E-commerce sales in Malaysia have continued to experience strong growth, with double-digit sales increases seen through the past decade. This growth has carried over into 2021, although the rate of increase has slowed slightly compared to the previous year. Prior to the COVID-19 pandemic, e-commerce was already seeing robust growth in Malaysia. However, the pandemic has led to an even greater increase in sales, with growth rates slowing only slightly in 2021 despite the higher base from which sales in the category are now starting.
The COVID-19 pandemic and the resulting social distancing regulations have been the main drivers of the high consumer interest in e-commerce. In 2021, non-essential retail outlets, including non-grocery specialists, were forced to close for several weeks due to quarantine measures in response to the Delta wave of the pandemic. Even after reopening, these stores were restricted in their ability to operate at full capacity. Many consumers have also been hesitant to shop in crowded stores out of fear of contracting the virus. Given these circumstances, it is not surprising that e-commerce has seen very strong sales growth in 2021.
Since the beginning of the pandemic, many consumers have come to appreciate the convenience and wide range of products offered by e-commerce. E-commerce platforms also often offer excellent value for money, which has been particularly appealing to price-conscious consumers in Malaysia. The disruptions to commercial activity caused by the pandemic have made price considerations even more important for many in the country.
One factor that has historically hindered the growth of e-commerce in Malaysia is the low level of trust that many consumers had in online payment systems and digital payments in general. However, as digital payments have become more prevalent and the use of cash has declined, these barriers to the wider adoption of e-commerce have become less significant. In particular, the popularity of e-wallets such as ShopeePay and Touch N Go E-wallet has significantly increased in recent years, making it easier for e-commerce platforms to attract and retain customers. This is good news for the leading e-commerce platforms in Malaysia.
In Malaysia, as in other Southeast Asian countries, much of the value generated by e-commerce is accounted for by third party online marketplaces, with international giants Shopee and Lazada leading the way. However, in 2021, Lazada began to lose ground to its rival, Shopee. One challenge for Lazada has been its inability to adequately localize its products for the diverse and culturally specific Malaysian market.
In addition, since being acquired by Alibaba, Lazada has experienced stagnation. These factors have created opportunities for Shopee, which has expanded its reach and product range in order to appeal to a wider consumer base and gain market share from Lazada. It is uncertain whether Lazada will be able to recover and present stronger competition to Shopee in the future, but the company has been running strong advertising and marketing campaigns in both the digital and physical realms in an effort to do so.
The Rise in Proximity Retailing: Since the COVID-19 pandemic, there has been a significant increase in demand for convenience stores and other proximity retailing formats in Malaysia. This is due to people avoiding crowded stores and wanting to stay at home, leading to competition for hypermarkets from these smaller retail formats located closer to consumers’ homes and workplaces. As a result, some hypermarket chains have closed stores and Giant has rebranded and introduced smaller concept stores in an effort to compete with the rise of convenience stores.
Social Commerce Prevails: Social commerce, has become a common sales channel in Malaysia for small vendors. Facebook is the most popular platform for this type of online commerce, followed by WeChat and Pinterest. The growth of social commerce in Malaysia was driven by the high penetration of smartphones and the increasing use of social media and digital channels before the COVID-19 pandemic. The most popular categories for s-commerce include beauty and personal care, apparel and footwear, and toys and games. Instagram stores, known as Instashops, have particularly seen strong growth in Malaysia, particularly among Muslim fashion apparel and footwear retailers.
The Cross Border Effect: Prior to the COVID-19 pandemic, cross-border e-commerce became a common business model in Malaysia’s retail industry and the number of players in this sector has continued to increase in 2021. Jetspree and Yellow Porter have been at the forefront of this trend, offering services that connect online shoppers in Malaysia with travelers who can purchase products from their countries of origin and deliver them to the shopper, or provide affordable end-to-end international shipping and last mile delivery services for items purchased from e-commerce or physical stores abroad.
In Malaysia, There are about 21.3% of people use credit cards, and 73.8% of people use debit cards. While there are 33.9% of people purchase on the internet, there is only 32.6% of people with online banking accounts.
% with financial accounts
% with credit cards
% with debit cards
% get paid through digital channels
% buy on the internet
% with internet banking
% pay bill through online
% E-Commerce Penetration
There is 14.43 million consumer goods e-commerce users in Malaysia, and they spend total of around 8.17 billion USD dollars in 2021. That makes a per capita spending on consumer goods e-commerce of around 566 USD. Also, in those e-commerce users, about 55.9% of them purchase through their mobile phone.
Our CR Team focuses on every changes relevant to the customers across the world.