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What Is There to Know About The Latest E-commerce Trends in Malaysia?

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What Is There to Know About The Latest E-commerce Trends in Malaysia - One Search Pro Trusted Digital Marketing Agency in Malaysia

Fun fact: In 2020, e-commerce sales increased by more than 30 percent in Southeast Asia!

According to Shopee, online orders had a staggering 130.7 percent surge (from 321.4 million to 741.6 million).

So what is the e-commerce trend in Malaysia and the hypes?

This indicates that local sellers and brands have scaled up digitization efforts to attract the increasing magnitude of online consumers. In addition, Malaysia’s logistics industry is adaptive to ever-changing needs and technology, including e-commerce – which is a huge plus!

In this post, we’ll learn more about ecommerce trends in Malaysia, factors that spark ecommerce growth in Malaysia, why e-commerce Malaysia is blossoming, and a guide to starting an e-commerce business in Malaysia.

Overview of Malaysia’s E-commerce Trends And Opportunities

According to GlobalData on Malaysia e-commerce 2020 statistics, Malaysia’s e-commerce market is predicted to skyrocket up to 24.7 percent in growth. [1]

The sector is anticipated to gain RM 51.6 billion by the end of 2024, increasing at a Compound Annual Growth Rate (CAGR) of 14.3 percent.

With the number of online users set to reach 18.3 million users by 2025, there are even more opportunities abound for e-commerce markets to thrive in the online space!

You may be interested in: Emerging E-Commerce Trends Amidst Covid19

A brief history of e-commerce in Malaysia dating back to 2008. Source: Sterrific

Factors That Stimulate E-commerce Growth In Malaysia

Surge In Grocery E-commerce

Food, drinks, and groceries contributed the highest rate to e-commerce Malaysia – resulting in a booming industry for online selling Malaysia.

Pertaining to groceries and essential needs, people prefer and continue to secure daily supplies from local online businesses in Malaysia or big local mature markets like Tesco.

According to Statista, Malaysia ranked number 2 for the world’s fastest grocery market list for 2018 and will achieve over 60 percent Malaysian payments market share by 2022.

Malaysian consumers opt for buying groceries online to minimize going out and avoid long queues and parking hassles. Source: Vulcan Post

Seamless Delivery Logistics

Customers expect online shopping to be a breeze from browsing to choosing the preferred product, payment, and delivery. Thus logistics are vital.

Other countries might have different regions and islands separated by dense jungles and secluded islands, but Malaysia only has two significant regions, namely Peninsular Malaysia and East Malaysia.

This makes logistics all-the-more effective and manageable.

Malaysia’s logistics is one of the contributing factors to the rising ecommerce trends in Malaysia. Source: Pos Logistics

Digitally-Savvy Consumers

Malaysia is the first runner-up in the South East Asia region with the highest percentage of digital-savvy shoppers comprising 88 percent, approximately 22 million people. [2]

By the end of 2021, the percentage of digital shoppers is expected to rise to 90 percent.

With more than half (26 million) of the country’s population having access to the internet, 80 percent of that are people aged between 16 to 64-years old who shop online at least twice a week.

The e-commerce platform Malaysia is proliferating, all driven by increasing internet usage, smartphone penetration, social media, and a tech-savvy population. Another factor that stimulates e-commerce growth in Malaysia is the highest internet penetration rates in Southeast Asia.

Related: Top Social Media Sites in Malaysia to Market Your Business

Smartphone users find mobile commerce and online shopping more convenient and easy. Source: Inside Retail

The Rise In Social Media

Thanks to the Covid-19-driven e-commerce industry rise and increased social network utilization, many major social media platforms like Instagram and Facebook are starting to provide online shops.

The social network is no longer a tool to discover new friends and places but becoming a channel for users to purchase products.

Local brands and businesses seem to recognize the potential as there are visible growing partnerships with social media users where 78 percent of Malaysians spend their free time.

In addition, people love to buy trending products in Malaysia. Products that went viral on the social network are often sold like hot cakes!

Preference for Digital Payments

In the early months of the lockdown, electronic payment was the most preferred payment method instead of cash on delivery.

This directly encouraged contactless payments like e-wallet, PayPal, WeChat, Google Pay, and WeChat – up to 93 percent. Not only that, it also shaped the e-commerce industry in Malaysia.

Bank transfers and digital payments are the new norms.

Digital payments in particular, accounted for a huge chunk of 93 percent of e-commerce transactions [3] – not to forget that there are also over 30 businesses with an e-money license in Malaysia, including PayPal and Google Pay.

Digital payments have become more accepted as payment methods in the Malaysian ecommerce market. Source: Sifu Shopping

Government Assistance

Malaysia’s government has increased the internet coverage and accessibility to more rural areas to accelerate the adoption of e-commerce under a program known as National Ecommerce Strategic Roadmap.

The program is set to stimulate Malaysia’s ecommerce market size, seeking to expand the market and adapt to new norms.

This initiative encourages more small businesses and medium enterprises to learn more about digitizing their business and how to do online business in Malaysia.

You may be interested in: 34 TikTok Small Businesses Ideas & TikTok Compilations To Blow Up On TikTok

Social Distancing and COVID-19 Restrictions

Based on a survey conducted by Rakuten Insight, 62 percent of the respondents reported that they prefer to stay in and shop online because they are adhering to government policies on social distancing.

Participants also expressed their desire to minimize contact with people outside of their household to prevent infection by Covid-19. The same survey also indicated that more people are buying essential needs online instead of visiting physical stores.

Related: Covid 19 Malaysia: How to Survive from CMCO through Selling Online?

Why Is Malaysia The Home of Marketplaces?

1. Transactions Across Borders

Cross-border ecommerce in Malaysia is relatively high as it accounted for 4/10 of most e-commerce transactions last year.

About 48 percent of Malaysian shoppers are willing to purchase from international ecommerce merchants. These high rates are driven by international merchants and brands, better offers, prices, and access to items that are not available in Malaysia.

The top three cross-border spending typically occur in popular ecommerce players from China, Singapore, the US, followed by South Korea, and Japan. Seeing the opportunity, the Malaysian government implemented its digital tax system for international transactions from digital goods suppliers beginning January 1, 2020. [4]

This makes Malaysia the second country in Southeast Asia to commence such a tax besides Singapore.

Cross-border sales happen when consumers buy from online shops across national borders, where the seller and the consumers are in different countries. Source: Bank Of China

2. Mobile-First Audience

It goes without saying that today’s shoppers engage and interact with their mobile devices every day.

Malaysian shoppers quickly adapt to changes in technologies and mobile e-commerce – and many have started to use their mobile to browse and shop.

As a result, the percentage of mobile e-commerce is rising and is predicted to increase by $5.6 billion by the end of 2021.

One of the components of mobile audience marketing in the e-commerce industry involves developing mobile apps and-wallet. Source: Vision 51

3. Affinity Towards Discounts

Consumers choose to shop in Malaysia’s e-commerce market because it offers a vast product selection, significantly lower pressure, and most importantly – better pricing and discounts.

PayPal reported that 90 percent of Malaysians prefer to shop online because it helps save time and expects the order to arrive in a week.

Apart from marketplace discounts and coupons, deals, free shipping, and loyalty programs attract consumers to buy via e-commerce stores.

4. Ease of Digital Payments

The ease and comfort of online shopping are the major points why Malaysians prefer to buy everything they can online.

Opting for online banking minimizes physical contact in comparison to COD.

20 percent of online shoppers choose to shop online because of payment options without having to worry about interest. [5]

Younger consumers who do not possess a credit card can opt for (and tend to choose) online banking or e-wallet.

5. Social Commerce

Social commerce is the process of selling and buying products directly from social media.

Malaysians not only use social networks to interact and share exciting content but also to search and research possible purchases.

A recent study has shown that 87 percent of Malaysians used online marketplace on Instagram, Facebook messenger, and Whatsapp to survey for items and make purchases.

Social media marketing has also become more plausible and popular over the years with the surge of more e-commerce small businesses.

Malaysian shoppers are fond of using social platforms to connect and shop. Source: TINT

6. Annual Shopping Events

Malaysia celebrates various festivities thanks to its nature as a multiracial country with diverse ethnicity and religion.

This factor contributes to annual shopping events and international discount shopping events that encourage consumers to shop with deals and promotions available.

Usually, the holidays season or the end of the year tend to be the busiest online shopping season. Malaysia year-end sale and Malaysia super sale are two popular shopping events that allow retailers to generate considerable profit.

In Malaysia, online purchases increase during the Malaysia Mega sale carnival. Source: NST

7. Competition Between Regional & International Retailers

There are two major Malaysian e-commerce platforms: Shopee and Lazada.

However, other international e-commerce markets such as AliExpress, Taobao, Amazon, eBay Malaysia, and Bukalapak are also trying to penetrate the local Malaysian ecommerce market.

Still, due to their restrictions on logistics to Malaysia and longer delivery time, local consumers tend to opt for local marketplaces instead.

Malaysia’s E-commerce Space Summarised

E-commerce websites in Malaysia have some of the heaviest online traffic. To quickly have a side-by-side comparison among all features offered by only established online shopping markets, here’s a comparison table:

Platform HighlightsOnline Shopping Platform established by Sea GroupEstablished by Rocket Internet, and is now owned by AlibabaMarketplace owned by Malaysia AEONMarketplace for fashion and accessoriesShopping online, and promote various ecommerce store
Affiliate Marketing AvailabilityYes Yes Yes Yes Yes
Mobile or PC-centricBoth desktop and mobile application Both desktop and mobile application Both desktop and mobile application Both desktop and mobile application Both desktop and mobile application
Commission fee2.1 to 7 percent6-12 percent for each sale3 to 20 percent4 to 6 percent5 percent
Monthly traffic20,900,00020,000,000470,0001.450.00780,000
Accept individual, enterprise, or international sellers?Accepts individual enterprise, company, and international supplier and wholesaler Accepts individual enterprise, company, and international supplier and wholesalerOnly accepts companiesAccepts enterprise and companyAccepts individual enterprises, companies, international suppliers, and wholesalers

7 Tips and Tricks to Grow Your E-commerce Business In Malaysia

1. Offer a Diverse Product Range

The ecommerce industry in Malaysia is extensive. To compete with other sellers on any e-commerce platform, you need to introduce and offer a variety of products.

Understand your niche market’s needs and try your best to fulfill said needs by customizing product pages and categorizing them according to a target audience base.

2. Provide a Wide Range of Payment Options

People turn to online shopping because of the ease and flexibility offered by the payment methods.

To entice customers with your shop, allow your customer to select their most preferred payment method such as digital wallets, COD, bank transfer, PayPal, and credit cards. Avoid using outdated payment methods at all costs.

You should also aim to provide consumer protection to reassure customers that your e-commerce business is trustworthy.

3. Offer Superior Fulfillment Experience

When your customers purchase from you, try your best to accommodate your customer’s requests.

Examples range from providing a faster delivery process, attending to their questions and feedback and updating them on new stocks.

4. Understand Local Nuances

Malaysia is a multiracial country. As the saying goes: seperti rusa masuk kampung – as ecommerce merchants, you ought to learn about the cultures!

By doing this, you’ll know what to offer and when is the best time to promote it.

5. Offer High-Quality Customer Support

Nobody likes the silent treatment. When a customer is buying from you, they expect you to attend to any issue during the buying experience.

For example, don’t leave your customer hanging for days after payment. You need to update and acknowledge them. Unreliable delivery processes will also make your customer stop buying from you.

6. Use a Mobile-Friendly App/Channel

Mobile commerce apps are lighter loading in comparison to mobile versions or desktops.

Sometimes, it even allows your customers to share a product with other people.

For example, Shopee lets its customers share a link of a product through Whatsapp. The mobile app also offers leverage to a mobile device’s functions such as click-to-call, sale reminders, or get-to-location, making it easier for consumers to connect with your business.

Related: A Guide to Mobile SEO: Optimizing Your Website for Mobile-Friendly SEO

7. Sell on Important Dates

Participate in special occasions and special events organized by the marketplace. Special events such as 11.11, 12.12, etc. allow exposure and impulse buying from consumers.

Like most physical stores, most e-commerce stores advertise themselves before the special event. Just make sure that you have enough stocks to fulfill the heavy orders!

Wrapping Up

Malaysia’s e-commerce industry is impeccable compared to other ASEAN countries.

It is a unique market for the ecommerce industry in the Southeast Asia region because of Malaysia’s ecommerce economy and evolved e commerce infrastructure for modern and digital technologies.

For many retailers, the shifting ecommerce trends have widened their business’s potential positively. Malaysian consumers are more tech-savvy and prefer shopping online to save time and to stay safe at home.

If you need to know more about Malaysia e-commerce or planning to launch your own e-commerce business, reach out to your trusted online marketing agency, One Search Pro today for digital marketing Malaysia needs.

We have accumulated over 10 years of experience in online marketing Malaysia, providing services such as:

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