A Look at the Current State of Online Shopping in Malaysia

Mamak
#1

Going for the real thing

But there’s a lot of misconceptions about what e-commerce entails. She clarifies that it isn’t about selling on social media sites like Instagram or Facebook. You need an e-commerce purpose-built platform like a marketplace or have your own brand website with proper payment and delivery systems. Social media is for sharing photos and posts. It’s better for shoppers to buy from a marketplace – which is easier for authorities to monitor, rather than on social media.

Proper e-commerce businesses may have ads on social media but they’re to drive traffic to their website. The legit ones won’t ask you to send a private message, SMS or WhatsApp for details. Proper e-commerce websites will have an address, company name, website operator, and contact details.

But, having a website doesn’t mean a company is e-commerce ready. Shoppers must be able to perform transactions online, she explains.

“Also, having a website doesn’t mean that shoppers will flock to buy your products. You won’t get traffic without digital marketing. Even if you get visitors to your site, it doesn’t mean you’ll make a sale. It still boils down to the product.”

Offline retailers shouldn’t be afraid to go online. It’s still about selling, marketing and promotions, she advises. You don’t need to spend a lot to hire a special technical team. There are many free e-commerce classes online and solution providers that are cheap.

Join a well-known marketplace first. Once you have a following, you can venture out to your own brand website, she tells retailers looking to go online.

The country’s e-commerce journey only started in 2012. Between 80% and 85% of e-commerce is the business-to-business (B2B) market. The business-to-consumer (B2C) market takes up only a small portion. That’s why businesses are being targeted to grow e-commerce. MDEC, she says, is focussing on SMEs which makes up 98% of businesses here.

“At the moment, 80% aren’t e-commerce ready. We must convert ‘brick and mortar’ SMEs to e-commerce. We have an e-commerce strategic roadmap for that,” she says, stressing that online presence is a must to “future-proof” a business.

The roadmap, approved by Cabinet last month, is aimed at doubling e-commerce growth in the country from the current 10.8% to 20.8% by 2020, she shares.

Sellers will become more responsible with fewer incidents of fraud once consumers are comfortable buying online and are more aware of their rights and how to seek redress. This, she says, is the mark of a mature e-commerce market the country is striving for.

“We must go regional and bring Malaysian brands overseas. But before we push anything, we must see if the product can sell in a particular country at the price and quality people want,” she opines.

“We cannot set up marketplaces in every country. So, we work with a dominant marketplace in the country we want to penetrate. We have an e-trade programme that lets local producers sell in 14 countries including India, China, Indonesia, Singapore, the United States, Australia and Thailand, by working with marketplaces like eBay, Taobao, Qoo10 and Matahari.”

Indonesia’s Matahari has physical stores and a strong e-commerce presence. She describes this as an omni-channel and the ideal set up.

“Both offline and online are very important. You have to create a seamless customer experience between the two. For example, a shopper should be able to buy online and get it delivered within the day or return the item at any of the store’s outlets.” We don’t have that yet.

She doesn’t rule out the Government investing in local e-commerce players with regional growth potential. Halal products, she points out, are a niche market. Out of over 30 halal certification bodies in the world, the Malaysian Islamic Development Department is among the most trusted.

Source: The Star Online

#2

Unhappy buyers: main consumer grouses / complaints in Malaysia

THE National Consumer Complaints Centre (NCCC) received a whopping 15,333 reports on online shopping cases in the last two years.

With losses amounting to over RM6mil, online shopping topped the centre’s list of complaints received in 2014 and 2015, reveals its legal and policy senior manager Shabana Naseer Ahmad.

“The number of complaints jumped and the amount of losses more than doubled from 2014 to last year,” she adds.

More issues are emerging as e-commerce grows. Risk is certain as business is being conducted with products they’ve never touched and money paid to people they’ve never seen, the Domestic Trade, Co-operatives and Consumerism Ministry notes.

From 2013 to date, over 7,000 Internet transaction scams were lodged with the ministry’s e-Aduan System.

This year alone, the ministry has acted against seven online retailers selling counterfeit luxury brands. And, from January to July, a total of 113 websites were either blocked or had their illegal content removed, the ministry shares in an e-mail response.

“Almost 70% of Malaysian buyers are influenced by reviews and over 60% are likely to buy from offshore online retailers,” it adds.

The rising complaints, Shabana says, show that shoppers are moving online.

It’s a trend of modern living. Consumers are very comfortable buying online, she adds. You can get better quality items at cheaper prices with just a click. It saves time, money and energy, as you’re spared from having to brave traffic jams and the hassle of looking for parking. And, there are more choices and comprehensive product information available online, she says.

But, while there are benefits to online shopping, consumers should also be wary as chances of being scammed are very high. There are also cons to online shopping that consumers should consider.

These include difficulties in identifying legit sites and clearing the air if there’s miscommunication, inability to inspect or try the items before buying, and the uncertainty over how repairs are handled and the hefty cost of shipping it back to the online store.

“Also, if you’re an impatient person, waiting for the product to be delivered can be a pain.”

Source: The Star Online

#3

Brick and mortar here to stay

E-COMMERCE will never replace “brick and mortar” retail.

Acknowledging that the new buying pattern is a strain on traditional business models, the Malaysia Retail Chain Association (MRCA) – which has over 300 members covering more than 20,000 outlets nationwide – believes it’s about adapting to changes.

Businesses have seen a 20% to 30% drop in spending but e-commerce isn’t solely to be blamed. Weak consumer sentiments and purchasing power are a challenge too, association deputy president Valerie Choo says.

Already faced with rising costs, talent shortage and the depressed ringgit, retailers must now contend with users who test products in-store but buy them online. Mobile devices are also driving footfall by allowing consumers to locate stores and interact through apps, beacons or QR codes.

There’s greater customer participation beyond the usual feedback forms. E-commerce enables direct engagement with customers who go online to get information, compare prices, and read and offer reviews.

Online shopping complements, not replaces traditional retail, Choo insists.

“Millennials and high-income shoppers are especially keen on experience, differentiation and personalisation. They respond to interactive video displays, retail tables with touch-screen technology, personalised fitting-room lighting, and digital memory mirrors. Ultimately, most still want the sensory experience before buying,” she opines.

Online marketplaces like Taobao and eBay aren’t threats, she adds. They’re opportunities for retailers to attract new and return consumers, and foster brand loyalty. Retailers, however, must evolve and equip themselves to handle this new way of doing business.

Offline, not online retailers, have the advantage, she feels.

“We can get our business onto the Internet faster. And, we have outlets that let customers experience the products directly.”

Learn from others, she suggests.

Singapore, for example, has a retail productivity centre to promote the use of technology by local SMEs. Retailers can also work with online partners.

“(Fitness class booking site) KFit leverages excess capacity in existing retail outlets and reaches out to untapped markets. It’s a win-win situation for both online and traditional retailers.”

“Click and-mortar” businesses also let shoppers buy online and pick up the product in-store, she adds.

It’s crucial, she says, to cater to consumer preferences and convenience. A mix of physical and virtual models reduces the need for large spaces.

Businesses that want to grow must create value. Today’s customers are defying classic notions of what drives their purchasing decisions.

The key is to embrace technology fast and have access to a well-developed e-commerce ecosystem. Retailers must change their organisation’s DNA, not just their marketing and branding strategies.

Choo said due to our humid weather and culture, shopping malls and other retail outlets have evolved into popular lifestyle venues.

She, however, urged retailers to ride the e-commerce wave.

“Unfortunately, the use of technology tools among local retailers – particularly the SMEs that make up 80% of our members, is low.

“Many don’t go beyond having a website.

“Only 19.8% of total SMEs in the country are involved in doing business online,” she said, adding that retailers must upskill and engage directly with consumers through multiple channels like social media and pop-up stores.

Source: The Star Online

#4

A young, but growing market

SINCE Zika was detected here, there’s been a surge in searches for items like mosquito repellent patches and wrist bands – a 517% and 349% increase respectively, notes 11street CEO Hoseok Kim.

“Our survey showed that 95% of Malaysians feel positive about online shopping, especially with more gadgets and gizmos in the market. They see e-commerce as a way for them to save,” he says, stressing that online shopping isn’t just for women.

Many opportunities, he says, are untapped. The e-commerce penetration rate for advanced countries like Korea is 15% but here it’s a mere 2.5%.

The e-commerce retail market in Malaysia, Indonesia, the Philippines, Singapore, Thailand and Vietnam alone, is estimated to be worth around RM28.7bil.

Poised to be the third largest in the world after China and India, South-East Asia (SEA) is on the cusp of an e-commerce golden age. The region’s expected to chalk double-digit numbers in the next five years.

“Compared to other SEA countries, we have good infrastructure like Internet penetration, payment methods and comprehensive logistic and delivery systems to boost e-commerce,” he says.

Agreeing, Shopee regional managing director Ian Ho says over 70% of the population owns a smartphone. And, with 18 million plus active mobile Internet users daily, regular purchases via mobile phones are a given, he says.

Launched last year, the mobile marketplace has over 20 million downloads across the region.

Many Shopee users are first time e-commerce buyers keen on fashion, cosmetics and mobile accessories, making two or three purchases a week, he says.

Kim adds: “Consumers look for specific things they need on PCs while mobile shoppers don’t usually have anything in particular that they want to buy. They browse because they enjoy shopping.”

More than half of 11street’s traffic is generated on mobile phones.

“Mobile shopping is fast becoming a lifestyle as you can do it anytime, anywhere,” he says, adding that the GST (Government Service Tax) hasn’t affected online trade. As consumers become more frugal, online shopping – with rewards like loyalty programmes, vouchers and discounts – grows.

Educating the public that shopping online can be a seamless, safe and fuss-free experience is key, says Shopee’s Ho.

Unlike buying from the store where shoppers can touch, feel and receive the goods when payment is made, e-commerce, he explains, is about trust. Shopee sellers don’t get paid until the buyer is satisfied.

Meanwhile, local retail exporters on eBay are experiencing solid growth due to the country’s strong manufacturing base and weak ringgit exchange rate against the strong US dollar, eBay Malaysia country head (cross border trade) Wong Mei Inn says.

The rise in smartphone and broadband penetration and stronger government support for Internet-based retail, she adds, has lowered entry barriers for Malaysians to do business online.

E-commerce is relatively young here but more opportunities for new businesses and young entrepreneurs in auto parts, cell phones, sporting goods, home improvements, computers, consumer electronics, and home furnishing, segments are emerging.

“Our global customer base has 164 million buyers. Malaysian exporters sell to customers in 34 countries with the United States, Australia, and the United Kingdom making up the top markets.

“We want Malaysians, especially the millennials, to recognise the benefits of online cross-border trading.”

Most traditional commerce companies can only sell locally or regionally. Even if they break into the international market, they’ll only reach a small segment. It’s the bigger ones that manage to penetrate the global market, she points out.

“On eBay, large firms don’t dominate the export market as much as they do in traditional trade. Small businesses can cast a wider net and export to more international markets.

“With doors open to more international markets, 99% of commercial sellers are exporting on eBay as compared to 55% on traditional commerce.”

Shopee’s Ho sees a growing group of entrepreneurs looking to sell online. Its “Shopee University” helps local entrepreneurs set up a free online business in a mobile-centric environment through tutorials. In August this year, Pos Laju got onboard. The goal is to train 10,000 nationwide by December.

Source: The Star Online

#5

Armchair shoppers

WHILE armchair shoppers embrace the ease of virtual shopping, others insist on touching the real thing before parting with their hard earned ringgit.

Manager Minnie Poo, 31, got her wedding dress – among other things, online. The pregnant mother confessed to buying everything from kids toys to adult toys, online.

“I bought Ben Wa balls – a sex toy also used for Kegel exercises, after giving birth to my daughter two years ago.”

Her purchases from local and foreign online stores include big items like dining chairs and lamps that range between hundreds of ringgit to over RM1,000.

The cheapest item she’s bought was a RM30 bracelet, shipped free from the United Kingdom. But, she had to give it away as it didn’t fit.

“I’ve also ordered from the United States and China, usually from Alibaba’s Taobao. They have everything under the sun. It’s all about keywords when searching for what you want. If you can name it, you’ll find it.”

Well-known brands, she says, are okay. But to be extra sure, she consults “Mr Google” and reads user reviews. When buying online, keeping an open mind is key, she feels. Consumers must be open because what you find may not be exactly what you had in mind. She, however, is rarely disappointed.

“If it’s something I really want but am not sure about the item’s quality or specifications, I always go for the cheaper variant. So, I won’t be so sad if it’s a lemon.”

While she’s never had any problems with sellers, courier providers and the authorities are a different kettle of fish.

“Once I ordered essential oils and a diffuser from the US, and had to pay over RM100 in taxes when the order itself was only a few hundred ringgit. I felt cheated by the courier provider and the Customs Department because these are not ‘sensitive items’. And, when Malaysian stores finally sold them, it was cheaper,” she laments.

Describing herself as a “lazy shopper”, Poo hates traffic jams, the crowd, and having to go from shop to shop to find something. So, she always shops online, even if the items are available in stores.

The only problem she has with online shopping is the wait.

“I want it fast – right after I’ve paid.”

Poo’s best friend Dingo Xiao, 32, bought a designer bag for about RM2,000 online. A regular at Taobao, Shopbop, Asos, Urban Outfitters and Amazon, she also hunts for phone accessories and stationery in virtual stores.

While she loves online shopping because “you get to see everything with a click”, she still enjoys going to brick and mortar shops.

“I like feeling and touching the real thing. Then, I’ll go online to see if I can get a cheaper deal,” she says.

Clothing sizes and taxes, though, are a headache. She’s had items stuck at customs and the taxes are often too much.

“I bought shoes from Korea and was asked to get it from customs myself. The box was huge so they assumed that it’s expensive stuff but the invoice showed a very low amount. They though I was bluffing. It’s inconveniences like these that make me think twice about shopping online,” she shares.

Trust, she thinks, is crucial with online shopping. When things are cheap, you’ve got to give and take, she justifies.

“You can’t see the real thing so sometimes it differs from expectations,” she says, admitting that the only illegal item she’s bought online was a sex toy.

Marion Ngo, 48, however, needs to see, touch and feel an item, before parting with her money.

She just doesn’t trust what’s online – especially when it’s for health and beauty.

“My cousin Coreen Ngo, is the total opposite. She buys everything online. Two years ago, I paid RM600 for eyebrow embroidery. She got it for half the price on Groupon,” she shares, describing Coreen as a “professional online shopper”.

It’s a title the 48-year-old housewife embraces. While she does sometimes get carried away when filling her cart on bigsale.com.my, Coreen shops online because it’s cheaper and more convenient.

“When I know I’ve bought too much, I never tell my husband. But some things – especially facials and dining deals, can be up to 70% cheaper compared to normal retail prices. She even gets her haircuts at half-price.

“Eyebrow embroidery is temporary. Why pay so much? Mine lasted over eight months and I’m happy with how it turned out.”

An avid online shopper, Coreen reads public comments before buying. She also window shops to check the retail price before sourcing for a better deal online. She, however, shies away from designer bags because “there are many fakes out there”.

“Quality may be an issue but you can really save if you do your homework.”

Coreen hopes to see more Malaysian marketplaces and local products online because it will give consumers like her more options.

Source: The Star Online

#6

Malaysian consumers have trust issues

IT’S about trust. The lack of it, actually.

Malaysians prefer traditional norms. We view societal changes with suspicion, Multimedia University’s Prof Hishamuddin Ismail, who is from the Faculty of Business, thinks.

This, he says, is evident in the country’s online shopping trend.

Online shopping, he says, contributes to societal changes especially in the way we interact with others.

“Online shopping results in lesser interaction with others, making one more individualistic. To Malaysians, connectivity is more important than being individualistic – which isn’t our culture. And, culture plays a significant role in societal changes,” he says, explaining why despite online shopping benefits and high broadband penetration, the industry hasn’t boomed.

Universiti Sains Malaysia (USM) School of Management Assoc Prof Dr Azizah Omar points to security and privacy as reasons why we’re reluctant to shop online. She thinks Malaysians are worried about their personal information being compromised.

“You can’t use all your senses for online shopping. And, unfamiliarity with technology is an issue.”

Online transaction risks like refunds and billing issues, return policies and faulty products are a concern. But with increasing use of the Internet and the popularity of online shopping among the younger generation, it will improve, she feels.

She, however, thinks that the goods and services tax (GST) and rise in prices have weakened the spending power of consumers. Consumers are focused on buying essential items and are more cautious in their shopping habits, she notes.

“So offline, compared to online buying, is ideal as it’s easier for consumers to thoroughly examine a product before buying.”

Source: The Star Online

#7

Malaysians not buying into online shopping

PETALING JAYA: Globally, online shopping has taken the retail market by storm, but Malaysians are still making a beeline for the malls.

Most prefer brick and mortar shopping, because we like to shop with our senses – trusting only what we can see and touch. Those who prefer browsing in brick and mortar shops are apprehensive about paying for something they haven’t inspected.

However, those who do get online insist that virtual stores offer a wider selection, are cheaper and more convenient.

Online shopping is new here so there’s a sense of anxiety about something going wrong while using the platform. “Touching, seeing and feeling products before buying are important to Malaysians. So, top online purchases are usually from the service industry like flight and movie tickets,” said Universiti Sains Malaysia (USM) School of Management Assoc Prof Dr Azizah Omar.

Common items bought online are fashion, cosmetics, health, mobile accessories, toys and baby products. Malaysia Retail Chain Association deputy president Valerie Choo said due to our humid weather and culture, shopping malls and other retail outlets have evolved into popular lifestyle venues.

Newly announced measures to increase digital connectivity under Budget 2017 are expected to propel greater e-commerce growth here.

The Prime Minister had earlier called on Malaysians to embrace, adapt to changes and explore new areas of growth, as 2017 will be the year of Internet economy for the country.

Source: The Star Online