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The State of Ecommerce in Malaysia

With the launch of eBay Malaysia in 2004, Malaysia began its foray into ecommerce. In 2007, Lelong.com.my, a C2C website, was launched, attracting more than 9.56 million monthly visitors. Lelong is credited with establishing the Malaysian ecommerce industry, and it had market share for a few years before Fashionvalet.com and Mudah.my joined it in 2011. The new state of ecommerce in malaysia has begun to emerge. Lazada and Zalora, two main players, opened their Malaysian operations in 2012, backed by Shopee in 2015. By 2020, Malaysia’s eCommerce industry will be worth US$ 4.3 billion, with the market forecast to double to $8.1 billion by 2024.

The main ecommerce markets in Southeast Asia are Singapore and Malaysia. Despite accounting for just 8% of Southeast Asia’s population, they collectively account for more than half of the region’s overall online retail sales. Though Singapore and Malaysia’s ecommerce markets are still in their infancy compared to established markets like China and Japan, they stand out in terms of the cross-border share of the ecommerce industry.Cross-border orders from American and Chinese webshops account for around 55 percent of all ecommerce purchases in Singapore and 40 percent of ecommerce orders in Malaysia. In comparison to Japan, South Korea, and even China, these figures are significantly higher.

When it comes to tax laws for ecommerce sites, however, there are gaps between the countries – Singapore is known for its favourable laws and legislation, as well as its relatively low rates of corruption. Duty-free shipping is available for purchases under US$320. This promotes cross-border e-commerce. Imported products, on the other hand, are subject to higher taxes and stricter rules (for example, the duty-free ceiling is set at US$160). Although Malaysia’s much greater and younger population than Singapore highlights the country’s future e-commerce potential, website localization could be more difficult due to the country’s linguistic and cultural diversity. 

Malaysia’s ecommerce growth is being fueled by a rising number of digitally savvy middle-class consumers seeking better discounts and access to foreign brands. Other major factors driving ecommerce development in the area are listed below.

  • Geological & Topographical Advantages

Due to the region’s fragmented topology, which is characterised by numerous islands and thick jungles, ecommerce players in Southeast Asia have traditionally faced logistical challenges. Malaysia, on the other hand, is divided into only two main regions: Peninsular Malaysia and East Malaysia, making ecommerce logistics much easier and more cost-effective.

  • Surge in Grocery Ecommerce

Malaysian grocery and FMCG ecommerce is increasingly expanding, as it is in other Southeast Asian countries. In reality, Malaysia came in second on Statista’s list of the world’s fastest growing grocery markets in 2018, behind only Singapore in terms of year-over-year growth. According to IGD Asia, the volume of online grocery purchases in Malaysia will rise at a CAGR of more than 60% between 2017 and 2022.

  • Digitally-savvy, mobile-first consumers

Malaysia has a staggering telephone penetration rate of 140 percent and an internet penetration rate of 85 percent. More than 26 million Malaysians have access to the internet, with 80 percent of those aged 16 to 64 shopping online.

  • Social Media Growth

Thanks to many native shopping campaigns by Facebook and Instagram, the boundaries between social media and ecommerce are becoming rapidly blurred. Furthermore, for ecommerce companies, social media is an outstanding exploration and post-purchase tool. Malaysia had 25 million active social media users as of 2019, accounting for 78 percent of the country’s overall population. For ecommerce companies, this technologically savvy, upwardly mobile segment represents a vast potential consumer base. For more articles similar to this one, click here.