The Complete Guide to Setting up an Effective E-commerce Business in Malaysia
Malaysia has a diverse economy and has effectively transitioned from agricultural and commodity-based to industrial and service industries. GDP in Malaysia is predicted to reach $373 billion at the end of 2022. The official estimate for Malaysia’s GDP was $961 billion at the end of 2022, purchasing power parity figures. World Economics forecasts Malaysia’s GDP to be $1.305 trillion – 36% bigger than government figures as of 2023.
Malaysia’s $4 billion e-commerce business is renowned for its tremendous expansion in recent years. Annual sales have risen dramatically since 2015, climbing 47.8% in 2017 alone, leading to a further boost of e-commerce business in Malaysia.
There are several advantages and disadvantages of e-commerce for businesses. It is necessary to analyze your competitors, define your product and business type, and register your firm with the proper authorities before knowing what is an e-commerce business. Before starting an e-commerce business in Malaysia, it is essential to have a clear vision and strategy for what you want to offer and how you will operate. With proper planning and execution, launching an e-commerce business in Malaysia can be a great idea.
Is Starting an E-commerce Business in Malaysia a Good Idea?
The e-commerce industry in Malaysia is expected to grow by 24.7% in 2021 and reach USD 12.6 billion by 2024, so starting an online business there would be a smart option.
Here are some factors to consider:
- Business model: Determine the correct business model that your products or services demand.
- E-commerce platform: Choose the proper e-commerce platform partner.
- Payment gateway: Decide on the finest payment gateway for your business.
- Logistics Partner: Select a logistics partner.
- Shipping service: Consider the cost and dependability of shipping service.
Advantages of Selling in Malaysia
The benefits of e-commerce to business in Malaysia are:
- Access to a new market and overseas buyers
- Opportunity to expand and boost revenue
- Compared to other countries, Malaysia offers a relatively lower cost of living and business operations
- Strategic location for trade and business in Southeast Asia
- Multicultural and multilingual population
- Growing middle class with increased purchasing power
- Favorable government policies and incentives for foreign investment
Selling in Online Marketplaces and E-commerce Platforms
Selling in online marketplaces and e-commerce platforms has become increasingly popular in Malaysia, providing businesses with many opportunities and advantages. It allows you to start or grow your business without upfront costs and no long-term commitment. Here are essential factors to take into account in how to start an e-commerce business in Malaysia:
- Low cost: Starting an online business on an eCommerce site is faster and cheaper than creating an actual storefront.
- 24/7 availability: Online markets allow you to offer your things 24/7, which means you can earn sales even when you’re not physically present.
- Increased possibility of scalability: Online markets help you to access a bigger audience, which might boost your chances of scaling your business.
- Increased profit: By selling on an e-commerce site, you can lower overhead costs and boost your profit margins.
- Minimal upfront commitment: Online markets allow you to start selling with little previous knowledge, minimum upfront fees, and no assistance.
- Specialized services: Some e-commerce marketplaces in Malaysia provide specialized services that can help you advertise your business and shop.
- No regional limitations: Unlike conventional stores, online marketplaces are not limited by physical location, so you can reach clients throughout Malaysia and beyond.
Popular Online Marketplaces in Malaysia
Popular Malaysian online marketplaces provide a diverse range of products and services, and some even offer specialized services such as bulk upload of items, centralized product management, and profile-based listings.
1. Lazada – Lazada is an e-commerce site launched by Rocket Internet in 2011. It is one of the significant e-commerce businesses in Malaysia. It has approximately 10,000 third-party merchants and 50 million yearly active buyers. It provides various items, including health and beauty, fashion, smartphones and tablets, home appliances, and more. By 2030, it plans to service 300 million clients.
2. Zalora – Zalora is an online fashion, beauty, and lifestyle shopping destination that sells an ever-expanding selection of local and international brands customized for customers in Malaysia. It is another example of business-to-business e-commerce in Malaysia. Zalora provides various top global and regional brands across clothes, shoes, and accessories for men and women.
3. PrestoMall – PrestoMall is a Malaysian online store that offers many goods. Previously known as 11 Street Malaysia, it is now a component of Presto, the country’s first domestically dominant mega-app. The website provides various products, including electronics, clothing, books, cosmetics, etc.
4. Lelong – Lelong is Malaysia’s largest e-commerce marketplace, offering a safe and convenient online shopping experience for consumer-to-consumer (C2C) transactions and Business-to-Consumer (B2C) connections. It provides numerous items, including electronics, apparel, watches, cameras, books, and more, from various online shopping businesses and sellers in Malaysia inside a comfortable and safe environment.
How to Launch an E-commerce Business in Malaysia
E-commerce is a fast-developing sector in Malaysia, with 30% of e-commerce transactions in Southeast Asia originating from Malaysia. If you’re interested in beginning an e-commerce business in Malaysia, there are various steps you can take to get started. Here are some tips:
1. Determine the proper business model
Determining the correct business model for a firm in Malaysia needs careful evaluation of several criteria.
- Define your business idea
- Consider your customer needs
- Brainstorm on the business model
- Consider the market potential and competition
- Consider how your customers buy
- Use a local distributor or agent
By following these steps, you can decide on a business plan that is successful and lucrative for your business in Malaysia.
2. Choosing the right e-commerce platform partner
Choosing the proper e-commerce platform partner in Malaysia might be challenging. Here are some norms to help you make the appropriate choice:
- Define your business needs, goals, and future
- Research e-commerce platforms
- Consider the platform’s scalability
- Check the platform’s security
3. Deciding the best payment gateway for your business
Consider the following factors when selecting the most appropriate payment gateway for your business in Malaysia:
- Pricing and fees
- Supported currencies
- Payment options
- e-commerce platform integration
4. Selection of logistics partner
Selecting the proper logistics partner in Malaysia is vital for businesses that wish to extend their operations abroad. Here are some ideas and variables to consider when hiring a logistics partner in Malaysia:
- Experience and expertise
- Financial stability
- Customer service and reliability
- Area of expertise
- Existing relationships
- Services offered
5. Cost & reliability of shipping service
Here are some crucial factors regarding the cost and dependability of shipping services for e-commerce enterprises in Malaysia:
- E-commerce shipping fees in Malaysia generally vary from MYR0 to MYR15 per shipment.
- High logistics cost is one of the issues the Malaysian e-commerce business faces.
- Online customers in Malaysia strive for affordability and dependability regarding cross-border delivery.
- Postal services are often cheaper for sending overseas, while courier services are more dependable and efficient.
- Private express courier service companies specialize in one or a few elements of the supply chain or provide end-to-end services at a premium charge.
Getting on With the Business Registration Process
Here is a comprehensive guide outlining the step-by-step process of registering a business in Malaysia:
Choose a business structure: Selecting the appropriate business entity is the initial step when establishing a company in Malaysia.
Prepare for registration: After picking a business format, you must prepare for registration. This includes completing a name search to see whether the suggested name of the firm is available for registration. Additionally, it is necessary to engage the services of a licensed local company secretary recognized by SSM or affiliated with a professional organization.
Register your business: Once you have finished the preparatory stage, the following step will be registering your firm with the necessary authorities in Malaysia. You can start your business either online or locally. The registration procedure usually takes 5 to 10 work days.
Post-registration: A few things must be done after your business has been correctly registered. For example, you will need to gain licenses, permits, or permission letters from other necessary officials that are important for the business in Malaysia.
Licenses You’ll Be Needing
To start an e-commerce business in Malaysia, you must follow specific legal requirements and obtain the necessary licenses. Here are some key points:
- Register your business with Suruhanjaya Syarikat Malaysia (SSM) or the Companies Commission of Malaysia (CCM).
- Obtain an e-commerce license, which is essential to operate an online business.
Numerous Online Payment Gateways in Malaysia
There are various online payment channels accessible in Malaysia. Here are some of the more popular ones:
iPay88: iPay88 is a well-known online payment gateway service in Malaysia that provides both domestic and foreign payment options.
Razer Merchant Services: Credit and debit cards, online banking, and e-wallets are just a few of the payment methods provided by Razer Merchant Services (RMS), a supplier of payment gateways.
PayPal: One of the most well-known and easily recognizable payment gateway businesses is PayPal. It is also among the easiest. You only need a PayPal account to begin accepting payments on your website.
Billplz: It is a payment gateway service with cheap transaction fees and enables users to make various payments.
Stripe: Credit and debit cards, internet banking, and e-wallets are just a few payment methods available through Stripe, a payment gateway service.
Current Situation of the Malaysian E-commerce Market
Malaysia’s e-commerce business rapidly expands due to increased usage and mobile phone penetration. The government has established a six-point action plan to boost e-commerce adoption, and the National E-Commerce Council has been formed to oversee the NeSR2.0’s implementation. Shopee takes the lead as the favored e-commerce application in Malaysia, attracting an impressive monthly visitor count of approximately 55 million.
Accessing Dedicated Marketplaces to Attract Customers
Accessing dedicated markets might be a terrific method to attract clients to your online business in Malaysia. Here are some key points:
- Consider working with online markets: By linking up with one or multiple online marketplaces in Malaysia, you can reallocate what would otherwise be rental and set-up costs towards getting additional goods or even obtaining a transport system.
- Implement a mobile application: In Malaysia, you can also implement a mobile application to ease client shopping. The site’s advertising can be done jointly with the related application and the well-known outlets available at any time.
- Provide customer care services: Businesses built on the Internet must profit from complete, client-oriented services. It is essential to assess this form of service as well.
- List your things on an online marketplace: Listing your items online allows you to access their user base and reach thousands of buyers who otherwise can still see your business.
- Run Google Ads campaigns: Run Google Ads to attract possible clients who are already looking for things you sell
The Malaysian e-commerce market is predicted to grow by 19.9% to reach MYR38.2 billion ($9.2 billion) in 2022. Malaysia’s dynamic economy, solid digital technology infrastructure, and high e-commerce adoption rate make it a potentially attractive place to launch an e-commerce business.