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Key E-commerce Challenges & Opportunities in Malaysia

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Apr 23, 2023 | E-commerce Industry, Inventory Management, Southeast Asia

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Home > Blog > Key E-commerce Challenges & Opportunities in Malaysia

Are you a seller, retailer or brand selling in the Malaysian e-commerce market or someone who is planning to launch in the online space? 

Is it becoming a real hassle for you to elevate your eCommerce business, manage the extreme online demands, meet the expectations of the consumers all while maintaining a smooth operational flow? 

Well, you are not alone because the rapidly growing and immensely competitive space of e-commerce in Malaysia is not that easy to make a mark at, but is also not an impossible forte to make your mark on. 

With the right technological solutions, proper operational procedures and well-established customer relations, the Malaysian e-commerce market space can be your breeding ground to success. 

But how to move forward in the direction of achieving the above-mentioned objectives? This blog is your one-stop guide to all your queries, concerns and possible business strategies in order to achieve maximum growth with minimized errors and hurdles.

Also read: What is a Warehouse Management System and How Does It Work?

E-commerce in Malaysia

The e-commerce industry in Malaysia has seen a massive growth of US$ 4.3 billion in 2020 and is expected to grow up to US$ 8.1 billion by 2024!

Over 25 million, a total of 80% of the overall population of Malaysia are avid internet users and online shoppers, making the region a hotspot for e-commerce advancement and growth.

The government of Malaysia works around several dedicated ministries under the National eCommerce Council NeCC and programs such as the National e-commerce Strategic Roadmap NeSR in order to drive the upward curve of eCommerce in Malaysia and to increase the GDP contribution of the country.

After Singapore in the South East Asian region, Malaysia is the second-largest e-commerce market and the increasing number of middle- earning class in the country, internet users and constant investments of big eCommerce spaces such as eBay, Lazada, Zalora, Shopee, Carousell, etc., in the country, amplifying the choices and demands of online consumers, it is soon going to level up with Singapore in terms of eCommerce growth.

But with great opportunities, comes greater challenges and the same is the case with Malaysia where you as an eCommerce business owner will face several difficulties before you succeed in becoming a top seller in the regions.

E-commerce Biggest Challenges in Malaysia

eCommerce biggest challenges in malaysia

While the e-commerce market in Malaysia is booming and becoming the first choice of local as well as international businesses to invest in, there may still persist some challenges in your road to success.

Talking about how strong the entire e-commerce ecosystem is in Malaysia and how the government is constantly working around plans and strategies to uplift sellers, retailers, brands, etc., the implementation of these policies and systems still require time and a little more push for proper implementation.

The ever-changing consumer demands is another hurdle that most e-commerce businesses in the country fail to adapt successfully and rapidly because of the lack of proper technological support and assistance right from accurate warehouse management to order and inventory management, providing Omnichannel solutions and more!

Biggest Challenges the Malaysian e-commerce businesses face may involve:

1. Managing Inventory & Orders

Malaysian retailers have struggled to adapt to the technological advancements going on in the eCommerce industry and their biggest hurdle in becoming a top online seller was to properly manage their inventory in order to serve the customer demands. 

Leading Hardware company, ATKC Hardware found itself in a similar situation when they initially decided to take their business online. Coming from a small region of Malaysia, the company was looking to expand across the country and was hoping to take its brand to the next level. 

The first step in the direction for ATKC Hardware was to execute accurate inventory management solutions in order for them to improve stock maintenance and provide better serviceability. 

Faced with the crucial issue of managing their products, the brand decided to implement Barcode Inventory Management System to help them fasten e-commerce processes. 

In absence of a proper inventory management software solution, your business can face severe problems right from maintaining stock freshness, enabling stock rotations, restricting stocks outs and dead stocks etc.

2. Handling presence across B2B and B2C selling platforms

One of the most common challenges faced by hundreds of e-commerce businesses including one of the well-renowned cleaning and sanitization product companies, Citycoin that sells its products under the name of Lovis, was to require proper product distributions and visibility to achieve sales growth for their businesses.

The brand struggled with selling its products on retail stores and offline channels and faced several financial challenges. The only solutions that helped them was to switch to online selling, which required them to integrate on leading marketplaces, carts, and online website to reach a wider pool of customers and to showcase their products better. 

The brand listed its products on the leading marketplaces such as Shopee and Lazada which helped them attract more and more customers and significantly reduced their burden of deploying dedicated sales and marketing teams to take care of their sales. 

Kacang Macha is another popular e-commerce FMCG seller in Malaysia that sells Halal Indian Snacks to Malaysian customers. 

The company initially struggled to manage its presence across B2B platforms such as Alibaba, Daganhalal, etc as well as B2C spaces. Due to their exposure across these selling platforms, the brand has managed to overcome their challenges of taking their products across audiences.

And so, without allowing your products to reflect on multiple B2C as well as B2B eCommerce marketplaces, carts, etc., it will become an issue to gather customers and achieve higher sales.

3. Balancing Surge in Demands and Fulfilments

Another key challenge that eCommerce businesses face while transitioning and positioning themselves as rapidly growing eCommerce players is the effective management of warehouse operations to ensure faster order fulfilment rates and to supply in accordance to demand.

Herman Foods is a big name in the Malaysian eCommerce market that ships Malaysian ‘Musang King durians’ across borders. The brand ships across 18+ countries and has always wrestled with the need to balance their supply in terms of the demands they get for the Malaysian delicacy. 

The brand has deployed tons of manual labour and adopted technological support in order to maximise their rate of order processing to provide higher quality exports to all the regions of their focus.

And so, not having the advanced technology assistance to tackle the evergrowing demands of the shoppers while carefully handling all your products can become a pain point for any business.

4. Tackling Manual Dependency for e-commerce Operations

When demands rise, e-commerce businesses are required to speed up their picking, packing, dispatch and delivery operations, but doing things manually can cause a lot of delays, errors, etc., 

Kait Lifestyle Store is an organic baby food company selling over 1000 products in Malaysia which struggled with managing orders and inventory manually while maintaining the freshness of all their products.

Without automation, taking care of each and every process of your order cycle can become really difficult and may lead up to poor customer service, lower customer loyalty, increased order cancellations and returns, all of which can severely impact your overall business growth.

While these challenges top the list of every e-commerce player or even the new ones starting their e-commerce journey in Malaysia, there can always be more business-specific and personal barriers each seller can face while trying to create a niche for themselves in the vastly expanding e-commerce space of Malaysia.

But for every problem, there is a solution and in the case of overcoming these challenges possessed by the Malaysian e-commerce market, the solutions are well proven and highly adaptable for any small to medium business with a little support and better business planning.

E-commerce Opportunities in Malaysia

Due to the massive development and government initiatives towards making eCommerce the biggest sector in Malaysia, the opportunity to become a leading online seller in Malaysia is huge.

eCommerce challenges & opportunities in malaysia

1. Wider Access to Products Across Borders

The majority of the population of Malaysia consists of young, working-class, fashion and tech-savvy individuals who are constantly on the lookout for well-renowned brands, locally as well as internationally. 

The consumers in Malaysia are a ‘Mobile-First’ audience with over 1.9 billion purchases made via a smartphone in the year 2019 alone and prefer to shop from apps and social media platforms rather than specifically from websites.

Due to their preference of shopping from smartphones, online shoppers in Malaysia have the ability to shop whatever from wherever irrespective of the origin of a product, right from the comfort of their homes, which plays a significant role in the success of eCommerce in the region.

2. Higher Trust of Consumers on Digital Payment Modes

If we talk about the consumer behaviour in Malaysia, It is evident to see that out of all the e-commerce markets around the world, South East Asia is one region where the consumers do not fear or are rather more comfortable paying for their products online and try to avoid physical payments or cash on deliveries. 

This is a completely different and e-commerce positive behaviour that most of the other countries struggle to achieve but in Malaysia itself, online transactions and digital payments cover up over 93% of the total eCommerce payment methods, making this region a favourable space for big payment gateway companies such as PayO, Google Pay, PayPal, etc.

3. Greater Influence of Social Media

Social media holds a huge impact on the population of the entire South-East Asia, let alone Malaysia, where over 25 million people are active social media users. Online shoppers depend so much on the ratings, reviews and influencer feedback of each of the products they want to buy, that the distinction between an e-commerce platform in Malaysia and that of a social media platform is vanishing. 

Social media platforms such as Facebook & Instagram have also added to the ease of shoppers as well as sellers to list their products to a bigger pool of audience, get real-time feedback on their products and work around effective sales strategies to grow and profit

4. Rapid Demands for Essential & Non-Essential Items

Essential products such as groceries and FMCG items have grown in demand in Malaysia as the country ranked 2nd in the list of fastest-growing grocery markets as per a Statista report in  2018. 

Fashion & Beauty, Electronics, Toys, Furnitures etc are the most preferred non-essential categories that see increasing demands and have provided space to a number of eCommerce businesses to flourish in the region.

5. Better Geographical Conditions

In terms of shipping and logistics, South East Asian countries present tons of challenges as the topography is not favourable due to the entire region being a culmination of multiple small islands with vast forests but with Malaysia, the conditions vary as it is made up of two parts only and provides a rather smoother on land transportation opportunity enabling logistics and delivery companies to make higher profits here.

6. Greater Accessibility to E-commerce Enablement Solutions

With the constant rise of e-commerce, there also has been considerable growth seen in terms of technological and e-commerce enablement solutions in Malaysia. Internationally renowned e-commerce solutions providers have begun to shift their focus to the rapidly growing e-commerce market of Malaysia, providing sellers immense opportunities to render superior services with best in class supply chain solutions right from automated inventory, order and warehouse management, integrations to leading e-commerce platforms and much more.

In Conclusion 

The future of e-commerce in Malaysia is bright and it is the perfect time for you to begin, advance and adapt to new methods and techniques of providing the best services to your customers. 

Just by working your way with the right approach and with the correct technological assistance, you can grow your eCommerce business, provide superior customer services and experience higher profitability and productivity.

Want to find out more about the e-commerce market of Malaysia, check out our blog on the latest trends going on around the region and the most effective strategies and methods to follow in order to become a top seller in Malaysia.

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