In a report released on October 22, global consultancy firm Deloitte said that eCommerce in Malaysia is an increasingly attractive market, due to the country’s population of about 30 million people, its brisk economic growth and progressive digital technology infrastructure. The report, “The Next Wave” Emerging Digital Life in South and Southeast Asia, stated that the contribution of eCommerce to Malaysia’s gross domestic product (GDP) grew steadily to about $28 billion USD in 2018. 

Just like Singapore and Indonesia, Malaysia is among the region’s “digital life” leaders. This is based on specific indicators such as mobile phone penetration, mobile Internet speed, digital payment maturity, online shopping maturity, social media activity and policy support. 

We explore Malaysia’s ecommerce trends and evolution in 2020

The report, based on a survey across different age groups in eight countries in South and Southeast Asia, was previewed by Deloitte in September at the Ant Group and Alipay organised INCLUSION Fintech Conference in Shanghai.

eCommerce trends in Malaysia

Digital payments are a key enabler of digital life and eCommerce. Compared to some other countries in Southeast Asia, online transactions are still in its initial stage in Malaysia but are rapidly growing. Previously underdeveloped financial systems and an insufficient supply of traditional banking services, together with considerable gaps in internet development, have left an enormous opportunity for growth. 

From 2017 to 2019, global use of eWallets skyrocketed from 500 million to 2.1 billion, with the largest increase in developing countries. In Malaysia, the value of digital payments reached $11,904 million USD, with an expected  2020-2024 annual CAGR of 10.9%. In February, Malaysia’s subway transport system became the second in the world to allow payments and access using QR code. 

According to the report, Malaysia also ranks second in the top 10 countries by eCommerce retail growth. The increased use of online payments spurs this growth, and currently, the eWallets with the highest number of users are Touch’n Go (82.41%) and Boost (66.68%). These eWallets have infiltrated daily life with usage for eating, clothing, accommodation and entertainment purchases increasing. Monthly expenditure on digital entertainment is less than $10 USD for 42% of respondents and between $10 and $30 USD for 38%, showing their usage for small payments. 

Due to the pandemic, 78% of respondents said they had increased their use of digital services,  with 41% saying this has increased substantially. Consumers in South and Southeast Asia mostly choose digital payment for eCommerce/mCommerce (70%), peer-to-peer transfer (69%), and in-store purchases (62%). While eCommerce in Malaysia and regionally decreased in the tourism sector, there was a ramp-up in the purchase of exercise equipment, technology and food supplies. 

Smartphone penetration

Malaysia has the second-highest penetration rate of smartphones (83%), and about 80% are active internet users. For many, the smartphone is their primary access to the web. Mobile phone apps for social media, eCommerce, daily life services, videos and music, and financial services are the most popular. 

This reliance on mobile devices in everyday life has had a natural knock-on effect on the number of people using them to make purchases.  

Social media activity

The same report shows that Malaysia has the highest social media penetration rate. At the start of this year, about 81% of the population actively use social media, up approximately a third from 2016. Facebook is the most popular platform in the country, followed by Facebook-owned Instagram and Messenger, with LinkedIn in fourth place.

Policy support

In many countries, digital technology is becoming the predominant engine of economic development. Therefore, investing in the development of this sector is a vital strategy for international competitiveness. Most Asian countries have introduced a series of policies to support this move. 

In Malaysia, the Digital Economy Platform (DEP) aims to drive the Shared Prosperity Vision 2030 programme. This government plan intends to encourage sustainable growth, equitable distribution of development amongst the various income groups, ethnicities, and regions in the country. It also hopes to close the urban-rural gap and work towards digitalising as many people as possible. In 2020, Bank Negara Malaysia distributed the Exposure Draft on Licensing Framework for Digital Banks. This framework aims to enable the innovative application of technology in the financial sector. 

The current eCommerce trends in Malaysia support the country’s rapidly growing digital economy. Thanks to policy measures attempting to bridge digital gaps nationwide, advanced infrastructure and more Malaysians getting access to the internet and participating in the digital economy, eCommerce in Malaysia looks set to continue to grow. 

Consumers aged between 21 and 40 years old are the leading digital movement and pave the way to an increase in online purchases in the region. Now, Malaysia has become a regional leader in digital life in Southeast Asia and still has many opportunities to grow as the country becomes a more technology-oriented nation.