Everything You Need To Know About Starting An E-commerce Business in Malaysia

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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:

  • Security
  • Reliability
  • 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
  • Reputation
  • 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

Conclusion

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. 

FAQ’s

What are Malaysia’s top e-commerce product categories?

Some top e-commerce product categories in Malaysia are:

Electronics and media

Personal care and food

Men’s and women’s fashion

Furniture and appliances

Sports equipment

How to start a product business in Malaysia?

Starting a product business in Malaysia involves several steps:

  • The first stage is to settle on the business type and learn the subtleties of the sector.
  • You must register your business and have a legally recognized local office address. 
  • You should also investigate your competition, comprehend the industry forecast, and weigh the benefits of beginning an Internet business.

Can a foreigner open a shop in Malaysia?

Yes, foreigners can open a shop in Malaysia. According to the Company Act 2016, a foreigner is authorized to create a specified business entity and the entity alone. There are typically low limitations on foreign investment in Malaysia, and foreign investors can own 100% shareholding.

Do I need a license to sell online in Malaysia?

Obtaining a legitimate business license is necessary to establish a business in Malaysia, including licensing, registration, permits, and approvals. All internet enterprises must be registered with the Companies Commission of Malaysia. 

What are the major products of Malaysia?

The primary products of Malaysia are integrated circuits, refined petroleum, palm oil, rubber clothing, and petroleum gas. Malaysia is the world’s most significant supplier of rubber clothing, oscilloscopes, various vegetable oils, copper powder, and platinum-clad metals.

Is e-commerce booming in Malaysia?

E-commerce is flourishing in Malaysia, with its development outperforming established markets in the area. The Malaysian e-commerce market is anticipated to reach $8.9 billion by 2023, with a CAGR of 20%. The factors driving e-commerce growth in Malaysia include a rising digitally-savvy middle-class seeking discounts and access to global brands, as well as the government’s recognition of e-commerce as a means of inclusivity.

How big is Malaysia’s e-commerce?

By 2023, Malaysia is projected to become the 31st largest e-commerce market globally, surpassing Colombia, with an estimated revenue of $10,187.7 million. The e-commerce industry in Malaysia is expected to experience substantial growth, with a forecasted increase of 13.62% between 2023 and 2027. This growth trajectory is anticipated to lead to a market volume of $16.98 billion in 2027.

What are the e-commerce issues in Malaysia?

A: Some of the e-commerce issues in Malaysia are:

  • High logistics cost
  • Handling presence across B2B and B2C
  • Managing inventory and orders
  • Limited production capacity
  • Trust and security

Do you need a business license to sell online in Malaysia?

Obtaining a business license is a requirement for selling online in Malaysia. Regardless of whether your business operates solely online or has a physical presence, registration with the Companies Commission of Malaysia (CCM) is mandatory.

Can foreigners do online business in Malaysia?

Foreign nationals can operate internet businesses in Malaysia but must meet the relevant registration criteria, such as registering with Suruhanjaya Syarikat Malaysia (SSM). Several phases are involved in the registration procedure, including name approval, application submission, and fee payment.

How should e-commerce businesses be taxed in Malaysia?

Revenue from e-commerce is considered Malaysian income if the operations test confirms business activities within Malaysia. Corporate income tax is applicable to cross-border e-commerce firms established in Malaysia, with rates of 17% for income below MYR 500,000 and 24% for income exceeding that threshold.

What is the most profitable business in Malaysia?

Some of the e-commerce issues in Malaysia are:

  • High logistics cost
  • Handling presence across B2B and B2C
  • Managing inventory and orders
  • Limited production capacity
  • Trust and security

How much capital do I need to start a business in Malaysia?

The minimum paid-up capital necessary to start a new private limited company in Malaysia is 1 MYR. Newly founded business companies in Malaysia are entitled to a tax exemption of 5 years. The corporation tax rate in Malaysia usually is 24%. However, corporations with income not exceeding 2,500,000 MYR per year are classified as Small and Medium-sized Enterprises (SMEs) and receive some tax relief.

What are the challenges of online business in Malaysia?

Online enterprises in Malaysia confront several difficulties. 

  • The first major obstacle to businesses is the acute shortage of financial support available for SMEs. 
  • Second, cybersecurity is a big concern for e-commerce enterprises, and small e-commerce organizations need to adopt advanced cybersecurity technology and practices. 
  • Finally, businesses need help to satisfy new needs such as correct pricing, analytics, and client segmentation since the consumer experience is so important.

What products are in high demand in Malaysia?

Textile items, vulcanized rubber garments, and miscellaneous furnishings are among the fastest-growing products in demand by importers in Malaysia. Shopping products, comprising imported phones, computers, vehicle parts or accessories, computer parts or accessories, and lower-voltage switches and fuses, form 41 of the top 100 Malaysian imported consumer goods.

What is the value of e-commerce in Malaysia?

The e-commerce market in Malaysia is developing fast, with a forecast annual growth rate of 11.4% from 2019 to 2023. The country’s mobile commerce development surpasses total e-commerce and is anticipated to reach an $8.9 billion industry by 2023. The Malaysian government is recognizing the development of e-commerce as a weapon of inclusivity and has declared assistance for strengthening local micro, small, and medium companies (MSMEs).

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