Malaysia has a growing eCommerce sector, and the recent implementation of the National eCommerce Strategic Roadmap seeks to bolster the growth rate of e-commerce trends in Malaysia. Moreover, we have a developed infrastructure to sustain digital technologies.
With the recent pandemic, a lot of day-day to activities are shifting towards technology-reliant channels. People are buying more online, and over 80 per cent of the population are active Internet users. So there are lots of opportunities for a new Malaysia e-commerce business to enter the market.
But with a plethora of platforms to use, you might be overwhelmed when making the most suitable choice for your business. In this guide, we’ll lay out the entire process of starting e-commerce in Malaysia.
Opportunities & Threat of the E-Commerce Industry
As with any other business, you need to conduct a SWOT analysis to know your strengths and minimise your weaknesses. You’ll also want to understand the threats and the various opportunities an eCommerce business will present. Technology changes the scope of e-commerce marketing constantly. So conducting a thorough SWOT analysis is a requirement to be successful.
|1. Reach customers everywhere|
2. Low-barrier to entry
3. Multi-platform option
|1. No immediate customer gratification |
2. Products are not tangible
3. Logistics issues
|1. Versatile technology|
2. Immediate customer response
3. Comprehensive customer data
|1. Fierce competition |
2. Fraudulent activities
3. Price undercuts
What do you think that you do better than your competitors? What gives you an edge? Being an e-commerce business means that you can reach buyers who usually can’t visit a physical location.
Think of the ways of how your products and services give you an advantage. Maybe you have a more extensive inventory than your competitors? Therefore giving people more options when browsing your eCommerce store.
If you’re using a platform in a marketplace, do you offer superior customer support and added value to your customers? Try to include bonuses, discounts, or limited time offers on your products, especially if you see the competition is not doing it. This gives you a fair advantage over other eCommerce businesses that don’t engage with their customers in the same way.
In an e-commerce business, buyers don’t have the advantage of immediate gratification right after purchase. Intangibility is an inherent weakness with eCommerce stores. However, that might not be the case if you’re selling purely digital goods, as people already know what to expect.
Things like apparels can sometimes be challenging to sell online in an e-commerce store because of variations in sizes and design. Another example is the consumable goods. Delays in shipping might cause a perishable product to go bad, and be unusable once it reaches the customer.
eCommerce by itself is technically technology applied to typical commerce stores. In that regard, there are always newer technologies that can increase value to your business, or make customer interaction and acquisition smoother and better. For example, you can track your customer’s journey through your sales process, and identify at which stage of the funnel needs improvement.
When it comes to offering support, live chat, and even chatbots, you can respond to customer inquiries quickly, which is not possible with traditional retailers. Also, marketing with e-commerce stores presents more advertising opportunities, such as using social media influencers to promote a product – via their channels or various social platforms.
eCommerce stores have a low barrier to entry. It’s easy to set up a website using content management systems and shopping cart technologies available. The flip side, however, is someone can easily set up their website right at home. They’ll become your next competitor within a short amount of time. And in a marketplace like Shopee, a seller can undercut your prices and take away your customers.
There’s also the potential of fraudulent activities and chargebacks when running your own eCommerce store. However, this occurrence is mitigated somewhat if you’re using a marketplace platform since they have contingencies for it.
Factors to Consider If You Want To Start An E-Commerce Business
Starting an eCommerce business is no easy task. There are many factors and variables to consider. And before you start taking on orders, consider the following factors:
1. Identify The Right Business Model
The e-commerce business is a thriving business model expected to grow by 385% in the next decade alone. If you intend to be a part of this booming ecosystem, you need a solid business plan and model that works for your ideas and goals.
Before choosing a platform for your business, you need to identify the type of business model you will use. There are a few types to consider:
- B2B model – focuses on providing mostly services (although there are exceptions) to other companies to help them run their operations. This could be a web hosting company that caters to start-ups, or digital marketing agencies that provide marketing services to online businesses.
- B2C model – the common model for most e-commerce businesses. The market is huge, with many umbrella niches to cater to and various platforms to use.
- Consumer to Business (C2B) model is not apparent to most start-ups but works well in some industries. Upwork is an early adopter of this business model. The site contracts services from individuals and allows clients or businesses to bid on it.
- Consumer to consumer (C2C) model – a type of business where consumers can exchange goods and services, usually by paying a listing or transaction fee to the platform’s owner. eBay and Lelong are examples where consumers themselves hold auctions.
There are also hybrid models that utilise more than one type of business model. Knowing which kind of business model you’ll be using will allow you to plan the next course of action, along with identifying viable means of revenue models.
2. Find a Niche Market Instead of Targeting Everything
When deciding on your eCommerce site, you need to narrow down your target audience and your niche. Are you pursuing a niche based on your passion and interest? Or are you interested in the niche because the product is popular?
Understanding your brand and your goals are essential, so you know which niche to pursue. For example, the fashion brand Zalora considers itself a one-stop retail shop for high-end clothing. Their niche market is fashion-conscious buyers who buy from local and international brands.
Hermo, on the other hand, is an eCommerce site catering to the beauty niche. Their mission? “We want you to be gorgeous with us”. As such, the site attracts women from all walks of life interested in beauty care products.
You can even micro-niche a broad niche. Instead of targeting the fashion niche, you can target high-heeled shoes, for example. Figuring out what you do best and knowing your assets will help you determine your eCommerce site’s right niche.
3. Who Will Be Your Logistics Partner?
Logistics can be as simple as picking the products, packing and shipping them. Or it can require complex arrangements that involve warehousing, insurance, and tracking, among others. Depending on your business, below are some popular logistics options in Malaysia:
Shopee Supported Logistics
Using Shopee Supported Logistics is a popular option for sellers in Shopee’s marketplace. It’s free with the Shopee Free Shipping Program and allows sellers to utilise various logistic partners such as Pos Laju, Ninja Van, DHL eCommerce, J&T Express, and Shopee’s own Shopee Express.
LEL (Lazada E-Logistics)
Sellers in Lazada have a few standard delivery options: self-subscription service and delivered by the seller themselves. A few shipping providers are assigned for each option, including LEL Express, Gdex, and Skynet. Shipping fee can be calculated based on dimensions, weight, distance and product type.
Another popular choice for eCommerce businesses because of the low rates and nationwide coverage. For smaller eCommerce sites, you can choose between walk-in counter rates or pre-paid envelopes or boxes. Prices are determined by zones and by weight and size. Larger eCommerce sites can sign up as a PosLaju contract customer to get discounted rates.
4. What Features To Look Out For When Choosing an E-Commerce Platform?
Choosing the right eCommerce platform is just as important as selecting the right niche. You’ll be focusing all your efforts in establishing brand awareness and building a customer base. Stick with one platform in the beginning and weigh the pros and cons of each before committing. A few features you should be looking out for are:
- Does the site have a mobile app?
It’s essential to keep track of your business even on the go. Having access to an app allows you to check for data even when you’re outside your office.
- API integration
API integration is crucial for developers to handle the information from a given platform in a single user interface. Most major marketplaces in Malaysia will have this feature. However, the process for acquiring the API key will be different from one platform to another.
- What kind of training is offered to set up a store?
A marketplace platform must have extensive training for new sellers. This could be from written guides and FAQS to long webinars. The training should also include how to handle logistics and best practices. Along with the fees and how to become a seller. Two major platforms in Malaysia offer the training mentioned above – Sitegiant provides training on how to use their webstore, whereas Lazada University has detailed training available here.
5. Take Into Account The Commission Rate
Besides the setup or other fees, you should know what kind of commission you need to pay on a platform to list your products, or when you make sales.
Currently, Shopee doesn’t charge any commission to list your products, which is why it’s so popular.
Other marketplaces like Lazada will charge between 3% to 5% if your products are home appliances or electronics. At the same time, the baby and beauty category is 3% and 5% respectively.
Lazada Full rate card image source
6. Determine The Right Payment Gateway
Payment gateways in Malaysia have come a long way in the last ten years. There are plenty of options available. These are from well-known international solutions and local payment gateways developed by local companies, which might have more attractive fees and localised payment options.
To determine which payment gateway to use for your business. Know which market you serve, your demographics and the location of your customers. For example, PayPal is a widely used online payment processor that is recognised around the world. But if you’re serving local markets, it might not be a good option because of the transaction fee. Moreover, local buyers might be reluctant to purchase online from a random site using PayPal.
If you’re targeting local customers, you can use an online payment processor like iPay88, which is popular in Southeast Asian countries. Or the easy to use senangPay, which is open to anyone with an SSM registration. Most local payment gateways are integrated with local marketplace platforms. And allow you to receive payments via FPS internet banking, or using a credit or debit card. Fees from different vendors will vary and depend on the type of account you sign up with. Typically the fees will be from 2% to 12%. An annual usage fee should also be taken into account.
So, How Do I Get Started?
Starting an eCommerce business can be one of the most rewarding ventures. The low start-up costs and potentially high return on investment is a huge advantage for new entrepreneurs. And with a multitude of platforms and technologies to use, there are plenty of options to start a thriving business.
However, running an eCommerce business comes with its own set of problems. Hosting and other technical issues can result in your website crashing and unable to take orders. Also, the level of competition can be fierce, and running advertising can get expensive if you don’t know what you’re doing.
If you haven’t started selling online yet, but are interested in, then feel free to have a consultation with us at One Search Pro. We have helped dozens of companies go from great ideas to successful start-ups. And we can do the same with your goals.
A few of the key strategies we can do for you at One Search Pro:
- Identify and segment your audiences
We’ll work with you to identify critical subgroups that are interested in your products and services. Based on the information given, we can help tailor your marketing messages to connect and resonate with your audiences. Comprehensive psychographics will be conducted based on your target demographics so we’ll know the ideal buyer persona for your products and type of e-commerce.
- Establish goals and measurement strategy
How do you determine if a campaign is successful? Or how can you tell if a visitor is interested in your products, and whether they convert from a cold lead into a hot buying prospect? At One Search Pro, we analyse data and establish specific, measurable and achievable goals for your company.
- Execute based on each brand’s needs & strategy
Each brand is unique and requires a custom-made strategy. Whether you have a one-of-kind handmade product or provide items that cater to everyday consumers, you should have a solid plan for your business.
Contact us today at One Search Pro for a free consultation on how we can grow your e-commerce in Malaysia.