Malaysia: An Untapped Ecommerce Opportunity?

Article on e-commerce opportunities in Malaysia, originally from the Zippycart website, and later on the Malaysia Crunch site:

Malaysia: An Untapped Ecommerce Opportunity?


It was the first time in history that a Malaysian company made headlines at TechCrunch last December. Friendster, the granddaddy of social networks has been acquired by MOL Global, a Malaysian e-commerce (payment) company.

How much do you know about Malaysia?
Malaysia is a country in Southeast Asia which comprises many ethnic groups, with Malays being the majority followed by Chinese, Indians and others. Our multi-ethnic, multi-cultural background also makes us a unique multi-lingual society. A typical Malaysian is usually literate in 2 -3 languages (or more). English is arguably the common language used on the Internet here as many western sites or services are popular and frequently accessed. Some of us are also accustomed to sites from China, Taiwan, Indonesia or even India.

Malaysia’s facts & figures
Malaysia’s population stands at over 28 million. We have around 30% broadband and 106% mobile penetration as of the end of 2009. According to Internet World Stats, we are number 9 in Asia’s top 10 Internet countries, by having 16.9 million Internet users.

Malaysia e-commerce statistics
Half of Malaysia’s Internet users are buying or transacting online, which equaled more than 8 million in 2009. Most of the numbers are contributed by airline tickets (which we will discuss shortly). Other popular goods sold online include books, general consumer goods, movie tickets, technology gadgets and so on. The most preferred online payment method in this part of the world is credit cards followed by Internet banking.

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.

E-commerce challenges in Malaysia
Yes, no doubt we have witnessed 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, as they are the master in micro-transaction infrastructure. Social gaming is expected from Friendster, but what about social shopping?

So, who will be the Amazon of Malaysia? Be it Lelong, Air Asia, MOL, Rakuten, someone or no one, e-commerce’s future here can only be brighter in 2010 and years to come!

Guest post by CK Wong, E-Commerce Consultant

From Blogspot to Dot Com

Many blogshops have gone from using blog platforms to purpose-built e-commerce websites.

A blogshop is essentially an online shop that is built from a free blogging software like Blogspot and Word Press (the two most popular blog platforms used for blogshops).

There are various indicators of this classic blogshop format- the layout, the navigation, the chronologically-reverse posting arrangements, comment boxes, and the '.blogspot/wordpress' in the URL.

It is reasonable to guess that owners convert their blogshops into 'dot com' websites to take their business to the next level, as a proper website can better facilitate e-commerce operations. 

Where a blog software is free, a dot com site requires some expenditure to maintain the online presence, like hosting fees, Web design, etc. 

It seems to me that the essential questions to investigate here are:

1. the motivations to go from blogshops to dotcoms (including the features, facilities and capabilities that a website can offer over a free blogging platform)
3. whether the blogshop model is an entry-level phase for micro-business owners (the scope and size of business this model can support- for example size of customer base/turnovers, product range/inventory, geographic scope of operations, etc)
4. whether a conversion signals a move to grow the business (the neccessity to automate the business to handle larger scale operations)
5. whether it is possible for a blogshop model to sustained (without conversion to a dot com)

Here are blogshops that have converted to dot coms:

Loving Avenue: the blogshop
Loving Aveue: the dot com

News release claims there are over 3000 Blogshops in Singapore

This news article claims that there there are over 3000 blogshops in Singapore.  Previous estimates from last year had put the number at over 2000.

I think this higher number can be attributable to the loose definition of blogshops as the article uses the term 'online stores' as well.

The blogshops listed on the Blogshop City website currently stands at 1028.

The article is from the website Online PR News: http://www.onlineprnews.com/news/22644-1266820853-1-blogshop-and-online-fashion-shopping-directory-in-singapore-blogshopcity.html

Blogshopcity.com is Singapore Newest Blogshop and Online Shopping Directory in Singapore 

The latest BlogShop and Online Shopping Directory in Singapore

Online PR News – 21-February-2010 –

A Singapore-based online shopping forum and Blogshop directory, www.blogshopcity.com was officially launched today.

With over 3,000 Blogshops in Singapore, Blogshopcity is created with one thing in mind and that is to enhance the online shopping experience for its visitors by categorizing these 3,000 online stores.

For any Blogshops that seeking to advertise their business, advertisements and promotions shall prove ineffective unless the website offers a user-friendly interface. A website’s usability features are characterized by its design aesthetics, easy content search and navigational structure. Blogshopcity helps to address all that by categorizing the over 3,000 blogshops and online businesses based on the type of items they sell. By doing so, it not only to change the perspective of advertising online businesses over the internet but also help to address the buyer needs when it comes to buying that new dress over the internet. The information of each blogshop and the items they sell are mentioned in detail.

Unlike other directory and forum, at Blogshopcity anyone can browse through the categories and easily search for the stuff they are looking for. This website is also regularly updated with the latest information about the latest sales and launch of new blogshops in Singapore. This assists in your endeavor to search for the best online shopping deals over the internet

For More Info Visit:- http://www.blogshopcity.com

This article can also be found in http://www.cnngo.com/singapore/shop/launch-blogshopcitycomblog-761484



  

Why use Grounded Theory method for this project?

I think I need to convince myself (I am in the midst of reading the literature on Grounded Theory, and I am finding that it is one tough nut to crack!) why a Grounded Theory approach is needed for this project!

Stern (1994) the strongest case for the use of grounded theory is in investigations of relatively uncharted water, or to gain a fresh perspective in a familiar situation.

1.  This blogshop project is based on the question of "Why are people turning blog software that is intended for personal publishing into online retail spaces?", which is a good candidate for a qualitative method approach as it will allow the social phenomenon of blogshops to be studied in depth.

2.  As there is very little previous study on blogshops, it is an opportunity to ground the project in data, to allow theory to emerge from the data rather than to engage in a verification exercise that uses a proxy-theory, that is the testing of existing hypothesis is not the main concern in this project.


3.  Also, the vast majority of research in the field of e-commerce have employed quantitative methods- for example, the use of cluster and factor analyses to categorize online retail types. It is hoped that applying a different research approach here would make a worthwhile contribution.


4.  Grounded Theory provides for many forms of data collection, including interviewing and observations which are methods that will be utilized in this project.

5. Grounded theory seeks to construct theory about issues of importance in peoples’ lives (Glaser, 1978; Glaser & Strauss, 1967; Strauss & Corbin, 1998).  This resonates very well with this blogshop study which will not just look at blogshops as business entities but their owners, buyers and partners as well.




References:

Stern, Phyllis Noerager. 1994. Eroding Grounded Theory. In Critical Issues in Qualitative Research Methods (Morse, Janice M. editor), Sage Pub., - ed., pp. 210-223.

How Blogshops attract traffic

Many blogshop owners seem to be quite clueless about getting traffic at their blogshops.  This article , written by a popular Singaporean blogshop directory owner, outlines the basics of driving traffic to blogshop sites.

From: http://www.goarticles.com/cgi-bin/showa.cgi?C=2602901.

How to Attract Traffic to to Your Blogshop in Singapore   

by Kelly Chan

You have just build your blogshop and in it you have a great product to sell so it is time for the next piece of the puzzle, getting the right targeted visitors to your blogshop. Currently there are over 2,000 blogshops in Singapore but only a few popular ones that make over 8,000 dollars a month so how did they do it?

There are many online and offline marketing methods to attract traffic to your blogshop and in this article, our focus is getting the right referral traffic. So what is referral traffic? Before we go deeper, let first examine the type of visitors, this is often classify into the following categories:

* Direct Traffic - Visitors who enter your URL and visit your blogshop directly
* Referral Traffic - Visitors who are referred thru to your blogshop via an external link from a referral website
* Search-Engine Traffic - Visitors who found your blogshop thru Search engine like Google, Yahoo etc.

For most blogshop that just started not long, their focus to get referral traffic. There is no way one can get direct traffic if you do not adopt other marketing techniques as no one even know you to begin with. Search engine will take a while to indexed blogshop before your blogshop is displayed based on relevant keywords, let forget about that at this moment.

Ok... Let talk about referral traffic. The easiest way to build referral traffic is by leaving your blogshop link in popular forums. Before you go around spamming forums, make sure you check the rules and regulation when it comes to inserting external links else you may just get banned. Make sure you get the right traffic instead of any traffic, high traffic does not necessary translate to sales, it is the right traffic that does. For example if you are selling dresses then your targeted audience is female so you should focus on popular Singapore women forums like cozycot, flowerpod and deluxemall. In my opinion, forum traffic is often the most effective as they are information seekers and engaging users.

If you are asking "Yes, I understand you now, but how do I get traffic to my site from the forum?" Here are the answers:

a) Below each of your forum posting, you can always include a forum signature below your post. A forum signature can often be a hyperlink to your web site or just a statement that you want to put across to your readers. Whenever someone sees it, there is a likelihood that someone may find it interesting and click on your forum signature.

b) The other way is to write or indicate your web site link in your forum postings thru an article.

c) Finally, some forum also have specific area that allow you to advertise your blogshop for free as well
Other than posting in forums, you can also consider submitting in blogshop directories in Singapore like www.Blogshopcity.com
 
There is no shortcut for success, it takes hardwork so start building backlinks today!

Search engine like Google also indexed and ranked your blogshops based on your backlinks from relevant forums as well.

Literature Review- Factors affecting adoption of ICT

Factors affecting EC in firms has been researched widely in the literature.

There is agreement that EC usage is more prominent in larger firms than in smaller firms (Burke, 2005; Sharma, Ahmed and Wickramasinghe, 2004) because SMEs generally have limited resources and technological capabilities (Thong, 2001).

The following is a summary of the major themes of research on EC adoption in SMEs:

1. Rate of adoption of EC in SMEs

EC adoption is relatively low (Lee, 2004), especially in developing countries (Karanasios and Burgess, 2006).  In SMES, ICT usage is generally limited to simple communication and advertising functions like email and web presence, while e-commerce transactions is limited (Lawson et al., 2003).

2. Factors that determine EC adoption in SMEs:

Studies focused mainly on internal and external factors that influence adoption, wehich can be categorized into:

• Individual factors- ownership/management characteristics and support, and IT knowledge, capability and interest
• Organizational factors (Aguila-Obra and Padilla-Melendez, 2006)- size of the firm (Burke, 2005), the cost of implementation, industry sector and readiness of the firm to engage in EC 
• Environmental factors- roles of government, pressure from partners, customers and competitors, and support from vendors and consultants
• Technological factors- security issues, perceived usefulness, competitive advantage, and compatibility.

Studies also covered the strengths of influence of the various factors on adoption (Grandon and Pearson, 2004; Jeon, Han and Lee, 2006; Kartiwi and MacGregor, 2007; Lal 2002).

Related to these are studies on the e-readiness of firms to adopt EC, especially factors that influence SMEs'  decisions to adopt EC (Ramayah, Yan and Sulaiman, 2005; Raven, Huang and Kim, 2007).

Adoption factors like opportunities for international marketing and exporting (Chong, 2008; Kula and Tatoglu, 2003) and location of business (Bharawaj and Soni, 2007) have not been studied much.

3. The Extent of EC Diffusion and Impact on Firm Performance

The degree of assimilation of ICT has been studes in terms of

• The extent to which ICT pervades the firm's operations (Beck, Wigand and Konig, 2005; Migiro, 2006; Raymond et al., 2005; Al-Qirim, 2005; Al-Qirim, 2007)
• The impact on firm performance- in terms of financial aspects (Beck, Wigand anfd Konig, 2005; Johnston, Wade and McClean, 2007; Raymond et al., 2005), competitive aspects (Fisher et al., 2007; Maguire, Koh and Magrys, 2007; Teo, 2007), business efficiency and IS success (Calderia and Ward, 2003).  Although these studies have found positive impact of EC usage in SMEs, the benefits are inconsistent in different sectors, regions and firms Johnston and Wright, 2004).

4.  EC Adoption by SMEs in Different Regions

There has been considerable studies on EC adoption by SMEs in different regions including caparisons between developed and developing countries (Kula and Tatoglu, 2003; Molla and Licker, 2005; Karanasios and Burgess, 2006; Kartiwi and MacGregor, 2007).

The factors that affect EC adoption in SMEs differ across countries.  Kartiwi and MacGregor found that organizational factors are the main barriers in developing countries compared to technical factors in developed countries.

Studies on EC adoption in South East Asian SMEs include countries like Singapore (Thong, 2001; Teo, 2007), Malaysia (Sulaiman, 2000; Ramayah, Yan and Sulaiman, 2005; Hashim, 2006; Sam and Leng, 2006; Hussin, Noor and Suhaimi, 2008), Indonesia (Kurnia, 2007)

References:

1. Aguila-Obra A.R.D. and Padilla-Melendez, A. (2006). Organizational Factors affecting Internet Technology Adoption. Internet Research, 16(1), 94-110.

Al-Qirim, N.A.Y. (2005). An Empirical Investigation of an E-Commerce Capability Model in Small Businesses in New Zealand.  Electronic Markets. 15(4), 418-437.

2. Al-Qirim, N.A.Y., (2007). The Adoption of eCommerce Communications and Applications Technologies in Small Businesses in New Zealand. Electronic Commerce Research and Applications, 6(4), 462-473.

2. Beck, R., Wigand, R.T., abd Konig, W. (2005). The Diffusion and Efficient Use of E-Commerce among SMEs: In International Three-Industry Survey. Electronic Markets. 13 (1), 38-52

3. Bharadwaj, P.N., and soni, R.G. (2007). E-Commerce Usage and Perception of E-Commerce Issues among Small Firms: Results and Implications from an Empirical Study. Journal of Small Business Management, 45(4), 501-521

4.  Burke, K. (2005). The Impact of Firm Size on Internet Use in Small Businesses. Electronic Markets. 15 (2), 79-93.

5. Caldeira, M. r. M. and Ward, J.M. (2003). Using Resource-based Theory to Interpret the Successful Adoption and Use of Information Systems and Technology in Manufacturing Small and Medium-Sized Enterprises.  European Journal of of Information Systems, 12, 127-141.

6. Chong, S. (2008). Success in Electronic Commerce Implementation: A Cross-country Comparison of Small and Medium Sized Enterprises. Journal of enterprise Information Management, 21(5), 468-492.

7. Fisher, J., Craig, A., abd Bentley, J. (2007). Moving from a Web Presence to E-Commerce: The Importance of a Business Web Strategy for Small Business Owners. Electronic Markets, 17(4), 253-262.

8. Grandon, E.E. and Pearson, J.M. (2004). Electronic Commerce Adoption: An Empirical Study of Small and Medium US Businesses.  Information and Management, 42(1), 197-216.

9. Hashim, N.A. (2006). SMEs and E-commerce: An Exploratory Study of Effectiveness of Government ICT Assistance Programmes. SME-Entrepreneurship Global Conference 2006, 17-18 October, Kuala Lumpur

10. Hussin, H., Noor, R.M., and Suhaimi, M.A. (2008). Perceived Attributes of E-Commerce and the Adoption Decision: The Case of Malaysian SMEs. Jurnal Teknologi Maklumat and Multimedia, 5, 107-125.

11. Jeon, B.N., Han, K.S., and Lee, M.J. (2006). Determining Factors for the Adoption of e-Buisness: the Case of SMEs in Korea.  Applied Economics. 38(16), 1905-1916.

12. Johnston, D.A., Wade, M., and McClean, R. (2007).Does eBusiness Matter to SMEs? A Comparison of the Financial Impacts of Internet Business Solutions on European and North American SMEs. Journal of Small Business Management.  45(3), 354-361.

13. Johnston, D.A. and Wright, L. (2004). The E-Business Capability of Small and Medium Sized Firms in International Supply Chains. Information Systems and eBusiness Management. 2(2-3), 223-240.

14. Karanasios, S. S. and Burgess, S. (2006). Exploring the Internet Use of Small Tourism Enterprises: Evidence from a Developing Country. Electronic Journal of Information Systems in Developing Countries, 27(3), 1-21.

15. Kartiwi, M. and MacGregor, R.C. (2007). electronic Commerce Adoption Barriers in Small to Medium Sized Enterprises (SMEs) in Developed and Developing Countries: A Cross-country Comparison.  Journal of  Electric Commerce in Organizations, 5(3), 35-51

16. Kula, V., and Tatoglu, E. (2003). An Exploratory Study of Internet Adoption by SMEs in an Emerging Market Economy. European Business Review, 15(5), 324-333.

17. Kurnia, S. (2007). Identifying e-Commerce Adoption Driving Forces and Barriers: The Case of the Indonesian Grocery Industry. CollECTeR (Collaborative Electronic Commerce Technology and Research) 2007, 9-11 December,  Adelaide, Australia

18. Lal, K. (2002). E-business and Manufacturing Sector: A Study of Small and Medium Sized Enterprises in India.  Research Policy, 31(7), 1199-1211.

19. Maguire, S., Koh, S.C.L. and Magrys, A., (2007). The Adoption of E-Business and Knowledge Management in SMEs. Benchmarking: An International Journal. 14(1), 37-58.

20. Migiro, S.O. (2006). Diffusion of ICTs and E-Commerce Adoption in Manufacturing SMEs in Kenya. South African Journal of Library and I nformation Science 72(1), 35-44.

21. Molla, A. and Licker, P.S. (2005). Perceived E-Readiness Factors in E-Commerce Adoption: An Empirical Investigation in a Developing Country. International Journal of Electronic Commerce, 10(1), 83-110.

22. Ramayah, T., Yan, L.C. and Sulaiman, M. (2005).  SME e-readiness in Malaysia: Implications for Planning and Implementation. Sasin Journal of Management.  11(1), 103-120.

23. Raymond, L., Bergeron, F. o., and Blili, S. (2005). The Assimilation of e-Business in Manufacturing SMEs- Determinants and Effects on Growth and Internationalization.  Electronic Markets.  15(2), 106-118.

24. Raven, P.V., Huang, X., and Kim, B.B. (2007). E-Business in Developing Countries: A Comparison of China and India.  International Journal of E-Business Research, 3(1), 91.

25. Sam, T.L. and Leng, A.-C. (2006). Adoption of Electronic Commerce amongst Small and Medium Enterprise. Knowledge Management International Conference and Exhibition 2006, Kuala Lumpur.

26. Sharma, S.K., Ahmed, N., and Wickramasinghe, N. (2004). E-Commerce Adoption in Small and Medium Enterprises (SMEs) in Asia: a Study of the Early Stages of E-commerce Uptake.  International Journal of Internet and Enterprise Management, 2(3), 1.

27. Sulaiman, A. (2000). The Status of E-commerce Applications in Malaysia. Information technology for Development, 9, 153-161.

28. Teo, T. S. H. (2007). Organizational Characteristics, Modes of Internet Adoption and Their Impact: A Singapore Perspective. Journal of Global Information Management, 15(2), 91-117.

29. Thong, J. Y. L., (2001). Resource Constraints and Information Systems Implementation in Singaporean Small Businesses. Omega, 29(2), 143-156.

Start up failure rates

Startup Failure Rates — The REAL Numbers

From the Small Business Trends website: http://smallbiztrends.com/2008/04/startup-failure-rates.html

Posted By Scott Shane On April 28, 2008 @ 8:12 am In Startup Trends | 87 Comments

I’m writing today’s blog in the hopes of getting accurate information on new business failure rates out into cyberspace in a way that the search engines will find it quickly. There is a huge amount of misinformation on the Web about new business failure rates that gets cited and reproduced all over the place and that’s a problem for a host of reasons.


Below is Figure 6.2 (p.99) from my book Illusions of Entrepreneurship: The Costly Myths that Entrepreneurs, Investors, and Policy Makers Live By ^[1]. The data come from a special tabulation by the Bureau of the Census produced for the Office of Advocacy of the U.S. Small Business Administration.
While these data look at the 1992 cohort of new single-establishment businesses, the failure rate percentages are almost identical for all the cohorts that researchers have looked at. So, these are pretty much the one through ten year survival rates of new firms.


Proportion of New Businesses Founded in 1992 Still Alive By Year.

These are the averages. There are considerable differences across industry sectors in business failure rates (see Figure 7.1 on page 113 of Illusions of Entrepreneurship), which is pretty interesting and important. But I’ll have to leave a discussion of what those are and why they exist for another blog post.

* * * * *

About the Author: Scott Shane ^[2] is A. Malachi Mixon III, Professor of Entrepreneurial Studies at Case Western Reserve University. He is the author of eight books, including Illusions of Entrepreneurship: The Costly Myths that Entrepreneurs, Investors, and Policy Makers Live By; Finding Fertile Ground: Identifying Extraordinary Opportunities for New Ventures; Technology Strategy for Managers and Entrepreneurs; and From Ice Cream to the Internet: Using Franchising to Drive the Growth and Profits of Your Company.

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Article printed from Small Business Trends: http://smallbiztrends.com
URL to article: http://smallbiztrends.com/2008/04/startup-failure-rates.html
URLs in this post:

[1] Illusions of Entrepreneurship: The Costly Myths that Entrepreneurs, Investors, and Policy Makers Live By: http://www.amazon.com/Illusions-Entrepreneurship-Costly-Entrepreneurs-Investors/dp/0300113315/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1199972909&sr=8-1

[2] Scott Shane: http://wsomfaculty.cwru.edu/shane/