Malaysia is known for its legendary shopping seasons. And its Mega Sale Carnival is often described as the ‘mother of all sales’, attracting locals and tourists alike and cementing Kuala Lumpur’s reputation as one of Southeast Asia’s shopping meccas.
But a new realm of shopping is capturing Malaysians’ eyes and wallets. E-commerce has grown exponentially around the world in recent years, and Malaysia is no exception. Despite making up only two per cent of all sales in the country, online sales in Malaysia is expected to grow at a double-digit rate in the near future. In fact, different analysts identify the country as either the second or third largest e-commerce market in Southeast Asia.
However, an e-commerce index by Fitch Solutions reveals that Malaysia is outperforming its ASEAN neighbours in terms of e-commerce sales growth, projected to increase from US$8.3 billion in 2019 to US$12.9 billion in 2022. Over the same period, the country’s consumer spending is forecast to grow at a rate of five per cent annually.
A few factors drive this growth:
The number of e-commerce consumers in Malaysia is skyrocketing to reach 21.9 million in 2020
The country is becoming increasingly affluent and is on track to attain the status of ‘developed country’ (provided that it avoids an economic plateau)
It has a growing middle class, but consumers in this class face pressures such as high taxation and cost of living, coupled with stagnant salaries. As such, they have high incentives for pursuing cheaper sources of products (such as online sales)
All this paints a rosy picture for e-commerce sellers, but it begs the question: who are Malaysia’s online shoppers?
Almost half of Malaysia’s 32-million-strong population shop online. A third of the population (39 per cent of women and 38 per cent of men) make online transactions, such as buying items or paying bills.
This parity among men and women shoppers is echoed in a study of the e-commerce habits of undergraduate and postgraduate students in Malaysia. Despite featuring more female participants, the study found that at least 50 per cent of both male and female respondents shopped once a month or more.
The researchers found that Malaysians like to shop online because doing so saves time. In their busy schedules, the convenience of having your purchases delivered straight to your doorstep is undeniable. The ease of comparing prices across platforms and even countries gives Malaysians a wider variety of items, and even price points, to choose from.
Interestingly, many Malaysian shoppers do tend to favour products bought from overseas online stores, with 40% of e-commerce purchases being cross-border. To find out Malaysians’ likely motivations for cross – border shopping according to research by Paypal are as follows:
Better prices (72%)
Access to items not available in my country (49%)
I can discover new and interesting products (34%)
Higher product quality (29%)
Shipping is more affordable (24%)
Paypal’s finding that people around the world really love great prices seems to ring true for Malaysians as well. This love for good deals could likely be driven by a rising middle class who faces comparatively high taxes and stagnating wages.
This is likely why 11.11 and 12.12 have become some of Malaysia’s biggest e-commerce events. These events offer discounts as high as 90 per cent and achieve the highest sales in the Home & Living, Fashion, Health & Beauty, Accessories, and Mother & Baby categories. According to analysis by iPrice, 47 per cent of Malaysian online shoppers were active during the 11.11 period compared to the previous month.
It seems that Malaysians are also avid last-minute shoppers. The same iPrice analysis reports that online shopping activity was at its highest just before the day ended as Malaysians continued looking for the 11.11’s final deals.
If you’re looking for a more comprehensive list of Malaysia’s hottest online shopping periods, we wrote a post covering the biggest events.
As mentioned in Paypal’s findings, some of the products Malaysians look for overseas are either hard to find at their local stores, or are cheaper overseas or of higher quality compared to alternatives available locally. In some cases, these products are available overseas a lot sooner before they become available in Malaysia. One example would be the success of Amorepacific, a company that imports top performing South Korean beauty products for reselling in Malaysia.
Malaysians also shop online in preparation for major holidays, especially Chinese New Year and Ramadan. They search e-commerce platforms weeks ahead of these celebrations in order to compare products and prices.
Buyers look for gifts to give to their family and friends on Chinese New Year, as well as beauty and fashion products that will help them refresh their look for the year ahead. During Ramadan, they look for clothing to wear at the Hari Raya Aidilfitri celebration at the end of the season.
Word-of-mouth referral also encourages brick-and-mortar shoppers to try out e-commerce, which is why e-commerce merchants shouldn’t overlook social commerce when selling to Malaysians. In fact, the country is said to be the world’s fourth largest market for social commerce adopters. This means Malaysian social media users tend to convert into e-commerce buyers.
In fact, the country is said to be the world’s fourth largest market for social commerce adopters, with research by Vase.ai showing that Malaysians get their first stimuli to shop when they surf social media. Vase.ai’s research breaks down the stimulus that gets Malaysians thinking about shopping as follows:
Surfing social meda – 66%
Direct influence from friends and family – 49%
Shopping malls – 28%
Television – 21%
Magazines and/or newspapers – 19%
*The percentage listed here measures how many survey respondents agreed these factors impacted their online purchase decisions
In the research, Malaysians mentioned that the most effective online stimuli are social media and e-commerce websites, followed by branded websites, apps and video websites like YouTube, Twitch and Vimeo.
At the consideration stage, Malaysian shoppers tend to rely on articles and blogs, infographics and videos when deciding what to buy and where they’ll buy it from. They also actively seek out information from product reviews, compare products with their alternatives and follow product launch updates.
This means getting Malaysians to convert into e-commerce buyers requires a robust online strategy to supplement your online and/or offline store’s marketing strategies.
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It bears repeating that e-commerce has opened up international sales channels to Malaysians, allowing them to purchase products unavailable in the country. In some cases, even if these products are available in Malaysia, they may be launched earlier overseas or may even be priced lower. That’s why many Malaysians shop online on websites like Amazon or Alibaba’s Tmall and why foreign sales events like Black Friday and Cyber Monday are making their way into local buyers’ lingo.
The International Trade Administration (ITA), US Department of Commerce reports that Malaysians like to buy the following items from overseas:
Daily supplies (39 per cent)
Fashion & accessories (23 per cent)
Special/rare items (20 per cent)
Home appliances (7 per cent)
Consumer electronics (7 per cent)
Food & health items (4 per cent)
Top sources of these products include Singapore, Japan, South Korea, and the United States.
Locally, Lazada, Mudah, Lelong, Shopee, and 11street attract a large chunk of Malaysia’s e-commerce consumers. In terms of B2C marketplaces, iPrice’s ‘Map of E-commerce’ Malaysia mentions the following are the top five e-commerce platforms in the country.
Lazada – 26.2 million monthly web visits
Shopee – 20.2 million monthly web visits
11 Street – 8.4 million monthly web visits
Lelong – 4.5 million monthly web visits
Zalora – 2.2 million monthly web visits
Lazada is quite successful—it is the only e-commerce platform among Malaysians’ top visited websites, according to the We Are Social 2019 report. Both Lazada and Shopee, though, joined the top 10 list of apps with the most active monthly mobile users.
Malaysian e-commerce consumers use a variety of payment methods, such as cash on delivery (COD), credit card, and online transfer.
From the above results, mobile banking is the most popular method of paying for online purchases. On the other hand, the slew of new payment options like mobile payments means that these options shouldn’t be ignored either. On the bright side, the wide availability and popularity of online-enabled payment solutions means that getting payment for your products for the most part shouldn’t be too troublesome.
Interestingly, Maybank2U consistently ranks among the top 10 in different lists of Malaysians’ most visited websites, as well as on the top Google search queries in the country in 2018. This could be explained by Maybank2U’s users using the web banking service to make on-the-go online payments, including for e-commerce purchases. Maybank2U offers a variety of personal and digital banking services, such as Samsung Pay, Visa Checkout, transfers, a mobile wallet, and a promotions app.
On the other hand, it is still advisable to offer cash on delivery (COD) as a payment method when expanding your e-commerce store into Malaysia. Online merchants can offer COD via an e-commerce platform or a shipping partner which supports and facilitates COD transactions. According to Nielsen, many 45-54-year-old Malaysian shoppers preferred COD when shopping online.
This is because they are afraid of credit card scams, and they may not necessarily trust an e-commerce platform with their payment data, which brings us to the next point about potential roadblocks for e-commerce in Malaysia.
Of course, online shopping is not entirely trouble-free. Long delivery times can discourage buyers, which is why many Malaysian online shoppers are willing to pay more for their purchase to arrive more quickly. Around half of the e-commerce consumers in Malaysia expect to receive products bought from local sellers within three days.
Fraud is another—and more serious—concern. An analysis of cybercrime in social commerce transactions in Malaysia paints a not-so-pretty picture. Among the respondents, 9 per cent experienced making an online purchase but not receiving the product at all. Another 23 per cent experienced receiving a product that was different from what was promised.
And despite increasing adoption of cashless payment methods, 46 per cent of Malaysian consumers still distrust the security of online payments, especially when using smart devices. The majority—70 per cent—prefer online interbank transfers, cash, and ATMs.
In its National eCommerce Strategic Roadmap, the Malaysian government pointed out that the fulfilment experience can be frustrating. Many sellers make deliveries during office hours, when people are at work instead of at home. This leads to the risk of the items being returned to the seller, or to the inconvenience of having to pick up the parcel from a depot.
The government also lamented the lack of product diversity. This is partly due to the fact that SMEs in Malaysia have been slow to adopt e-commerce. By enabling more brick-and-mortar retailers to sell, the government hopes to increase e-commerce adoption, as consumers will have plenty of items and product categories to choose from.
For e-commerce merchants in Southeast Asia, Malaysia is one of the most attractive markets given its population size and increasing affluence. E-commerce merchants eyeing this market can take advantage of certain opportunities through the following strategies.
Providing a diverse product range. Given the government’s concern about product diversity, online sellers have the opportunity to satisfy an unmet need among Malaysian consumers. One way to do this is to research the available products carried by popular sellers, and offer alternatives or related items and accessories.
Check out popular offline items. Find out what products are selling like hotcakes on brick-and-mortar stores, but can just as easily be sold online. See if you can make and sell those items online at a better price.
Offer a wide range of payment options. Think e-wallets, online transfers, credit cards, and COD. Explore virtual banking options, too.
Provide a superior fulfilment experience. Find reputable shipping partners and use an efficient cross-border shipping model. Allow consumers to track deliveries in real time, so they’ll never be left guessing when to expect their items.
Understand local nuances. Know what Malaysians like to buy, and when. Understand the customs, traditions, and holidays that drive their shopping seasons.
With the right product and excellent service, online merchants in Southeast Asia can capture a share of the Malaysian e-commerce market. To succeed, keep an eye out for shifting trends, and always keep learning about your consumers.
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