Malaysia: a watchout market in 2015
Ecommerce is on the rise. Studies across our advertising network show that in 2013, 60 per cent of Malaysians shopped online; increasing to more than three quarters of Malaysians who claim to shop online by mid-2014.
This comes as no surprise as the Internet’s vast potential has made it easier for merchants to reach a larger pool of people. Conversely, shopping via the Internet offers consumers convenience and a larger range of products to choose from. What surprised many is how fast it has evolved into a new shopping experience, one where shoppers refer to online information, reviews and competing offers before visiting shops. And the steps are repeated again while at the shops!
Transactional Internet banking began in 2000 and ecommerce gradually grew since then. By the end of 2014, nearly 20 million Malaysians on our network are connected to the Internet via their mobiles, most (more than 80 per cent) through their smartphones. This relatively high smartphone penetration has helped to spur recent growth of electronic commerce and this will continue increasing as competing telco operators lower data rates and competing manufacturers lower smartphone prices.
To date, a large number of purchases made online are still paid for in cash. Of the online payment methods, credit or debit cards and online banking are preferred. Further growth in e-commerce will come as more consumers and small businesses migrate to electronic payment systems. In 2009, 66 per cent of Malaysians on our network said they didn’t have a debit or credit card. This dropped to 48 per cent in 2012 and 33 per cent in 2014. Electronic payments will only increase as ‘agent banking’ gains momentum; giving more people access to bank accounts and debit cards, particularly in rural areas. At the same time, more point-of-sale terminals are expected to be deployed among lower-tier merchants to promote the acceptance and usage of debit cards.
What’s next?
- The Rise of online entrepreneurs: With lower start-up costs and a broader reach, more entrepreneurs are turning to online retail instead of traditional brick-and-mortar businesses. This is further encouraged by a business environment favourable to making and receiving payments online – particularly with online wallets.Notable among these entrepreneurs, is their Internet marketing skills, particularly search engine marketing, and their ability to adapt to new trends in consumer behaviour, launching blog shops followed by Instagram shops. Some like JelitaSara.com are way ahead of the curve – starting online, then opening brick-and –mortar stores and appointing agents as a means of addressing consumer demands.
Their prevalence and success will in turn influence mainstream promotions and the education of consumers in digital commerce. As these entrepreneurs gain more attention, more traditional retailers will appreciate how an online channel is a low-risk way to test new products and complement existing presence. - Manufacturers to sell online: In the past year or so, manufacturers that make and sell consumer products have begun to strategise direct–to-consumer online sales as they learn to balance their relationships with retail partners. Many more will do so in the coming year but it is important for them to realise the challenges of direct retail (e.g. customer service, order fulfillment) and the need for dedicated e-commerce staff.
- Advertising & consumer awareness: Mobile has practically become the first screen in Malaysia. As more products and services go online, more searches and purchases will be made via mobiles. This will bring about more changes in marketing and consumer education as merchants look to mobiles not just for consumer awareness but for transactions. But the increasing numbers of merchants with an increasingly forensic digital marketing approach will demand quality, accuracy and cleanliness from their marketing agencies and ad networks. This will bring major changes in the way we run mobile advertising. With consumers spending more time online and on mobile, it’s no surprise that advertisers are also shifting resources as agencies also set up new units to create digital content and convert TVCs for wider distribution.Mobile creatives will no longer only be the banner ads that we are used to but will include more interactive rich media content.
Internet savvy merchants will practice cross channel optimisation for mobile across search, social and display will be key. At the end of the day, the advertiser does not care about what channel closed the sale as long as there is sales. - Online expansion strategies: While many are considering the internet as an option, others have used the channel to great advantage. For some Malaysian companies, the race to expand online into international markets began as early as 2004 with Jobstreet and continues with myTeksi’s recent expansion into regional markets. Online shopping may yet change how Malaysian retailers develop their regional expansion strategies to deliver services and goods beyond national borders.
