Commentary by Hoseok Kim, CEO of 11street (Malaysia)
Today, there are a total of 252.4 million Internet users around Southeast Asia, with Malaysia emerging as the third country that recorded the highest percentage of Internet users (67%) after Singapore and Brunei.
The promising Internet penetration result indicates Malaysia’s enormous potential for e-commerce market growth. Leveraging on the rise of Internet usage, indeed 2015 have been a fruitful year for all online businesses and e-commerce as Malaysia recorded one of the highest online transactions per capita in Southeast Asia.
Nevertheless, this only represents the tip of an iceberg – Malaysia’s e-commerce market owns approximately 2% of the total retail market and countless opportunities still remain untouched if we look at what has been accomplished by other advanced e-commerce markets such as Korea, which accounts for approximately 15% of the total retail market.
Over the past five years (2010-2014), Malaysia’s e-commerce market size has seen 31% increase in CAGR. Viewing from a logical standpoint, we anticipate it will follow a similar growth rate and achieve USD 3.1 billion by 2018. As for 2016, we foresee mobility, better Internet and logistics, and security will be the three key drivers to push for the local e-commerce development.
1) The ‘mobility’ trend will continue to grow
The mobile penetration in Malaysia has reached 136% this year, and the growth of connected devices have paved the way for a positive increase in the e-commerce sector with 47% of Malaysians using their smartphones to shop online.
Furthermore, Malaysia ranks third in the rate of growth of mobile shopping in Asia (over 20%; from 25.4% in 2012 to 45.6% in 2014) according to a Mobile Shopping Survey and with these results, it is not surprising to know that more than 50% of traffic to 11street is generated on mobile devices.
What shoppers can expect next year
This promising result has encouraged us to make a bigger commitment for mobile users. We believe the ‘mobility’ trend will continue to grow and next year, 11street will put a stronger focus to serve mobile shoppers through a two-pronged approach.
Mobile shoppers can expect more curated content from 11street’s app, with an improved user interface and user experience designs (UI/UX). Additionally, we will lift it with additional personalized features, and introduce more mobile exclusive deals for an exciting mobile shopping experience.
2) Internet penetration and improved logistics will further enhance local e-commerce activities
While the government has allocated RM1.2 billion for Malaysian Communications and Multimedia Commission (MCMC) to offer High-Speed Broadband to rural areas starting next year, we are also pleased with the government’s initiative to improve the logistics – a crucial element to boost the e-commerce development in Malaysia.
Driven by the progressive e-commerce landscape, the logistic industry, especially the courier segment has seen exponential growth over the past one year. For instance, courier service contributed 60% of POS Malaysia’s total earnings in FY15, as compared to 41% in FY14.
In preparation to serve shoppers better in 2016, we believe these supportive initiatives suggested by the government will aid sellers to meet future demands, by providing shoppers a seamless online buying experience with more timely delivery service.
What shoppers can expect next year
Online marketplaces like 11street place high importance on offering pleasant shopping experiences from the moment a consumer start shopping online, all the way through to the delivery of purchased items. Several measures that the company has been implementing since its establishment include (i) Thoroughly brief and train sellers on product delivery management (ii) Provide shoppers with a tracking system to keep them informed on location, time of arrival, and delivery status of their purchased products.
With a solid Internet and logistics infrastructure, 11street trusts that Malaysians will enjoy online shopping even more in the coming years.
3) User confidence, especially safe and secure online shopping is a priority for shoppers
Security issues discourage shoppers from heading online. Malaysia Computer Emergency Response Team (MyCERT), a department within CyberSecurity Malaysia, reported that the number of online scams in the country is on the rise. A total of 743 fraud cases were received in Q1 2015, of which is the second most reported incidents (25.54%) in total reports.
Shoppers are always urged to make transactions with only trusted platform that offers product return policies, customer reviews on products, seller’s rate or scoreboard, as well as a trustworthy payment system. Online sellers and marketplaces have to bear this in mind and update their security measures from time to time in order to establish shoppers’ confidence.
What shoppers can expect next year
11street implemented the ESCROW system, which is a financial instrument of placing a buyer’s money on hold and releasing it to the seller only when the delivery of the purchased item is fulfilled, thus protecting buyers from frauds. The ESCROW system has helped to prevent many fraud cases and it will continue to be invested by 11street in the future.
Our website is also strengthened with abilities to monitor all products, transactions from buyers and sellers to detect suspicious activities such as counterfeit product listing. Moreover, a number of other efforts include a stringent application process and regular product quality inspections will be enhanced to provide shoppers a safe & secure shopping experience.
A budget-conscious year ahead
2016 will be another budget-conscious year for Malaysians in view of the rising cost of living caused by GST implementation and the ringgit devaluation. To assist consumers to ‘shop smart’, we are gearing up to double our variety of product listings for ‘Shocking Deals’ with the lowest price guarantee by early 2016.
It is also worth noting that cross-border trading (CBT) trends can be observed from the increasing searches for popular international products on the Internet in Malaysia. However, with the higher exchange rates and international shipping fees, today local shoppers might find it challenging to get their favorite overseas brands or items. In view of this, 11street is committed to bring in more popular overseas product, including cosmetic, fashion, and food items, especially from Korea in 2016. These products will be imported and affordably priced at the online marketplace in order to satisfy Malaysian shoppers’ needs.
Undeniably, the overall e-commerce market in Malaysia is poised to flourish positively. The next step would be to sustain the market potential and all industry players need to work together to ensure this. As a market expert, 11street is delighted to work with close partners such as Multimedia Development Corporation (MDeC) and Google. We look forward to collaborating with even more industry leaders in the coming year. In closing, we would like to urge sellers to stay alert on the evolving mobile & purchasing trends in the market to give shoppers a satisfactory experience, as this will build upon Malaysia’s vibrancy as a profitable market for e-commerce.
A well-known e-commerce player in the International market, 11street established itself in Malaysia since April 2015, and within mere 8 months the company managed to expand its number of products to more than 7 million units and achieved top 29 rank at Alexa (as of 14 Dec 2015)]