A 10 Year History of eCommerce in Malaysia
The eCommerce sector is among the fastest growing industries in Malaysia. Recent estimates by Statista reveal that eCommerce platforms has garnered revenue as much as RM4.2 billion as of 2017. Furthermore, the industry is expected to increase to earn as much as RM9.8 billion by year 2022. This goes to show you how much potential eCommerce is in the region.
Statista also revealed data that indicates eCommerce has become an integral part of many Malaysians’ lifestyle. In 2017, there were 15.1 million active users in Malaysia which accounts for 47.9% of the country’s population.
As the digital economy develops rapidly, it took the industry a decade to get to where it is now. Hence, iPrice Group released this infographic to reveal the history of eCommerce through Malaysia’s 10 most popular online platforms in the last 10 years. Click here to view the infographic: https://iprice.my/insights/history-of-ecommerce-malaysia/
2008 – 2011: The Early YearsThe adoption of eCommerce during the early years was spurred by the increased availability of internet services and usage of computers in households and offices. A study by the Multimedia University Malaysia stated that eCommerce earned a high growth potential due to the rapid rise in number of PCs and faster internet connections each year.
C2C platforms such as eBay and Lelong thrived during this era since it gave individuals the ability to sell products with a credible and in a convenient manner. Users unfamiliar with payment gateways could easily buy or sell items through cash on delivery (COD) methods. So instead of inputting their banking information, buyer and sellers can meet face to face to inspect products and accept payments.
The popularity of C2C platforms also spurred the usage of payment gateways and other online payment methods. eBay, which provided Malaysian access to products sold overseas, made it mandatory for users to sign up using PayPal. This encouraged the use of online bank transfer, credit and debit cards in the country.
The 2000s also saw the rise of online boutiques selling items from tech to fashion. Among them is Fashion Valet which formally launched an online platform by popular blogger Vivy Yusof and then boyfriend Fadzarudin Anuar.
2012 – 2014: Introduction of Online MarketplacesThe development of eCommerce in the 2000s set the foundation for new platforms where some went on to become the country’s most popular online marketplaces today. In 2012, Malaysia saw the entry of five additional players which includes Lazada, Zalora, Rakuten, Hermo and 65daigou (rebranded to Ezbuy today).
Rakuten, a highly successful eCommerce platform in Japan launched its Malaysian online marketplace. The Japanese-based platform stated that its entry is timely due to the country’s positive market growth and encouraging online shopping trends back in 2012.
This came true for Lazada as it rose to become Malaysia’s most searched eCommerce by 2014. The eCommerce platform even overtook pioneers such as Lelong and eBay. Within two years, the startup by Rocket Internet raised around US $814 million in funding which led to its rapid growth and popularity among Malaysians. From then on, Lazada remained among the most successful online marketplaces in the country until today.
2015 – 2017: eCommerce Now Stands at An Inflection PointBy the end of 2014, the Global eCommerce (B2C) sales exceeded US $1 trillion for the first time with every continent seeing double-digit growth. Yet eCommerce in Malaysia remains relatively new and has just begun to move towards maturity.
The Malaysian government took notice of this and launched the National eCommerce Strategic Roadmap in 2016. In a bid to double eCommerce’s growth by year 2020, its strategy includes a two-fold plan, which is to ‘future-proof’ small and medium enterprises (SMEs). By arming them with proper online marketing capabilities, it aims to expand the country’s market access.
In addition to this, 2015 saw the entry of important players such as GoShop, 11street, and Shopee. Shopee became one of the most prominent players and within two years, they quickly rose to become Lazada’s closest competitor. Funded & founded by gaming company SEA (previously known as Garena), their C2C marketplace initiated their business as a mobile-first platform. Their strategy was unlike any other eCommerce site in which most began as a desktop-first platform and only later, launched a mobile site or shopping app.
Shopee’s move was extremely timely as Malaysia’s mobile penetration was at 140% in 2014 and the highest in Southeast Asia. A separate study also showed that 74% of online traffic on Commerce platforms were accessed via mobile devices as well. Online traffic in Malaysia is expected to rise as the communication infrastructure constantly improves. Furthermore, service providers and smartphone brands are highly competitive in the country, making it a viable environment for mobile traffic growth. As such, Shopee rose to become Malaysia’s highest ranked online shopping mobile app on both iOS & Google Play Stores by end 2017.
However, the battle is not lost. Backed by Chinese eCommerce giant Alibaba, Lazada still has the highest online traffic in desktop. The gargantuan platform founded by Jack Ma, Alibaba invested US $4 billion into Lazada to catch the eCommerce wave in Southeast Asia. This is highly significant for the country because Lazada’s logistics and warehouse hub is located in Malaysia and has provided more than 2,000 jobs.
The rise of eCommerce between 2015 and 2017 was also caused by the rising popularity of online sale periods such as MYCyberSale, Singles’ Day (11th November), Black Friday, Cyber Monday and 12.12 Sale.
2018 and Beyond: The Future EconomyWithin 10 years, eCommerce in Malaysia has become exceptionally diverse and is expected to see further growth spurred both by businesses and governmental initiatives. Among the growth catalysts includes the Digital Free Trade Zone (DFTZ) initiated by the Malaysian Digital Economy Corporation (MDEC) and is commissioned by the Malaysian government. The DFTZ is set to provide a huge boost to SMEs, assisting them on marketing themselves online with expertise provided by Alibaba. On the other hand, eCommerce platforms such as Lazada, Shopee and others is expected to be highly competitive and will battle till the end to win consumers’ hearts in Malaysia.