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Malaysian eCommerce expected to proliferate in 2018

Malaysians have been known to be active internet users like people in some countries in Southeast Asia, and recent reports suggest that electronic commerce (eCommerce) is expected to flourish in the country this year.

eCommerce in Malaysia is expected to grow in 2018

One of the notable trends in Malaysia is that the estimated 22 million internet users will increase by 5 million this year, this includes people who use their mobile devices for online shopping. The Electronic Commerce Act of 2006 and other digital laws that have been passed were some of the factors that lead to the country’s rise in eCommerce.


Current digital marketing landscape in the country

            Malaysians have been known to maximize the convenience of the internet when buying products and services. A survey revealed that 80% of the 15.3 million Malaysians are using their smartphones or any other mobile device when doing online shopping. Another factor seen in the rise of the Malaysian eCommerce landscape is the sprouting payment gateways that offer secure transactions between merchants and consumers. The majority of online shoppers in the country  rely heavily on online money transfer (54%) as a mode of payment, and a significant number of shoppers use either debit or credit cards. The number of cash on delivery (COD) and prepaid account payments have declined.


Major payment gateways used in Malaysia:

            Among the 15 payment gateways honored in Malaysia, 2Checkout, BitPay, and Coinbase are the three of the most commonly used by online shops like shopify.  


Malaysian local eCommerce is expected to boom in the coming years

            Increase in income, internet penetration, and continuous growth in smartphone usage in the country are the factors for the estimated 5% online market increase in the year 2020 from the 0.5% recorded in 2014. More than half of online shoppers in Malaysia (54%) currently prefer to pay their purchases using online money transfer, while 33% choose to pay using credit/debit cards, followed by cash on delivery or COD (12%), and a small percentage (1%) choose to pay the seller through prepaid accounts.


Languages spoken in Malaysia

            There are 137 languages used in Malaysia, three of which are their national or official languages, namely: Malay, Bahasa, and Malaysian English (Manglish) that started from British English. Online shopping sites like Zalora and Lazada use English, Bahasa Malaysia, and Tukar Bahasa languages to communicate with the shoppers. The Malay language is commonly used for everyday speaking across the country, while English is mainly used in education, and other industries including the government. Malaysian Chinese, on the other hand, commonly speaks Mandarin and it’s also greatly used in businesses and Chinese schools. Other Malaysian dialects and some Chinese language variants are rarely used nowadays.


Malaysians are open to money exchange

            Malaysian ringgit (RM) is Malaysia’s national currency and it’s unofficially referred to as Malaysian dollars. Financial institutions and authorized money changers allow easy exchange of ringgit to US Dollar, Australian Dollar, British Pound, and other currencies. Cryptocurrency exchange, on the other hand, is tolerated in the country as it is becoming one of the fastest modes of doing transactions.        


Top online stores in Malaysia

            Lazada, 11Street, and Shoppu are the top three online shops in Malaysia in terms of web traffic that sell a variety of products. The age bracket of people who shop online is between 18 to 34 years old with an annual income between $30,000 to $60,000. Fashion and accessories are mainly bought by 16% percent of online shoppers, followed by home and living (15%) and health and beauty (13%).              


Search engine rankings in Malaysia 

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Online commission fees

            Merchants usually pay commission fees to online shopping platforms where they sell their products. Lazada, for example, based the commission fees they charged on the sellers’ product unit price per order, hence the computation: Listing price x Commission rate for the specified category of the item = Commission Fees.

            Merchants only need to pay commission fees if the online shop platform made a successful transaction with a customer. In Lazada, for example, merchants have to settle various payments depending on the transaction outcome. Such payments are usually calculated based on the merchant’s products involved in the transaction. Lazada, on the other hand, also pay fees to the merchant in every completed transaction. Other online shops like Lelong and 11Street have different payment structures for merchants.


Common mode of payment

            Due to the rapid eCommerce increase in Malaysia, more payment methods are expected to become digital. A 2013 report revealed that the majority of Malaysians (50%) pay online using online banking, followed by credit card (37.5%) and other modes of payment (12.5%) which includes PayPal, cash, and COD. 


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eCommerce is expected to proliferate in Malaysia this year 

            Lazada Malaysia believes that eCommerce will continue to increase in the country as they expect that there will be over 2 million people who will resort to online shopping and a 30% increase in monthly online shopping frequency is also expected. In 2016, the International Trade and Industry of the Malaysian Ministry released an eCommerce Initiative to urge the majority of entrepreneurs to break into the eCommerce world for them to access the nearly 100 million consumers in other Asian countries.    

            Globalization is expected to further push over 4,000 SMEs to maximize the power of eCommerce. Consumers buying decisions continue to be influenced by industry experts through social commerce as there will be an increase in relevant web content. Malaysia has also made clear their stand on cryptocurrency. As we know, digital currencies, although unstable, have been widely used in many transactions worldwide. A financial expert in the country stated that though they will not ban cryptocurrencies, they will be vigilant in monitoring it. Banning cryptocurrencies would hamper financial technology innovation. 


But there are still some hindrances in eCommerce that needed to be addressed

            Cybersecurity threats, scarcity in digital marketing experts, costly operations, cross-border eCommerce restrictions and limited production capacity are some of the challenges currently facing eCommerce in Malaysia.


Will a new eCommerce website sell in Malaysia?   

Based on the latest generated study, and some recent technology forecasts, opening a new eCommerce website in Malaysia would result to a healthy competition among existing B2C and B2B. Although there are already big players in the industry, establishing a new business may give consumers other options that they may like more compared to the existing business models. A new player could compete with online sellers like Lazada if they offer lower costs and safer and better payment solutions and delivery to merchants and consumers. Prospect investors, however, should have a skilled IT team who will run and maintain platform security.

Tags: Business

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