Key challenges and opportunities in Malaysia’s e-commerce scene | Digital Asia


Malaysia is one of the fastest-growing e-commerce markets in Southeast Asia. The industry kicked off in 1998 with the launch of Lelong, followed by AirAsia, eBay and iPay88.

E-commerce started picking up pace in 2010-2012, where major platforms like FashionValet,, Rakuten Malaysia (which was later closed), Carousell, Groupon,, Lazada and Zalora was introduced to the market (Source: ecInsider, entrepreneurcampfire).

A pre-Eid survey conducted by Shopee from last April 2 to 9 provides us good insights into Malaysians’ unique shopping characteristics. Nearly 140,000 respondents from all over Malaysia took part in the survey.

Below are the findings from the survey:

  • Nearly 85 per cent of the respondents are below the age of 35, proving that the adopters of e-commerce are generally young;
  • The highest number of respondents are recorded from Selangor, making up more than 20 per cent of the total number of respondents;
  • East Malaysians comprise 20 per cent of the respondents as they find online shopping more convenient and gives them access to a wider assortment of products;
  • As much as 80 per cent of respondents start making preparations for Eid (Raya) from a month before Ramadan, the holy months of Musims;
  • Around 90 per cent of respondents regularly shop online, at least once a month;
  • Nearly 95 per cent of respondents cited price and promotions as the main reason that they prefer to shop online;
  • Additional pull factors that draw users to shop online include convenience, product variations and other incentives, such as free shipping and zero commissions, as well as platforms that offer secure payment methods;
  • Interestingly, the top-5 categories purchased by female respondents during this pre-Raya period include men’s clothing (which ranks the highest, even above women’s clothing and women’s bags and purses), and men’s shoes;
  • On the other hand, top-5 categories purchased by male respondents are men’s clothing, accessories, men’s shoes, men’s bags and wallets and muslim fashion.

(Source: ThesunDaily)

How the industry is growing

The e-commerce penetration rate in Malaysia is roughly five per cent of the total retail market, although it is a combination of the travel and products purchases.

The e-commerce sector has recorded significant growth in 2016 and contributed RM74.6 billion, or 6.1 per cent to the gross domestic product (GDP), from RM68.3 billion, or 5.9 per cent in 2015. Hence, the industry is growing exponentially and will continue to grow in the next few years, as more SMEs are willing to adopt the technology/idea of venturing online.

(Source: The

Current trends:


A recent FedEx-commissioned study on trends being adopted by SMEs in Asia Pacific (APAC) has revealed a high adoption of new technologies among local SMEs. According to the study, Malaysia ranks fourth (among nine APAC countries surveyed) in digital platform implementation and third in adopting Industry 4.0 technologies.

Nearly 61 per cent of local SMEs are optimistic that the e-commerce platforms will help contribute to increased revenue growth in the next 12 months. Sixty-nine per cent of Malaysian SMEs have incorporated Industry 4.0 technologies into their operations such as mobile payments, automation software, and Big Data/analytics in particular. The survey also shows a significantly high adoption rate of mobile payments among Malaysian SMEs at 90 per cent.

(Source: The


Malaysia has high rates of e-commerce usage. Malaysia boasts of 15.3 million online shoppers (50 per cent of the total population) and 62 per cent of mobile users use their devices to shop online.

Online shoppers are often motivated to make purchase on the below factors: price advantages, product range, and availability of reviews. Shoppers also look for free shipping, convenience, and exclusive deals offered by online stores.

The topmost purchased categories are fashion & beauty, electronics, and sports & hobbies.

However, there are other categories that are most likely to expand, such as home décor, furniture, household, groceries, and health & supplements.

Some of the popular e-commerce sites in the country (not necessarily in that order) are:

  • Fave by Groupon
  • 11th

Favourite e-commerce players and are especially aggressive this year. Both come with zero per cent commission and Shopee is going even further with free shipping module and zero per cent transaction fees, it is no wonder they both are the favourite merchant/buyer platform to go.

As of mid of this year, Lazada has around 60,000 sellers on board, a significant rise from 25,000 sellers as of December 2017. Lazada’s monthly traffic is estimated at 45 million (as of Feb 2018).

As for Shopee, it has disclosed that it currently there are more than 1.6 million users. Its monthly traffic is estimated at 12.5 million (As of Feb 2018). Though it has lesser traffic compare to Lazada, the Shopee mobile app were downloaded by more than 5 million users, ranking it first in Malaysia’s most downloaded e-commerce app.

There are plenty of challenges that a seller is facing in today’s e-commerce industry. A few of them are

1. Exposure

Getting your products online is the easy part, but attracting visitors to your store/product and eventually converting them into sales take more than just a few clicks on the web. Besides having a good products, it requires a lot of knowledge, experiences, trial and error, patience and not to mention, money. Which also explains why sellers would prefer to kickstart their online business through third-party platforms like Lazada, 11street and Shopee. But even with that, it is not that easy.

2. Adoption

Again, the idea of selling online might sound easy especially when we were to start with third-party marketplaces. But for retailers, manufacturers and business owners, e-commerce is a new venture altogether. In most cases, sellers would realise that adapting to the e-commerce industry requires team effort.

From the basic of products photography, graphic design and content creation, you need professionals if you wish to execute them well. Then comes social media marketing, Google advertising, Google marketing, website analysis, online business analysis and strategic assortments, all this require talents to execute. Traditional business owners might find it hard to adapt to the industry and usually end up as just another person who have their products online.

3. External risk

With the convenience of technology and shipping, many drop-shippers are facing this issue, where the consumer buys directly from the manufacturer in China. This is a huge problem when Lazada opened up Taobao exposing local buyers to their products because many local sellers are also importers, who buy from China and sell them in local market. This has posed a huge threat to local sellers because the price war has become tougher than it was before. Sellers have to work harder to build themselves as a brand and win over buyers from trustworthiness and credibility.

Major investments/exits/shutdowns

Alibaba’s investment in US$4 billion in Lazada is the biggest funding round in Malaysia so far. And the biggest casualty is the shutdown of Rakuten.

The future

The Malaysian e-commerce industry is growing rapidly and will continue to grow. As compared to other Asian countries like China or Taiwan, it is way behind and could be considered as an infant in this industry. Experts believe that sellers would move towards the offline to online (O2O) business model, where online will complement offline and vice versa.

Also, online marketing will become harder. As we are fed by so much advertisements everyday through our smartphones, marketers will need to be extra creative if they wish to capture consumer attention, perhaps that’s where Augmented Reality and Virtual Reality will come in place.


The article is written by Wong Kim Yoong, Founder and CEO of Malaysia-based Red Dino Ventures, which provides e-commerce solutions such as setting up marketplace accounts, managing and retaining seller’s accounts, along with photography and graphic design.

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