PETALING JAYA: Malaysia’s 91.4% internet penetration rate as of November, and the population’s over 90% smartphone usage, are propelling the online shopping boom for essential goods and services to unprecedented levels.
Universiti Teknologi Mara senior economics lecturer Dr Mohamad Idham Md Razak said the Covid-19 pandemic, which initially fuelled the e-commerce explosion, created a digital consumer base that forced the development of a tech-savvy population.
“This use of technology has also been bolstered by a growing middle class that is expected to constitute 40% of the population by 2025. They have rising disposable incomes, and consequently, a heightened demand for online goods and services.
“Substantial investments in logistics by government and private sectors have streamlined the delivery process, enhancing the overall e-commerce experience.”
Mohamad Idham said the adoption of digital payment technologies, propelled by government initiatives like the National E-commerce Strategic Roadmap, has ensured seamless online transactions.
He added that the growth of e-commerce in the country has significantly changed the dynamics of consumer spending and ushered in a digital revolution in consumer behaviour.
“Notably, with e-commerce revenue soaring to RM47.69 billion in 2022 and an expected growth to RM79.47 billion by 2027, consumers are increasingly gravitating towards the online realm.
“The prevalence of websites like Shopee, which receives an astounding 55 million visits each month, due to the ease of use and wide selection of products, serve to highlight this change.”
Mohamad Idham said traditional shops and stores are seeing a rise in competition from online retailers, which is causing closures and consolidation in some sectors as a result of this preference for e-commerce.
“However, some physical stores are adapting by offering online platforms and omnichannel experience, which is an approach to sales, marketing and customer support that offers customers a consistent brand experience across all channels.”
He said consumers now expect a seamless online and offline shopping experience with fast delivery, excellent customer service and hassle-free returns becoming increasingly important.
He said younger generations, notably Gen Z and millennials, stand out as avid online shoppers, representing 46% of the e-commerce customer base, owing to their tech-savviness and digital native status.
Another factor is income, with middle-class and upper-class households accounting for a large portion of e-commerce sales.
Geographically, urban hubs like Kuala Lumpur, Selangor, and Penang dominate the e-commerce landscape due to robust internet infrastructure and higher consumer spending capacities.
“Although there were initially obstacles to e-commerce in rural areas, government initiatives along with improved mobile coverage are gradually reducing this gap and promoting more digital inclusion.”
A private university’s chief innovation and enterprise officer Prof Dr Vinesh Thiruchelvam said in Malaysia’s e-commerce landscape, payment systems have evolved significantly.
“For example, PayTechs (any payment that involves technology) constitute a notable 25% of the nation’s FinTech (financial technology) sector. Notably, Malaysia leads Southeast Asia in digital wallet adoption, with over half the population leveraging e-wallets for daily transactions in 2022.”
Vinesh said the e-commerce industry is stepping up its cybersecurity safeguards in response to the rise in online transactions.
He said threats, including cross-site scripting and e-skimming, in which malicious scripts penetrate websites or hack point-of-sale systems, are present in the country as cybercriminals are attracted to large amounts of user data.
“To counteract these risks, e-commerce platforms are adopting rigorous security protocols, including fortified data access controls, regular penetration testing, comprehensive security audits and meticulous oversight of third-party integrations within their tech infrastructure.”
