This article first appeared in The Edge Malaysia Weekly on March 26, 2018 - April 1, 2018

WHILE bricks-and-mortar retailers and malls are still going through a tough time, growing by just 2% last year, online shopping expanded by a whopping 28.4%.

According to market research provider Euromonitor International, internet retailing in Malaysia grew from RM1.29 billion in 2012 to RM5.09 billion last year — a three-fold increase in just five years. This includes sales generated through pure e-commerce web sites and sites operated by store-based retailers.

In 2016, online sales amounted to RM3.97 billion.

“Consumers in Malaysia are becoming increasingly accustomed to online shopping through a range of electronic devices such as computers, tablets and mobile phones. With the nation’s developed telecommunication infrastructure and high mobile penetration rates, many consumers have access to the internet and online stores,” says Euromonitor.

Euromonitor expects internet retailing in Malaysia to hit RM6.25 billion this year and further accelerate to RM7.67 billion in 2019.

An Online Shopping Survey conducted by Mastercard in November 2016 showed that three in four Malaysians did their shopping online, with 89.4% of respondents making at least one purchase in the last three months, compared with 81% in the previous year.

“The acceleration of digital payments and emergence of new payment technology that addresses safety, speed and convenience will continue to support this trajectory, in line with Malaysia’s digital economy ambition,” says Mastercard country manager for Malaysia and Brunei Perry Ong.

Malaysian-based online payment gateway solutions firm iPay88 recorded 58.5 million transactions over its systems in 2017 — a 53.1% jump compared to a year ago.

iPay88 head of marketing Calvin Yeap says companies that have both a traditional bricks-and-mortar as well as an online presence have a higher chance of success in growing their market share.

“We believe e-commerce is just another channel for a company to grow its market share.

“We are also seeing a trend of convergence in which traditional retailers are going online while online merchants are opening physical outlets,” he tells The Edge.

iPay88 foresees stiff competition for conventional retailers that have not invested in digital retail channels.

The challenge of competing online was reported to be among the reasons Toys “R” Us recently announced it will be shutting down its stores in the US and the UK.

For Malaysian retailers still relying on the traditional bricks-and-mortar model, they need to get consumers interested in their products to visit their stores, or face losing market share to online players like Lazada, Shopee, Zalora, 11street, Ezbuy and FashionValet, to name a few.

Another factor that cannot be ignored is the power of social media — anyone with a Facebook or Instagram account can easily start an online business from the comfort of their own homes.

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