A Country Guide for E-commerce sellers in Malaysia

A large and growing internet user base and a lucrative market fueled by high product margins make Malaysia a powerhouse in the Southeast Asian e-commerce landscape. With user penetration for online shopping projected to reach 53.1% and the e-commerce revenue expected to surpass $19.84 billion by 2027, Malaysia presents a compelling opportunity for businesses seeking to expand their reach and capture an active market share.

This comprehensive guide delves into the intricacies of the Malaysian e-commerce market, offering you tips, insights and actionable strategies required to navigate this dynamic space. 

Insights into the E-commerce Landscape of Malaysia

Malaysia’s e-commerce sector has witnessed significant growth over the past decade, with the COVID-19 pandemic acting as a catalyst. While this growth has moderated slightly as pandemic restrictions eased, the underlying momentum remains strong. In fact, in the first quarter of 2023, Malaysians made 291 billion Malaysian ringgit – an increase from the previous quarter’s 287 billion Malaysian ringgit. 

Here are some key trends shaping the Malaysian e-commerce landscape:

• Social Commerce Boom: Social media platforms like TikTok are emerging as powerful e-commerce channels, with influencer marketing and live streaming via e-commerce platforms playing a crucial role in driving sales.
• Cross-Border E-commerce Expansion: Consumers in the SEA region are increasingly looking beyond national borders and into Malaysia for unique products and competitive pricing, leading to the growth of cross-border e-commerce giving way to sellers in the country to expand their market.
• Shifting Shopping Preferences: Fashion, electronics, and groceries remain the top online purchase categories, with digital media gaining traction.
• Value-Driven Consumers: Economic uncertainty and rising inflation have shaped consumer purchase behaviour. The possibility of a recession has made Malaysians think and reconsider several aspects of purchases and even their capacity to put money into savings, buy daily essentials, or even keep up with their current lifestyle. Convenience and attractive discounts are the primary motivators for Malaysians to embrace online shopping.

Understanding these dynamic trends is crucial for any business seeking to thrive in the Malaysian e-commerce ecosystem.

Popular E-commerce Platforms and Marketplaces in Malaysia 

Choosing the best platform for your business depends on various factors, including your target audience, product category, and budget. Consider conducting thorough research to understand the strengths and weaknesses of each platform available before making your decision. However, here are a few platforms you can opt for when starting an e-commerce brand in Malaysia:

• Lazada: The undisputed leader in the Malaysian e-commerce market, Lazada offers a vast selection of products across various categories, extensive marketing reach, and robust fulfilment solutions.
• Shopee: Known for its mobile-first approach and integrated social features, Shopee has garnered significant traction, particularly among younger demographics. Its competitive pricing and gamified shopping experience make it a popular choice for both sellers and buyers.
• Zalora: A fashion-focused platform, Zalora caters to a style-conscious audience seeking branded apparel and accessories. It offers curated collections, exclusive deals, and seamless checkout experiences.
• BigCommerce: Geared towards established businesses, BigCommerce provides a scalable and customisable platform with advanced features such as built-in marketing tools and comprehensive analytics.
• Mudah: This classifieds website allows users to buy and sell a wide range of new and used items, making it a valuable platform for niche products and local businesses.

Common Trade Partners in Malaysia

As a member of the World Trade Organization (WTO) and a signatory to numerous free trade agreements (FTAs), Malaysia boasts a robust trade network that facilitates seamless e-commerce transactions.

Within Southeast Asia (SEA), Malaysia’s top trading partners include:

• Singapore
• Thailand
• Indonesia
• Vietnam
• Philippines

These partnerships, particularly through the ASEAN Trade-In Goods Agreement (ATIGA), enable favourable trade conditions with regional neighbours, granting Malaysian businesses preferential tariffs and simplified customs procedures.

Beyond the region, Malaysia also enjoys strong trade ties with:

• China
• Japan
• Korea
• India
• Australia
• New Zealand

These regional and international partnerships not only allow Malaysian e-commerce businesses to import a wider range of products but also present lucrative export opportunities.

Additionally, Malaysia’s strategic partnership with Indonesia specifically focuses on the import of Halal products, encompassing a wide range of categories like food, fashion, and personal care items. This caters to the growing demand for Halal products within the region and presents a unique opportunity for Malaysian e-commerce businesses to cater to this specific market segment.

E-commerce Challenges in Malaysia

Despite the immense potential, several challenges are inherent to the Malaysian e-commerce landscape. Understanding and addressing these hurdles is crucial for sustainable success:

• Intense Competition: The Malaysian e-commerce market is highly competitive, with established domestic players and international giants vying for market share. This necessitates differentiation through unique product offerings, exceptional customer service, and competitive pricing strategies.
• Digitising Operations: Many e-commerce businesses in Malaysia still rely on manual processes for order management and warehouse management. This can lead to inefficiencies, delays, and errors. Investing in robust and automated systems is crucial for optimising operations, improving scalability, and enhancing customer experience.
• High Logistics and Fulfilment Costs: Logistics and fulfilment can be a significant cost factor for e-commerce businesses in Malaysia. The country’s diverse geography and developing infrastructure present challenges in establishing efficient and cost-effective delivery networks. 
• Storage Infrastructure Needs: E-commerce businesses require robust and scalable storage infrastructure to manage their inventory effectively. This includes having adequate storage space, efficient inventory management systems, and effective organisational practices. Neglecting proper storage infrastructure can lead to stockouts, fulfilment delays, and customer dissatisfaction.
• Inventory and Order Management: Efficient inventory and order management are vital for e-commerce businesses to avoid stockouts, overstocking, and fulfilment errors. This requires implementing robust inventory management systems, employing accurate forecasting techniques, and streamlining order processing procedures.
• Overcoming Manual Reliance: Many e-commerce businesses, especially smaller players, rely heavily on manual processes for various operations. This can lead to errors, inefficiencies, and limitations in scalability. Investing in automation tools and digital solutions can streamline workflows, improve accuracy, and enable businesses to handle increased order volumes.

By acknowledging and proactively addressing these challenges, e-commerce businesses in Malaysia can position themselves for sustainable growth and success in this dynamic and competitive market.

Steps to Get Started in Malaysia

Eager to tap into the potential of the Malaysian e-commerce market? Here’s a roadmap to guide you through the initial steps:

1. Compliance First

Before diving in, ensure you’re compliant with Malaysian regulations. This involves completing all necessary paperwork, including registering your business and obtaining relevant tax registrations. Familiarise yourself with import regulations if you plan to source products from abroad, as this will ensure a smooth customs clearance process.

2. Finding Your E-commerce Home

With a clear understanding of your target audience and product offerings, research and select an e-commerce platform that aligns with your needs. Popular options include Lazada, Shopee, Zalora, andTikTok Shop. Each platform caters to different niches and offers varying functionalities. Consider factors like target audience, product category, budget, and scalability when making your choice.

3. Building Your Storefront

Once you’ve chosen your platform, it’s time to set up your online store. This involves designing a user-friendly and visually appealing interface, ensuring clear navigation, and providing comprehensive product information. Remember, high-quality product images, detailed descriptions, and competitive pricing are essential for attracting and converting customers.

4. Accurate Product Listings

Product accuracy is paramount in the e-commerce world. Meticulously list your products, including clear descriptions, specifications, dimensions, and high-resolution images from various angles. This transparency builds trust with potential buyers and reduces the likelihood of returns and disputes.

5. Navigating Import Regulations

If you plan to import products from overseas, familiarise yourself with Malaysian import regulations and customs procedures. This includes understanding duty structures, import permits, and any restrictions that may apply to your specific products. Partnering with a customs broker can help navigate these complexities.

6. Mastering Inventory Management

Establishing a robust inventory management system is crucial for e-commerce success. This involves implementing inventory management software, employing accurate forecasting techniques, and streamlining order fulfilment processes. Efficient inventory management prevents stockouts and overstocking and ensures timely order fulfilment.

7. Partnering for Efficiency

Logistics and fulfilment can be a complex and resource-intensive aspect of e-commerce, especially for new businesses. Consider partnering with a reliable 3PL in Malaysia. They can handle warehousing, packaging, shipping, and order tracking, allowing you to focus on your core business activities.

E-commerce Logistics & Fulfilment in Malaysia

Logistics and fulfilment are the backbone of any successful e-commerce business. In Malaysia, where the market is geographically diverse and customer expectations are high, selecting the right logistics and fulfilment partner is crucial for ensuring efficient delivery and customer satisfaction.

1. In-house fulfilment: For businesses with high order volumes and the resources to manage their own warehousing, packing, and shipping, in-house fulfilment might be an option. However, this requires significant investment in infrastructure, manpower, and technology.
2. Multichannel fulfilment: This service caters to businesses selling across multiple online marketplaces and channels. The fulfilment partner handles inventory management, order processing, packaging, and shipping across all platforms, ensuring consistency and efficiency.
3. 3PL (Third-party logistics) fulfilment: This outsourced solution is ideal for businesses of all sizes. A 3PL provider takes care of all warehousing, picking, packing, and shipping, allowing you to focus on core business activities.

A leading 3PL provider in Malaysia will understand the unique needs of e-commerce businesses and offer a comprehensive suite of services designed to empower your online success:

• Insights and Forecasting: Gain valuable insights into customer demand, inventory levels, and delivery trends using advanced forecasting tools to help you optimise inventory and ensure timely order fulfilment.
• Strategic Warehouses and Last-Mile Coverage: Strategically located warehouses and an extensive last-mile delivery network ensure fast and reliable delivery across the nation.
• Affordable Pricing: Competitive pricing plans that cater to businesses of all sizes and budgets.
• Multichannel Services: Whether you sell on Lazada, Shopee, or your own website, a 3PL can manage fulfilment across multiple channels seamlessly.
• Cross-border Offerings and Trade Services: If you wish to go international, cross-border fulfilment solutions and trade services can help you expand your reach beyond Malaysian borders.
• Scalability: The robust infrastructure and technology are built to scale with your business. As your order volume grows, 3PLs can seamlessly adapt to meet your evolving needs.

Partnering with a 3PL like Locad allows you to optimise your logistics and fulfilment operations, reduce costs, and deliver exceptional customer experiences in the competitive Malaysian e-commerce landscape.

Tips to Optimise Your Business for the Malaysian E-commerce Market

Beyond the initial setup, optimising your business for the Malaysian e-commerce market is crucial for long-term success. Here are some key strategies to consider:

1. Amplify Your Social Media Presence

Social media plays a significant role in influencing purchasing decisions in Malaysia. Establish a strong presence on popular platforms like Facebook and Instagram. Engage with your audience, share compelling content, run targeted advertising campaigns, and leverage influencer marketing to boost brand awareness and drive sales.

2. Embrace Multi-channel Selling

Don’t limit yourself to just one online platform. Sell across multiple e-commerce marketplaces, consider having your own branded website, and explore offline channels like pop-up stores or partnerships with brick-and-mortar retailers. This increases your reach and provides customers with greater accessibility.

3. Cater to Halal Preferences

Malaysia boasts a large Muslim population, and Halal products are in high demand. Diversify your product range to include Halal-certified items across various categories, such as food, fashion, and cosmetics. This caters to a specific market segment and demonstrates cultural sensitivity.

4. Prioritise Inventory and Warehouse Efficiency

Effective inventory management is essential. Utilise advanced inventory management software, implement accurate forecasting techniques, and streamline warehouse operations. This ensures optimal stock levels, prevents stockouts, and reduces fulfilment errors.

5. Deliver Stellar Customer Service

Excellent customer service is paramount in building trust and loyalty. Offer order tracking links for complete visibility into the customer’s fulfilment journey, respond to inquiries promptly, address concerns efficiently, and go the extra mile to resolve issues. Consider offering multiple communication channels like email, chat, and social media to cater to diverse customer preferences.

6. Data-Driven Decision Making

Leverage data analytics to gain valuable insights into customer behaviour, sales trends, and market dynamics. Use this data to inform your marketing strategies, product offerings, and pricing decisions. Regularly monitor key metrics like website traffic, conversion rates, and customer feedback to make data-driven adjustments and optimise your business for continued success.

7. Multiple carriers for resilient order fulfilment

Ensure that you have access to multiple last-mile carriers and partners to avoid cancellation and deliver on time. Moreover, find yourself a 3PL that may auto-assign the most cost-effective last-mile carrier at hand and offer more than one option to cater to a customer’s order delivery speeds.

Wrapping Up

Malaysia presents a fertile ground for e-commerce businesses, brimming with potential and a growing internet user base. With its diverse consumer preferences, strategic trade partnerships, and growing adoption of online shopping, the landscape offers exciting opportunities.

However, navigating this dynamic environment requires careful planning and a focus on key aspects like platform selection, inventory management, and customer experience. In this context, robust logistics and fulfilment solutions become crucial for ensuring efficient delivery and surpassing customer expectations.

Locad, as a leading 3PL provider in Malaysia, is equipped to empower your e-commerce journey with scalable solutions, strategic warehousing, and exceptional customer service.

To understand and get started on your fulfilment needs and unlock the full potential of the Malaysian e-commerce market, contact Locad today and find out more on how you can set your brand apart.