How did eCommerce become Popular in Malaysia?

Over the years, eCommerce has become an integral part of Malaysian lifestyle. Here we are discussing the history of eCommerce in Malaysia

FREMONT, CA: Malaysia has been witnessing rapid growth in the eCommerce sector. Statista's recent estimations reveal that eCommerce sectors collected revenue of RM4.2 billion in 2017. The industry is expected to grow to earn as much as RM9.8 billion by 2022. One of Statista's data also indicates how eCommerce has become an integral part of Malaysian lifestyle. In 2017, there were 15.1 billion active users in Malaysia, which comprises 47.9 percent of the country's population. This fact shows how much potential eCommerce has in this region.

For the purpose of reviewing the tech industry's developments, a study was conducted to gain an insight into how Malaysia's top eCommerce platforms became a household name to consumers. 

Here are some of the most important findings:

2008 – 2011: The Early Years of eCommerce

A study by the Multimedia University Malaysia stated that the adoption of eCommerce during this period was encouraged by the increased availability of faster internet services and usage of computers in offices and households.

C2C platforms such as eBay and Lelong flourished during these years, for it allowed individuals to sell products in a reliable manner. Users not familiar with online payment methods could easily buy or sell products through cash on delivery (COD) methods, which let the buyers and sellers meet face to face and inspect their items.

C2C platforms also increased the use of online payment methods. For instance, eBay made it mandatory for the users to sign up using PayPal. This stimulated the use of online bank transfer, credit and debit cards in the country. Many online boutiques, selling items from tech to fashion products, also emerged by the late 2000s.

2012 – 2014: The Emergence & Domination of Online Marketplaces

The development of eCommerce in the late 2000s set the foundation for many now-popular online marketplaces. In 2012, Malaysia witnessed the advent of five additional players, including Zalora, Lazada, Rakuten, Hermo, and 65daigou (rebranded to Ezbuy today).

While the players fought to gain the largest market share, Lazada rose to become Malaysia's most searched ecommerce by 2014. It overtook most experienced players like eBay and Lelong. Lazada, two years after its establishment, raised nearly US $814 million in funding. Since then, it remained as the most popular online marketplace in the country to this date.

2015 – 2017: eCommerce at an Inflection Point

By the end of 2014, when the Global eCommerce (B2C) sales went beyond US $1 trillion for the first time with every continent witnessing double-digit growth, Malaysia was yet to reach its full potential. To help improve the situation, Malaysian government launched the National eCommerce Strategic Roadmap in 2016. The strategy was to 'future proof' small and medium enterprises (SMEs) and to aid them with proper online marketing capabilities.

2015 witnessed the emergence of another set of new players: GoShop, 11street, and Shopee.

Shopee, funded and founded by SEA, rose to become one of Lazada's closest competitors and surpassed Zalora and Lelong within two years. Shopee's groundbreaking success was because of their wise move to prioritize their platform for mobile users since, in 2014, Malaysia's mobile penetration reached 140 percent considered as the highest in South Asia at that time. By the end of 2017, Shopee became the highest-ranked shopping application on Google Play Stores and IOS.

However, Lazada, backed by Chinese eCommerce giant Alibaba, still has the highest online traffic on desktop. Alibaba also invested US $4 billion to help get into the eCommerce wave in Southeast Asia. This is highly significant for Malaysia as Lazada's logistics and warehouse hub is there, and it provided over 2,000 jobs.

2018 and Beyond: The Future Economy of eCommerce

eCommerce in Malaysia is expected to experience further growth prompted both by business and governmental initiatives. Digital Free Trade Zone (DFTZ), initiated by the Malaysian Digital Economy Corporation (MDEC) with the assistance of Alibaba, is one of the growth catalysts.

However, after the political reform on May 9th, 2018, some assumed DFTZ would be discontinued. But, Jack Ma reassured SMEs and stakeholders that the digital project would continue. Ma also reassured Dr. Mahathir that the Chinese company was ready to help Malaysia with efforts to introduce advanced technology to its schools and support local businesses in areas like cloud computing. Till now, more than 2,000 SMEs have signed on to DFTZ's online platform to market their products to China and other countries.

Google and Temasek stated that Malaysia has the potential to become an $8.2 billion industry by the year 2025. It is now in the hands of both big and small eCommerce players to rise to the challenges and take Malaysia ahead in the eCommerce industry.

See also: Top E-Commerce Technology Solution Companies