Strong legs under e-commerce in Malaysia


Make no mistake, e-commerce is already here in Malaysia. And, it has moved beyond just those below 30 who are using it. Just consider the case of Datuk Ragavan Nair who launched in November, 2009 as an online retail business focused on the corporate market.

 It is not a sexy business but revenue in 2010 was RM1.5 million (US$478,000) and jumped to RM7.5 million (US$2.4 million) in 2011. From end-2009 to September 2012, Ragavan estimated he would have invested over RM5 million into making a success. His e-commerce venture has also been enlisted to be part of Entry Point Project 7 –Virtual Mall which sits under the Wholesale and Retail National Key Economic Area (NKEA).

Ragavan expects revenue for 2012 to cross RM14. Not bad for a business selling office supplies centred in the Klang Valley for now.

Indeed Malaysian entrepreneurs in the e-commerce space have long been convinced that e-commerce has strong legs in Malaysia, despite early scepticism over the quality of our internet infrastructure, consumer acceptance in using credit or debit cards to shop online, merchant willingness to put their products and pricing online where it can be easily compared. And even the weather!

It has been noted that the hot and humid weather and relative concentration of the population in urban centres, drives people into air-conditioned malls over the weekend to chill and do their shopping.

Yet the data tells us otherwise. Earlier in June, two leading Malaysian players, Exabytes Sdn Bhd and MOLPay Sdn Bhd officially launched their payment gateway for e-commerce, citing Goldman Sachs forecasts that e-commerce in Malaysia is projected to hit RM3.4 billion this year with a 30% year-on-year growth. The joint venture actually went live in June 20111 and already has 7,000 merchants on board and around 120,000 items on sale.

Meanwhile the world’s second largest e-commerce merchant, Japan’s Rakuten has already established operations in Malaysia and is bullish about its prospects.

It quotes more conservative estimates by Euromonitor International, which reported that “Internet retailing in Malaysia reached RM842 million in 2011 and is expected to exceed RM1.9 billion by 2016.”

Rakuten said its virtual mall will focus on offering consumers in Malaysia the best local and international goods while employing “Japan’s world famous customer service standards.”

Certainly the stakes have gotten higher but Malaysian e-commerce players are ready. As Fadzarudin Shah of shares with business circle yesterday, “Having huge competitors play in the same space only further validates that there is a huge opportunity available. So forget about getting bogged down by a brand that suddenly blankets the websites you visit with their ads. Instead, now is the time to show potential clients and investors what your website could be. If you are scared of competitors, you will always be behind them in the pack. Take it as a challenge and enjoy the ride.”

That ride naturally will have its bumps and rough patches but that is just par for the course in any entrepreneurial journey. Among some of the pain points entrepreneurs need to deal with is the broadband infrastructure that they are demanding needs to be more robust and affordable for consumers. With much of e-commerce predicted to go mobile, the data rates charged by telcos needs to go down to encourage mobile commerce. Making payment gateways more accessible and affordable is another wish list they have although our interview with Lim Kok Hing of, an online payment service, tells us that things are quickly improving on that front.

Probably online fraud is the biggest single issue though with Aussie internet entrepreneur Jamie Jackson saying that the experience of his portal, launched in March 2012, tells him that e-commerce merchants in Malaysia are “getting bashed beyond belief”.

By comparison, he notes that online fraud is not even in the conversation in Australia and New Zealand. Clearly a lot more needs to be done in this area which is linked to consumer trust.

But the sector is clearly moving ahead. As impressive as the growth forecasts are,Chan Kee Siak, CEO and founder of web hosting provider Exabytes Sdn Bhd, recently told an online business tech portal that the projections are conservative.

“I think we have the most matured e-commerce ecosystem in South-East Asia and we will see more and more consumers start transacting online,” he says.

The series of articles we have run over the past two weeks does seem to indicate this. But if you have a different opinion do write in and share your thoughts to Let’s keep the conversation going!

Chan Kee Siak, “Malaysia will see more and more consumers start transacting online.”

The views expressed here are the personal opinion of the columnist.

Photo credit: Flickr user firstindy

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