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    Home Digital Marketing Malaysia—The Next Cross-Border e-Commerce Promise Land

Malaysia—The Next Cross-Border e-Commerce Promise Land

Cross-border Commerce
July 30, 2019

4 reasons why Malaysia has the potential to win merchants and become a lucrative market in Asia?

The e-Commerce market has been developed in Taiwan for over a decade, and it’s facing a saturated market with slow market growth and a lot of internal challenges. However, while e-Commerce in other countries is still growing relentlessly since they have a bigger market to serve. When thinking of expanding businesses to other countries, the merchant’s in Taiwan would usually go to China or Southeast Asia.

In recent years, Taiwan’s government has been advocating New Southbound Policy and it seemed to open countless opportunities in Southeast Asia. However, markets in Southeast Asia are much more complicated than we think, with different races, languages, and cultures. If you were to pick a country to enter a market in Southeast Asia but not sure where to? Singapore is an International and highly developed country, with a strong economy. However, labor is very expensive and the market size is relatively small. 

Different data and reports have shown Indonesia has a lot of potentials. However, the language barrier is high, and the country’s landscape is scattered which makes delivery challenging.

Is there a country in Southeast Asia that has a similar language and culture as Singapore, and with the population and market size like Indonesia? Malaysia might be it. 

And here’s why:

1. Massive market size and similar culture 

Malaysia has a total population of 32 million people, and the young and middle-aged population that has disposable income are accounted for 70%. Besides, Asians have occupied ⅕ of the total population which prepares a massive audience that is familiar with Taiwan, and interested in the products. While the number of merchants declining each year in Taiwan, Malaysia’s eCommerce shop grows steadily at 20% every year, and the market profit will surpass Taiwan in 10 years. 

Facing a market gap with great potential, business owners still need to pay attention to the local religious beliefs and customs of Malaysia. For example, with the Muslim population growing rapidly, the halal food business expands rapidly, if you want to sell edible products, getting a Halal certification is important to generate sales in Malaysia. Also, Malaysian enjoy a slow and good life outside of work, and they’re willing to pay for products that could improve their living quality. 

2. Sophisticated Infrastructure with digital development rapidly growing

A successful cross-border e-Commerce must be accompanied by convenient logistics and localiz”ed payment gateways. Malaysia’s population is concentrated in the Greater Kuala Lumpur area, and the logistics cost have been significantly reduced compared to the past; benefiting from electronic payments, the ratio of cash on delivery is decreasing, which reduces the risk of returning goods; In terms of hardware, Malaysia has a high internet penetration rate of 85.7%, which is the 3rd highest in Southeast Asia, and even higher than the world average (53%); Online shopping is continuously growing (especially through the use of mobile devices) and courier services are becoming the norm, prices are no longer the only criteria for customers to consider. This shows the potential in Malaysia is undeniable. 

3. Active and open policies with government support

Based on the National eCommerce Strategic Roadmap proposed by the Malaysian government, the vision is to double e-Commerce revenue and contribute up to MYR 21.1 billion in GDP by 2020. To achieve this, the government will offer a tax-free tariff for products under MYR 500 and loosen the restrictions on B2C import items. 

Another thing to keep in mind is that Alibaba has also made Malaysia the first stop outside of China, and announced its strategies to cooperate with the Malaysian government and participate in the “Digital Free Trade” proposal, with the vision to make Kuala Lumpur International airport an international logistics hub and provide courier, storage, and customs clearance. As a transportation hub for Southeast Asia, Malaysia is expected to lead the development of cross-border e-commerce in other Southeast countries. 

4. Serves as a global logistics hub, easy to expand into other cross-border markets. 

Malaysia is a country rich in languages and ethnic groups, and different language serves different groups.

The most used languages are Simplified Chinese, English, and Malay, to strengthen the localization of the website with 3 languages can be time-consuming and expensive. But the effect and impact on sales will be worth it. For instance, Simplified Chinese is the main focus of the Malaysian Chinese market, and the local Chinese population accounts for more than one-fifth of the total population; As for English, it’s highly accepted in the local market and could reach more people, having a website in English could also be the gate to capture sales from Singapore and other western countries.; Malay has similarities with Indonesian and can pave the way for cross-border e-commerce to move forward in the vast Indonesian market.

3 highly anticipated industries in Malaysia: Beauty & Fashion, Electronic Gadgets, and Childcare 

Fashion

Beauty & fashion products have always been the most popular, promising yet competitive industry in every market. According to statistics from Shopee.com, the order volume of beauty & fashion items this year has increased by 250%, compared to 2017. 

Electronic Products

With a high penetration rate of 71% in Malaysia and 22 million active online users, consumers in Malaysia are interested in trying new electronic products and pursuing the latest technology. 

Childcare Products

Malaysia’s population is still growing and millennials make up half of the country, the child, baby, and maternity industry is expected to witness exponential growth over the coming years. 

 

Conclusion

If you’re looking to expand your business into other countries in Southeast Asia, Malaysia is a good place to start, with similarities in culture and language, it’s geographical advantage making it the hub of the ASEAN center and could reach over 626 million people in Southeast Asia. 

SHOPLINE has a team in Kuala Lumpur to provide professional consulting services to guide and support your business to grow in Malaysia. 

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Weiyi
Weiyi
Marketing Associate at SHOPLINE. A digital marketing nerd and a podcast fan. You can find her out in the woods once in a while but most of the times she’s glued to her laptop screen indoors.

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