Malaysia is a fast-growing Export Economy with about 80% smartphone penetration – How will the E-Commerce Shipments Market benefit from it? Ken Research

Malaysia consists of fragmented Competition with presence of 1000+ express players in the industry. Top 3 players namely Shoppee, Lazada & POS have ~40.0% market share. Companies are battling against each other to acquire and retain clients, expand geographical presence, expand service offering and improve unit economics to increase margins. 

1.  Fulfilment Model/Inventory Led Model along with the Market Place Model are the most preferred E-Commerce Business Models in Malaysia

• In Inventory Led model products are pre stocked in the e-commerce player’s warehouse or its logistic partner’s warehouse. These products are already sorted and only the packaging & labelling activity is carried later on.
• Mostly preferred by the large-scale e-commerce players with sufficient warehousing space.
• In Market Place Model products are directly picked from Multiple Sellers across Malaysia. Order details would be shared with the logistics partner who would go and pick the product from the designated seller.
• Preferred by most of the small-scale e-commerce platforms.
• Shopee and Lazada operate on a mix of fulfilment & marketplace model.

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2.  Malaysia is one of the top-ranking Countries in Asia in terms of the Internet Penetration in the country- With 88% in 2021

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There were 28 million social media users in Malaysia in January 2021. The number of social media users in Malaysia increased by 2.0 million (+7.7%) between 2020 and 2021. The number of social media users in Malaysia was equivalent to 86.0% of the total population in January 2021. Consumers interact with brands on these social media platforms owing to which ecommerce activity will see a rise in Malaysia.

3. Regulations that are provided by Ministry of Domestic Trade and Consumer Affairs for Retail Trade in Malaysia has few benefits for Everybody

Companies with 50% or more foreign equity and intending to participate in the distributive trade sector or the Unregulated Services sector are required to obtain the approval of the MDTCA.

 The Consumer Protection Act 1999 (“CPA”) provides for the protection of consumers in Malaysia. It applies in respect of all goods and services that are offered or supplied to one or more consumers in trade including any trade transaction conducted through electronic means.

 The CPA sets out mandatory statutory requirements including implied guarantees on the supply of goods and services, the consumer’s right of redress against suppliers and manufacturers, prohibition against unsafe goods, liability for defective product and prohibition against unfair contract terms with consumers.

The factors above is changing the landscape of ecommerce shipments industry in Malaysia in a positive way and will further lead to enhanced trust upon government in future.

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4. Klang Valley comprising of Kuala Lumpur generated the highest orders of more than $300 Mn for both Sourcing and Delivery in 2021

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E-commerce hubs are concentrated in Klang Valley owning to large and digitally literate consumer base with decent purchasing power along with highest urban population. However, this share is expected to come down in future, as tier II cities will become new demand centres driven by increased internet penetration, increase in number of smartphone users, rise in per capita income and increasing propensity to purchase online.