LOOKING BEYOND DIGITAL TRADE BOON
Though digital trade has made it easier to connect traders and buyers, there are risks that need to be addressed
WITH the Movement Control Order (MCO) being relaxed starting yesterday after 47 days of strict movement control, looking back, we have seen how instrumental digital trade has been in connecting sellers to consumers in these unprecedented times. Goods and services are able to reach customers, albeit with delay at times, while payments for those services can be made in a timely fashion, putting us at ease with its reliability and efficiency. What a boon digital trade has been.
From the very first day of the MCO, delivery companies like GrabFood and foodpanda have been pegged as winners, as some companies observed more than 30 per cent increase in orders. Due to this extraordinary rise in sales, there has also been a spike in registration for marts and restaurants to join these platforms.
For DeliverEat.my, it has observed a 300 per cent increase in the number of restaurants wanting to register with the platform. The MCO may have restricted customers from visiting and dining in at their favourite haunts, but digital trade has made it possible for their favourite food to be sent right to their dining room.
A week into the MCO, GrabFood and Grab riders and drivers joined forces to fortify the company’s logistics chain to meet the rising demand of customers through its delivery services. As orders from customers increase, restaurants and marts are not the only winners here. With digitalisation, employment and livelihood are secured for riders and drivers. Fortunately, there is no record of Covid-19 infection among them.
If the MCO has resulted in farmers being cut off from their customers, online platforms like Lazada can save the day. By putting their vegetables online, farmers from Cameron Highlands are able to sell without much wastage. Small grocery stores have also joined the digital trade bandwagon, providing free deliveries to the local community and accepting payment in the form of bank transfers. All orders can be made through WhatsApp where maintenance cost is very low.
Nevertheless, digital trade does not come without its challenges. Not all businesses are able to benefit from formal digital platforms. MSMEs (micro, small and medium enterprises) that are not registered with the Companies Commission of Malaysia (SSM) will not be able to join formal platforms offered by companies like GrabFood or foodpanda. On the one hand, the commission has announced that businesses can not only renew their permits online, but they can now also register their companies online from March 30.
On the other hand, as SSM counter services are closed during the MCO, it is unclear how long the business registration procedure will take now that everything is done online, with surging demand. Another challenge facing MSMEs is the high service rate charged by delivery companies, which is set at about 20 to 30 per cent, not including delivery charges. Given their already lower margin of profit during the MCO, this will further impact revenue and their ability to survive and retain workers during the extended MCO.
To avoid these costs, micro firms in the informal sector can benefit from other free platforms, like Facebook. There is a proliferation of informal e-Ramadan bazaars online, especially when the government banned Ramadan bazaars to curb the spread of Covid-19. Food and kuih sellers are now able to keep costs low as delivery charges are passed on to customers.
Even though buyers can now satisfy their cravings for bazaar specialties, there are risks. With no proper standards to adhere to and no review mechanism available, the quality of the products may not be the same as advertised. With no accountability structure, when products delivered are not up to the mark, refunds are not necessarily given. The whole experience becomes a hit and miss for customers, further frustrating them.
There is no doubt that digital trade and digitalisation have served both formal and informal businesses in Malaysia quite well in this very trying period. Nevertheless, if we anticipate that another wave of infection is on the horizon, the challenges mentioned above should be addressed together by the businesses and the government to ensure that both businesses and consumers can benefit and not be victimised by digital trade or digitalisation.