Ecommerce Evolution in Malaysia

From: http://www.ecomzen.com/p/malaysia-state-of-e-commerce.html

E-COMMERCE EVOLUTION IN MALAYSIA

Malaysia does have its own share of online retailers and e-commerce companies, though on a much smaller scale than the United States or Japan. Some have been around since the Internet hit our shores in the nineties. One of the famous first movers here is Blooming - the online florist, and they are still going strong today.

Another prime example surviving the dot-com bubble burst is Malaysia’s very own online auction site - Lelong. It is still arguably more popular than eBay Malaysia here despite its cluttered look and feel. Interestingly, Lelong has recently attempted an Amazon-ish online shopping site at SuperBuy.

One of the most important e-commerce milestones has to be the online ticketing site by Air Asia, a low cost airline based in Malaysia. Starting operation not long after the September 11 attack, the online site is the primary channel to purchase budget airline tickets (holiday packages are available too). A lot of people here were since braving themselves by entering the credit card numbers online in order to get bargain tickets. I would say that it was the starting point of e-commerce mass adoption here.

In recent years, online buy-sell activities are frequented at major auction and forum sites, and to a certain extent, popular foreign stores. At the same time, thousands of online stores are also mushrooming locally, with fashion and apparel being the most popular segment. Quite a number of them are blogshops too, which I guess is a unique trend happening only in Malaysia and Singapore.

Perhaps partly due to the need of those blogshops to sell more professionally, we have seen a few e-commerce SaaS providers emerging last year in 2009. For example, Neowave (who has been supplying shopping cart software for years) has since offered its e-commerce SaaS branded webShaper at affordable prices to online retailers.

Not to be missed, year 2009 also witnessed the big move by a local e-commerce company - MOL as mentioned earlier. Another piece of exciting news came from PayPal in the same year, who announced that they are now accepting transaction in local currency as well as withdrawals to local banks.

MOL is back in the headlines again in 2010 thanks to their partnership with Facebook, well they have Friendster to thank too! The same year also witnessed the group-buying sites are gaining attention here by offering heavily discounted retail vouchers. Some of the local Groupon-clones are MyDeal (from Singapore), GroupsMore and Everyday Coupons.

E-COMMERCE CHALLENGES IN MALAYSIA

Yes, no doubt we have experienced exciting developments in the local e-commerce scene, but many will not disagree that we are still far from the maturity level. The general public here simply doesn’t have the online shopping habit yet. It will take a mixture of cheaper, special, choices or loyalty offerings to encourage the habit of transacting online.

To a certain extent, I would say that we are lacking an e-commerce giant, something like Amazon or Rakuten. That could well kick start local e-commerce mass adoption, similar to what Air Asia has done to the online ticketing space. Of course, like any other markets, people here are generally concerned about security. The presence of the big boys (be it foreign or local) can afford pulling in the financial resources to help educate the local public. On the other hand, online retailers should also do their part in gaining trust from their customers.

As for smaller or medium sized online retailers, the biggest challenge would be attracting traffic to their online store without significant marketing funds. Unless you are selling something niche, it is quite difficult to pull traffic organically from the search engines which index product pages from all over the world. Besides huge e-commerce marketplaces, an obvious piece of the puzzle missing here is the price comparison engine, which could be a great channel for products to get found.

WHAT LIES AHEAD?

Coming back to big boys, Rakuten is strongly rumored to be having talks with certain local players, as Malaysia could well be part of their international expansion plan. There were also rumors of a substantial foreign investment on an established local e-commerce company.

Rumors aside, there are already some initiatives or ongoing developments by local companies to venture into (or expand their) e-commerce services. Suddenly, it seems that many want to be part of the e-commerce game plan. Online retailers are also growing by day, from individual sellers to existing brick & mortars. We need to keep an eye on MOL too, on their development with Facebook, Friendster and so on - perhaps social shopping and physical goods infrastructure are on the cards?

So, who will be the Amazon of Malaysia? Be it Lelong, Air Asia, MOL, Rakuten, Acmamall, someone or no one, e-commerce’s future here can only be brighter in coming years!