
Like its neighbouring counterparts, online shopping has made international brands accessible to more Malaysians, which they love. Additionally, Malaysia’s GDP per capita is the third-highest among ASEAN nations3. Because of that, this Southeast Asian ‘Tiger Cub’4 economy is a popular choice for eCommerce merchants to expand into in order to gain market share.
When it comes to the eCommerce personal care market in Malaysia5, there is much to look forward to. Revenue in this segment amounts to US$402 million in 2020, and is expected to show an annual growth rate (CAGR 2020-2024) of 10.2%, resulting in a market volume of US$594 million by 2024. User penetration is 23.0% in 2020, and the average revenue per user (ARPU) currently amounts to US$53.93.
Hence, as the skincare market falls within the personal care market in Malaysia, the optimistic growth rates mean that there are many opportunities for newer merchants to gain traction in the market. Additionally, specific to the skincare market, revenue has increased by 8% in current value terms in 20186, reaching MYR3.2 billion as mentioned earlier.
However, as an online merchant or a skincare brand looking to expand in Malaysia, it is important to find out more about the country's consumer demographics and skincare market overview in the country. Therefore, before we jump into details about the latest consumer trends in the industry, let’s gain a brief understanding about your potential customers and which existing brands have been popular among them so far.
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When we look at eCommerce consumer demographics in Malaysia, we’ll find that the largest age group of users fall between 25-34 at 27.9%, which belongs to the millennials. This is followed closely by those aged 35-44 at 24.6%, while the other age groups (Gen X, Baby Boomers) take up much less than 20% of the total eCommerce users.
Zooming specifically into the eCommerce personal care market, we’ll see that the largest age group of users still falls within the 25-34 age group, at an even higher percentage of 30%. This matters because different age groups have different demands8 and quirks. For instance, while the older generation may be looking for anti-ageing features, the younger generation may be looking for products that can help with acne.
Another example is that if you intend to target the largest consumer group, the millennials aged 25-34, you’d find that even though they form the majority of eCommerce users in Malaysia, they actually tend to spend less money than other age groups online9. This could be because they are known to be widely looking out for deals online to help them save on the cost of purchasing beauty products, particularly in the beauty market.
Furthermore, it is probable that this category of individuals tends to comprise of school leavers, college students or newly working adults9 who might not have high income levels yet and are on tight budgets. Hence, you may realise that one way to appeal to this age group of consumers might be to put up regular promotions to entice them to purchase your products. This is especially if your products are in the mid-tier range -- but you may have to be more careful if your products are premium goods as discounts may taint your brand image.
Speaking of income levels, the average annual income of all Malaysian households falls between RM 40,700 (US$10,000) to RM 101,000 (US$25,000)10, which is much higher than certain ASEAN counterparts such as Thailand11, but lower than Singapore12 and Brunei13. However, even though the GDP per capita in Malaysia has been rising over the years, 14 the income gap between the rich and the poor in Malaysia has also doubled15 over the last two decades.
According to Sunway University economics professor Yeah Kim Leng16, the Malaysian economy favours those with capital and high skills. Even though there are a lot of jobs in the service and manufacturing industries, those holding mid and low-level jobs have not seen much increase in their wages.
Furthermore, taxes have impacted the middle class of Malaysia17 (40% of total population) much more severely than the upper class. Hence, when entering the Malaysian skincare market, it is important to understand which segment you want to target because they have drastically different views towards prices.
On the other hand, if you want to target the upper class in Malaysia (20% of total population), their growing wealth would certainly give you various opportunities to enter the high-end skincare market.
The most popular skincare companies in Malaysia6 are multinational companies like Procter & Gamble, L’Oreal and Nu Skin with market share of 12%, 10% and 7% respectively. These companies tend to have a range with more expensive products and a range with cheaper products to cater to the different wealth levels of the population.
For instance, Procter & Gamble has SK-II, which is considered a higher-end brand and alone has 10% of brand share in Malaysia. However, Procter & Gamble also has Olay, which is a few times cheaper than SK-II and has around 2% of brand share in Malaysia.
Hence, akin to what Procter & Gamble has done, it might be good to pick one segment of consumers to focus on per brand rather than to focus on both at the same time, as your customers might be confused by your brand image. This is especially so as a newer merchant looking to enter the market. Yet, if you choose to branch out into several different brands with different products, then targeting different consumer segments can help to maximise sales.
Now that we’ve understood the Malaysian eCommerce skincare consumer demographics better, let’s take a closer look at the three main trends driving this market.
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In Malaysia, both premium and mass skincare products6 with an anti-ageing positioning remain popular among consumers. One of the leading skincare brands, Bioessence, launched ranges of anti-ageing skincare products under the names Bioessence Bio-VLift and Bio-Renew, which incorporate herbal extracts including ginseng, aloe vera and angelica, and black orchid and fermented rice.
Another leading skincare brand, L’Oréal, added an extension to its Revitalift range, with new L’Oréal Revitalift Centella Micro-Essence Water, which aims to repair age spots and renew the firmness of the skin. Another new launch in anti-ageing skincare was Pond’s Age Miracle. This range contains the most advanced anti-ageing technology, Retinol-C Complex, which promotes the continuous release of powerful retinol actives for 24 hours to help reduce wrinkles.
According to Euromonitor6, anti-ageing is expected to remain a popular positioning for various skincare products in Malaysia. Consumers are expected to remain highly conscious of the need to use anti-ageing products, since they have long exposure to sunlight, which can cause early ageing.
Among the three brands mentioned, it's worth noting that none of them are homegrown Malaysian brands. While Bioessence originates from Singapore, L’Oreal is a French brand and Pond’s is an American brand under Unilever.
This is optimistic news for foreign merchants looking to enter the Malaysian market as it can be seen that locals are open to foreign brands if they have products that cater to their needs. Based on research by Statista, foreign brands form a bulk of the skincare market in Malaysia, with countries such as Korea, Japan and America taking the lead18.
For instance, on Malaysia’s most visited eCommerce platform Shopee19, its products with the highest sales include several Korean brands like Some By Mi which do not have retail outlets in Malaysia. This means that consumers have to rely on eCommerce to purchase them, and goes to show how impactful creating a great online shopping experience can be when reaching out to consumers without even having a physical presence in the country.
Additionally, even with physical stores, certain brands still choose to sell on eCommerce platforms and through online sites. A few examples are Amorepacific’s Laneige and Innisfree8. This could be to increase sales by reaching out to those who do not have the time to shop at their physical stores, or those who live too far away in other parts of Malaysia.
While selling on eCommerce platforms is definitely a good way to enter a new market, promotional strategies on eCommerce platforms tend to be based on price. This means that you may face higher price competition online (compared to offline portals) and may have to similarly give discounts to draw customers.
When asked about why Malaysians are attracted to using Korean beauty products, 54% of respondents20 said that they found the K-Beauty products are more suited to their skin. 48% thought that K-Beauty products are more effective and produce better results than other products, in addition to having a wider variety for different skincare needs.
This crucially illustrates how important it is to capture consumer demands within your product line so that they can remain drawn to your brand. Hence, as a new foreign merchant looking to enter the Malaysian skincare market, cross-border eCommerce is definitely a good starting point to gauge the behaviour of your consumers.
Logistics service providers who are well-acquainted with Malaysia’s culture and shipping regulations can also simplify much of your cross-border shipping process, making it easier for you to start expanding your skincare eCommerce business in the country.
According to the latest survey by Malaysia’s Department of Statistics, the usage of smartphones for internet access reached 98% in 2018. A larger number of Malaysians have long exposure to smart devices, which prompts high digital stress. To delay the effects of ageing caused by digital stress, skincare brands have started to focus on the launch of skincare ranges which counter this factor6.
For instance, Beaubelle Swiss Skin Care gained strong popularity in South Korea, and entered Malaysia through the launch of Anti-Fatigue Eye Contour Gel. The Anti-Fatigue Eye Contour Gel is a pearlised instant rescue eye gel for application around the eyes to reduce signs of early ageing such as puffiness, dark circles, fine lines and eye bags. Additionally, the unique Swiss formulation provides an immediate soothing relief for tired eyes as well as to lift droopy eyes.
This anti-fatigue eye gel is especially beneficial to modern multi-tasking individuals subjected continuously to various stressors from daily activities at work and travel such as the blue light from digital devices, UV rays, air-conditioning, urban pollution and mental strain that leads to visible tiredness and sluggish circulation around the eye contour.
Skincare products targeted towards various societal issues, such as countering digital stress or pollution, are expected to be increasingly popular amongst consumers6, who are being pampered with more skincare products which have a more specific positioning.
As these products aim to reduce the negative impact of digital device usage on skin, advertising such products on social media might be a great way to reach out to consumers. By reminding consumers about the side effects of digital usage on social media, brands are able to ‘catch them in the act’ and promote their products.
This range of products might be especially pertinent given that consumers in Malaysia are unlikely to give up digital devices just for better skin, but they might be drawn to purchasing skincare products that can help to minimise the consequences on their health.
Furthermore, social media advertising also has several other benefits. For example, it can be much cheaper than traditional means of marketing such as television advertising. Because of how visual some skincare products can be, such as masks, they are great for bloggers and vloggers to do online tutorials22. Consumers are also taking photos of themselves in their favorite skincare masks, allowing for an even more convenient and cost-free promotion of the brands.
Summer Fridays, a brand co-founded by Instagram influencers Marianna Hewitt and Lauren Gores Ireland, launched in 2018 with just one product: a face mask. They spent no money on marketing, relying solely on their social media presences. In less than two weeks, the mask became the best-selling skin-care product on Sephora.com with thousands of positive reviews22.
Although the above example took place in the US, its method of marketing is still highly relevant for other similar brands looking to enter the Malaysian market. This is because Malaysia has a very high mobile social media penetration rate that ranks top 5 globally23, and is the highest in the region.
Some popular beauty social media influencers in Malaysia24 include Ameera Khan and Vivy Yusof who both have over 1 million followers on Instagram. By partnering with influencers like them, it might be much easier to tap on the large following that they’ve already attained.
Therefore, to take advantage of the increasing popularity of skincare products that tackle digital stress, it might be good to make use of social media to reach out to your potential customers in Malaysia.
In Malaysia, dermatological skincare ranges continue to excel6, with many consumers willing to spend on these products. Natural skincare25 is also very much in trend these days as more and more consumers ditch chemical-laden personal care products in favour of those that use safe ingredients, are eco-friendly and feel good on the skin.
Eucerin, for example, launched a new range, Eucerin Pro Acne Solution, to target consumers with acne. The range comprises mass facial liquid cleanser, mass basic moisturiser and mass toner. Besides the wider product variety from existing dermatological skincare brands, new dermatological brands, such as Curél from Kao, continued to strengthen their presence through stronger distribution.
In addition, Malaysians with strong knowledge of the benefits of using skin care ranges made from natural ingredients do not mind paying more for premium skin care products26 containing natural ingredients. Consumers of such products will remain highly loyal towards the brands that they use for their daily facial routine. A few examples are Sulwhasoo, Estée Lauder and SK-II.
This means that while premium brands do not need to have heavy discounts to attract existing consumers, consumers who are not yet brand loyal might need some promotional tactics to be attracted. Such tactics are frequently seen on eCommerce platforms like Shopee where the price discount is explicitly stated for every product (even for more premium brands such as SK-II27), hence users can directly compare discounts across brands.
Nonetheless, this rise in demand for dermatological, natural and organic skincare could be a result of the changing air quality in the country due to rapid urbanisation6, which is leading to more Malaysians with sensitive skin. Consumers are hence looking for skincare products with anti-pollution features to prevent further damage to their skin.
Additionally, social media has also given consumers a platform to promote the products they love and helped them become more informed about organic or natural products. On a global scale, Stephen Kanlian, head of a think tank at New York's Fashion Institute of Technology22, has mentioned that there has never been consumers with such a high level of education and sophistication, who look anywhere that they can to find a definition for natural or organic.
Furthermore, in Malaysia, input from friends and family or other consumers is particularly important for consumers. Reviews are a major factor for 71% of Malaysians’ online purchase decisions in 2019, according to research by vase.ai28.
This means that while natural, organic and dermatological products are certainly growing in popularity among consumers all over the world, consumers still tend to do research before making purchases. As they take into account reviews to better understand and differentiate brands, it remains important for you to have a healthy online presence and customer support system.
To wrap up, by understanding who, what and how your potential customers in Malaysia’s skincare market shop online, you might be able to better appeal to your target segment. While Malaysia may appear as a saturated market with many strong foreign brands in the market, the skincare market is still a growing one that provides many opportunities for newer merchants to enter the market, as a few K-Beauty brands have proven.
Delivery is still an important part of the eCommerce experience. If you’re sourcing your modest wear products from beyond Malaysia, it’ll be helpful to find an eCommerce shipping provider to help you with getting these eCommerce products delivered on time and on target to your Malaysian customers.
Popular eCommerce platforms and experienced logistics service providers who are well-acquainted with Malaysia’s shipping rules and regulations can also simplify much of your cross-border shipping process, making it much easier for you to start expanding your business in the country.
As a whole, if you’re looking to better understand the consumer trends behind this market, it’ll be good to look at what the young consumers are talking about on social media, and skincare or beauty influencers who are admired by many. By also looking at what foreign brands who have succeeded in this market have done, you might find it easier to gain your potential customers’ support by replicating similar methods.
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