The changing e-commerce landscape

Gone are the days where we rush to malls for year-end discounts – nowadays, most of us are eagerly waiting by our phones or laptops waiting for the right time ton be the first to snap up huge discounts from the plethora of e-commerce platforms out there. Malaysia is no exception to this trend but as we dive into the e-commerce era how are things around us going to change? This week, we take a look at how much our e-commerce landscape has advanced in the recent years and how it has changed its surrounding industries and markets:

With a smartphone in almost every pocket of the developed world, it’s safe to say that the way we shop and do business has changed drastically.

Gone are the days where we rush to malls for year-end discounts – nowadays, most of us are eagerly awaiting by our phones or laptops waiting for the right time to be the first to snap up huge discount from the plethora of e- commerce platforms out there.

Malaysia is no exception to this but as we dive into the ecommerce era how are things around us going to change?

Well one thing for certain is that brands and companies out there will now have to seriously consider an online presence if they want to continue keeping afloat in our ever competitive consumer industry. More brands moving to ecommerce platforms

If you think online shopping is mostly just about electronic and fashion, then you might not have taken a recent gander at our local e-commerce platforms who have expanded their offerings greatly.

Nowadays, a multitude of brands have jumped onto the online shopping craze – giving us all the convenience of being able to purchase almost anything and everything we need with a few taps on our smart phones.

From grocery stores like Aeon and Tesco to hardware supply stores like Mr DIY, as long as you live in an area within delivery routes of postal delivery services, you might never have to step out from your homes again.

One particularly successful brand that has flourished in the e-commerce space is Nestle (Malaysia) Bhd (Nestle) who join forces with online marketplace Shopee Malaysia back in March 2017.

With Nestle products so easily accessible in any corner store around Malaysia, you’d think that the brand’s online sales wouldn’t have been so significant, but this is far from the case as the group has announced that their sales have double on Shopee Malaysia within a year of their partnership.

And the solid and steady sales of Nestle products on the online marketplace’s grocery segment has also earned the group the title of Seller of the Year at the Shopee Seller Awards 2018.

In a statement, head of ecommerce and Nescafé Dolce Gusto, Nestle Malaysia, Joshua Zhu explained that the feat was achieved through continuous participation in all of Shopee campaigns that allowed Nestle to be able to reach new segments of consumers and build a base of loyal online shopper.

“We are very proud to be one of the first adopters of e- commerce amongst mongst the food and beverage players in Malaysia.

“Our progressive business approach is a demonstration of our foresight and versatility in embracing technology to enable healthier and happier lives for Malaysian individuals and families,” said Zhu.

To-date, Nestlé has more than 700 unique products available on the e- commerce platform including Milo, Maggi, Nescafe and Lactogrow that cater to consumers of every age group.

Nestle’s success in the ecommerce space shows potential for other fast moving consumer good (FMCG) manufacturers to thrive in the industry but food products are not the only category that has made a splash online in recent times.

Other best-selling brands seen on Shopee in 2018 during their numerous digital sale bonanzas were Samsung in phones and home appliances, Olay in skincare, Maybelline in cosmetics and Fitflop in fashion.

And in baby products, Enfa and Mamypoko reign supreme for their large sales of baby milk formula and baby diapers.

Lazada who is well known for their curation of electronic product sellers also saw baby products surging in 2018 as Pampers and MamyPoko were also on their Top Brand leader board in 2018.

“Also generating a lot of buzz among female shoppers are the Fashion, Health and Beauty categories, which grew by more than three times year-on-year (yo-y),” added the Lazada Group in a statement.

Riding on this growth in the cosmetics markets, Lazada and several large scale beauty and skincare brands had cooperated in several successful campaigns on the online marketplace.

M. A. C cosmetics had launched limited- edition products with complimentary lipsticks and themed gifts on their debut on their platform and following their sterling success, brands like Shiseido, L’Oreal and feminine product Unilever also launched successful campaigns in 2018.

Once revered as a less trustworthy source to purchase quality products, it is surprising now to see that the top sellers on our most popular online marketplaces and platforms are being dominated by brands and products that require strict quality control to be fit for consumption or application.

Our society’s attitude towards online shopping was warmed drastically in recent years, posing as a huge opportunity for many other brands and products out there to join in on the boom.

Overall, 2018 had been a pretty successful year all around for most platforms and online market places in the ASEAN region.

According to a study conducted by the iPrice Group, online market place Lazada has managed to maintain its lead as the top platform in our e-commerce space as it commanded the largest market share of total visits of Malaysian online shoppers at 46 per cent.

“However, the Alibaba backed e-commerce received a strong challaneged from Shopee who grew its total visits on desktop and mobile web by 98 per cent between the fourth quarter of 2017 (4Q17) and 1Q18.

“By end 2018, Shopee had reduced Lazada’s lead by 62 per cent to become its closest competitor,” said head of content marketing Jeremey Chew.

Shopee and 11street came in second and third in the market share of total visits at 23 and 13 per cent respectively.

Meanwhile the most visited Malaysian based e-commerce platforms were Lelong, Hermo and Goshop. Lelong came in fourth in the ranking board and boasts and average of 5 million visitors in 2018.

Through iPrice Group’s analysis of Malaysian search patterns on Google, the group announced that Malaysians had gone through a bit of a shopping spree on particular periods such as the 11.11 Singles’ day and 12.12 sale shopping holidays, the Hari Raya sales period, and the tax holiday period where the GST become zero-rated.

“The 11.11 Singles’ Day sale garnered a bigger interest in 2018 as compared to the previous years due to increased investment by various players to promote the event.

“This was evident as players such as Lazada organised a starstudded 11.11 Super Show to promote the event. Other players also initiated various offline and online activities to get consumers shopping,” guided Chew.

The top five e- commerce platforms in Malaysia saw a decline in search interest on 9 May during the 14th general elections period and on Hari Raya when most consumers were offline to celebrate the occasion.The need for last-mile delivery services to grow

With the local e- commerce industry projected to register a 20.8 per cent growth by 2020, analysts MIDF Amanah Investment Bank Bhd ( MIDF Research) and AmIvestment Bank Bhd (AmInvestment Bank) are expecting the booming ecommerce industry to drive growth for last- mile delivery companies such as Pos Malaysia Bhd (Pos Malaysia), GD Express Carrier Bhd (GDEX) and Tiong Nam Logistics Holdings Bhd (Tiong Nam).

“Consumers are attracted to online shopping due to price advantages, product range and its sheer convenience. The rapidly expanding e-commerce sector has created huge opportunities for parcel delivery service providers,” said AmInvestment Bank.

And the growth of our ecommerce scene is on the cusp of a quantum leap, driven by the Alibaba-backed Digital Free Trade Zone (DFTZ) project in KLIA Aeropolis.

“The DFTZ will serve as a regional e- fulfilment centre (virtual zone) as well as an ecommerce logistics hub (physical zone). Apart from MAHB (the landowner and developer of the KL Aeropolis), we believe local logistics players (including warehouse operators) are poised to garner a slice of the action in the DTFZ physical zone,” said the bank.

Closer to home, our state government has also hinted for the pursuit of a DFTZ of our very own at Kuching International Airport in a bid to spur the growth of the e-commerce scene in Sarawak.

While this is good news for parcel delivery players, the drastic growth of our e-commerce industry has also created a conundrum for local players as they struggle to meet the needs of the surge of orders and experience heightened competition.

Routes outside of urban areas especially are underserved as many players lack the resources and capabilities to cover the whole of Malaysia.

Due to this, many foreign logistic players have begun expanding into Malaysia in a bid to garner a slice of the growing last-mile delivery sector.

Hong Kong based logistic players Lalamove, GoGoVan and Pickup, and Singapore based Ezyhaul and Ninja Van are just few of the players that have already begun their expansion into Malaysia.

The crowding in the local space has begun leading to some intense price competition.

MIDF Research pointed out that existing last-mile delivery companies may need to revise downwards the delivery fee in

order to remain competitive.

“As a result, we observed that both GDEX and Tiong Nam’s profit margin has reduced to single digit in the latest quarterly earnings (3Q18),” it said in a sector report.

While profitability might have lowered in our last-mile delivery sector, its growth will continue to be driven by the robust growth of our e-commerce industry.