The e-commerce scene in Malaysia is slowly heating up. Many local and international newcomers as well as incumbents across various industries are trying to make a dent in the multimillion dollar market that is only destined to grow, at least for the coming few years.
Adrian Oh, Director of Business Development at webShaper, an e-commerce store solution, who is also an entrepreneur with a deep interest in the Malaysian e-commerce scene, shared with me some of his insights on the current e-commerce landscape in Malaysia and how businesses can enter the space with a higher chance of succeeding.
- 1 E-Commerce Trends in Malaysia and Key Driving Factors
- 2 Difficulties and Concerns about Setting Up an E-Commerce Store
- 3 Marketing Tips for Your New E-Commerce Store
- 4 The Importance of Customer Service
- 5 Giant E-Commerce Players and Their Impact on the Ecosystem
- 6 Examples of Malaysian-Based E-Commerce Stores that Get It
- 7 Advice for Young Entrepreneurs in E-Commerce
- 8 The Future of E-Commerce in Malaysia
- 9 Do You Run an E-Commerce Store? Share It with Us!
E-Commerce Trends in Malaysia and Key Driving Factors
Wayne: Since you are in the trenches of selling e-commerce software to SMBs considering about setting up their e-commerce presence online, are you seeing more of them getting into the space in 2013?
Adrian: Yes, definitely. This is driven by a number of factors. First of all, it is the successes seen on group buying sites in Malaysia, starting with Groupsmore (acquired by and renamed to Groupon in early 2011) and then Everyday.com.my (renamed to LivingSocial in early 2012). These daily deal sites made small business owners see the possibility of e-commerce in Malaysia and the fact that Malaysians are actually buying products and services online.
Adrian: Before this, there were a lot of e-commerce skeptics, even among successful entrepreneurs and retailers, in Malaysia. They don’t believe that Malaysians will buy their products online. Seeing the successes of group buying sites opened them up to the idea.
Adrian: Of course, the initial cost of setting up an e-commerce presence 10 years ago is around MYR20,000 to MYR50,000. Today, if you are utilizing a solution like webShaper, the cost is as low as MYR1 a day so it is definitely worth a try for businesses.
Adrian: Moreover, the retail space rental is trending upwards every year, creating pressure on retailers to either drive more shoppers to their physical store or to explore an alternative source of revenue, which can be their online store. All of these factors contributed highly to the trend of small businesses setting up an online e-commerce store.
Difficulties and Concerns about Setting Up an E-Commerce Store
Wayne: What are some of the problems or concerns that a small business owner may have when they are considering about setting up an e-commerce store?
Adrian: There are a lot concerns. The first one will be finding the right people to manage the online store. Individuals who possess the right skills are hard to find in Malaysia and many of them tend to choose the path of starting their own business.
Adrian: Small businesses that are looking to outsource the management of their online store, which may include tasks such as uploading of product information and customer service, will find the option too costly. Also, taking such a path will only allow the online store to grow up to a certain level. For example, the level of customer service that can be provided by third party providers is fairly limited and it is not going to be as seamless as handling it internally.
Adrian: The third concern will be the traffic to their online store. Traffic is not free and hasn’t been free. If there is no budget to drive traffic, there will be no revenue. There are a lot of available options such as Google AdWords, Facebook Ads, search engine optimization and many others when it comes to online marketing. Deciding on how to effectively drive traffic using any of the mentioned channels will remain as a challenge for many.
Wayne: What about concerns around logistics?
Adrian: It depends largely on what you are trying to sell. Let me give you an example. We had a prospect who was trying to sell bean bags online. There was no logistics company that is willing to deliver his products. Even if he got one which was willing to do the delivery, the price quoted was simply too costly to be absorbed by himself or to be passed on to the customers.
Adrian: Businesses should also look at how consumers prefer to shop for their products or services. We recently had another prospect who was trying to sell wallpapers with an online store. What I shared with them is that they should look at how consumers usually shop for wallpapers. Most wallpaper buyers don’t measure their own wall and purchase the wallpaper rolls without any form of consultation. They prefer to have a consultant advising them on the design and measurements, subsequently providing them with a quote, before proceeding to accept their payment via a wirelessly-connected credit card terminal.
Adrian: The same applies for websites that are trying to sell glasses online. Most Malaysians prefer to go through the process of examining our eyes before buying a pair of glasses, which usually come in both the frame and a pair of lenses. In other countries, the buying process is separated. Consumers would go to an optometrist to get the measurements of their eye condition before proceeding to a retail outlet, either online or offline, to purchase the glasses. Of course, in such countries, selling glasses online is a better idea.
Marketing Tips for Your New E-Commerce Store
Adrian: Let’s talk about marketing too, which I almost forgot to mention about. We talked a lot about discoverability recently. Do you understand your target market? Where are they? What kind of keywords they are using to search for your products online? Then, it comes down to utilizing the right tools to drive traffic. Most newcomers don’t have any idea about this so I think marketing should actually be the top concern for them apart from the things that I mentioned earlier.
Wayne: You said that most e-commerce newcomers don’t have the knowledge and experience when it comes to online marketing. As you also mentioned earlier that finding the right talent to assist them with the store can be quite hard, do you have any tips for them?
Adrian: Here’s what I normally share with them. Once you are done with the setting up of a webstore, the first thing you should consider doing is to have a store opening promotion, where you will offer great deals on some of the products that you are selling. The purpose of this is to build the initial customer base.
Adrian: Secondly, you have to promote the store opening deals. When a business open up its brick-and-mortar store, there will be an opening promotion. What makes it think that for the online version of the store, there is no need for such a promotion? Unless you carry the iPhone 6 right now, it is hard for a new store to convince people to visit and buy something if the products are sold at the usual retail price.
Adrian: Also, I always advise our customers to setup a Facebook page and advertise the page together with the deals that they are having. This is because setting up a Facebook page is easy. It is free and it can help new e-commerce stores build trust. When people buy things from marketplaces like eBay and Lelong, it is natural that they look at the seller ratings and judge whether they should do business with the seller.
Adrian: Building trust is something that a website cannot do easily. Store owners can start by publishing Facebook posts that are personal and authentic. It could be how your physical store looks like or a guide on how to use your products. Of course, when there is a question from the fans, there should be a timely reply. Malaysian consumers always visit the Facebook page of an online store these days to learn how the business is interacting with its customers. It is fine to have complaints but treat each of them professionally to show that you are real, and you care.
Adrian: Once you have a presence on Facebook, consider setting up a presence on websites with high traffic. For example, you can consider setting up a seller account on eBay or Lelong together with accounts on classified sites such as OLX or Mudah.my. Put up a listing of products that are in-demand so that when a sale happens, you can write an email to the customer, letting him or her know that for future purchases, he or she can go directly to your webstore.
Adrian: Then, you can consider about using Google AdWords. For our customers, we often recommend that they should start by thinking about the keywords that users will normally type into Google when searching for their products. From there, register for a free AdWords account and gather a list of about 50 to 100 keywords. There are a lot of video tutorials on this.
Adrian: Apart from all the tips that I mentioned, the single most important thing will be your products. If you are offering a generic product that everybody else is also selling, it doesn’t matter how much you have invested in advertising or marketing, it will come down to a price competition. The conversion rates are probably not going to be as good too. Try to sell something unique. For example, if you are selling coffee beans, become a coffee expert that sells more than a hundred different types of coffee bean. The way you come up with content, the way you distribute and the way you position yourself as a coffee expert will get you the sales.
The Importance of Customer Service
Wayne: Let’s talk about customer service for a moment. How important is customer service in the Malaysian e-commerce space?
Adrian: All of us are consumers. How would we like to be treated? Just think along this line and you will not go wrong. For example, if you send an inquiry, the ideal time for the store to respond should be the same day, if not, the next day. If a customer gets angry and tries to complain, over the phone or over email, never reply in text only. They will not be able to hear your tone or see your body language. Give them a call. This is how we do it and how we advised our clients to do when it comes to serving their customers.
Adrian: Be responsive, ensure that customers are being notified of each process that their orders are going through and always make sure that complaints are being replied promptly. It’s not too hard. The problem in Malaysia is that most e-commerce store owners don’t bother to reply. If you make an effort to reply or even better, follow up with a call, you will be seen as providing up-to-par customer service.
Giant E-Commerce Players and Their Impact on the Ecosystem
Wayne: Over the past couple of years, there were a lot of “giant competitors” entering Malaysia’s e-commerce space. More recently, we are also seeing Tesco entering the scene. How do you think their entry will impact the industry in general?
Adrian: I try to take the long term view on this. Most of these big guys bring in the capital. Capital is always needed to grow an industry at its infancy. Money will be spent on recruitment and training when they penetrate the market. Also, they will bring in the much needed expertise and know-how from overseas. Tesco has been selling groceries online since 2000. When they decided to do it here in Malaysia, it will only make the market better.
Adrian: A lot of Malaysians are reluctant to buy online because of trust issues. Once these big guys train them up, showing them that it is actually okay to buy online, they will be more ready to buy from smaller guys, knowing what they should be expecting.
Adrian: The smaller guys will have to compete differently with the giants. You can either go small and niche-focused or go big and broad like Tesco. Even though Tesco is huge, they will not be able to carry all the products in the world. The same even applies for Amazon and this is why we have all the marketplaces that provide smaller sellers a place to sell their niche products.
Adrian: To me, the competition for the small guys is real but looking from the big picture, it will help to bring up the whole industry.
Examples of Malaysian-Based E-Commerce Stores that Get It
Wayne: What are some of the Malaysian-based e-commerce stores that are doing things the right way?
Adrian: There are a few among our clients that are doing quite well. Let me highlight why they are doing well. First, take a look at RC Smart. The reason why they are doing well is because they are utilizing the online store as a complement to their physical store.
Adrian: The parts installed on a remote-controlled plane or helicopter may need maintenance once a in while. What RC Smart does is that it advises its customers to purchase the parts online so that they can avoid the hassle of visiting the store. They also use the webstore solution for inventory count by putting all the SKUs online. They have been around for years and a lot of community-driven activities were organized by them so most of their online customers are actually existing customers.
Adrian: Al-Humaira Contemporary is another example of an e-commerce store that is doing well. They started out as a blogshop, which is a store that many tried setting up using blogging platforms such as Blogger.
Adrian: What they are doing differently from others is that they shoot very nice and outstanding product photos. Of course, they created their own brand with the blogshop but the product photos featured on the store and their Facebook page are some of the best that I’ve seen among online shopping malls in Malaysia. They invested a lot in photo-shooting sessions and in getting beautiful models to pose with their products.
TAT7 iPhone Case
Adrian: Other than the ones above, I always like to talk about TAT7. The guy behind it, Tatt Chua, is a Malaysian entrepreneur and he invented a waterproof iPhone case that allows users or more specifically, scuba divers, to shoot underwater photos. This is a great example of product uniqueness. When they come to us, I couldn’t find a product anywhere online that is similar to his invention. We helped him do a quick survey, advised him in pricing the product and suggested him to target the international market.
Adrian: At that time, I shared two potential marketing strategies with him. First of all, since the product is unique, websites like CNET, Gizmodo, The Verge and other similar gadget sites are definitely more than willing to do a post on the product. Secondly, I shared with him that in order to sell a new product overseas, a good way will be to sell it on local group buying sites in different international locations. The purpose here is not to discount the price heavily to move inventory but to get more people to know about the product, and to introduce it to early adopters across the globe that are willing to buy and use it.
Adrian: He didn’t really need paid advertisements such as Google AdWords and Facebook Ads. He got the reviews he needed and sales started flowing in. Within 30 days after the initial launch, with almost zero marketing cost, sales surpassed $100,000. He even had an iPhone app developed for free by fans of the product.
Advice for Young Entrepreneurs in E-Commerce
Adrian: For the young guys out there, I shared an example of a retailer, which is RC Smart, an example of a store which developed their own brand like Al-Humairah, and of course, an inventor, which is TAT7. There are all these possibilities with e-commerce but none of them is easy. Everything has to start small and has to start somewhere. It will take years before it can become an established business that will keep growing. The failure rate today is still very high.
The Future of E-Commerce in Malaysia
Wayne: Where do you see e-commerce in Malaysia growing in the next one or two years?
Adrian: It will be about building the trust that consumers have with online shopping. In the next one or two years, I think we will definitely see more merchants coming in, big or small, but they will still face the same problems with talent and know-how. There will be opportunities for providers like us too. Of course, it depends on whether they are willing to spend with us since SMEs are sometimes a little tight with their budget.
Wayne: Alright, Adrian. I think that’s all for the interview. Thank you for everything that you have shared with us today.
Adrian: No problem. Do let me know if you have more questions. Thank you.
This is our second interview with a Malaysian-based local entrepreneur (the first was with the co-founder of Piktochart – Ai Ching) and it is always insightful speaking to local entrepreneurs that are trying hard to make something happen.
With so many businesses trying to enter the market, either as a merchant or by developing technologies that will help improve the online shopping experience and the operational side of things, the e-commerce space never fails to excite aspiring and current entrepreneurs. This is the main reason why we had this interview with Adrian, and we hope you enjoyed the tips and insights shared by him.
Do you have any question for Adrian about running or growing your e-commerce store? Share the link to your store, whether it is based in Malaysia or not, together with your question for Adrian, in the comment section below.