There’s a recession coming in Southeast Asia and Malaysia is likely to see slower growth during this period. However, there’s still some optimism in the market, around e-commerce and brands continuing to push forward with digital transformation.

We wanted to get a better sense of how the ecommerce industry would evolve in the market and what it means for businesses. We spoke to Vaibhav Dabhade, Founder and CEO of Anchanto, which is a global B2B SaaS logistics technology company.

Headquartered in Singapore, the company handles e-commerce management for SMEs, Micro-SMEs, and enterprise businesses around the region and in the Middle East as well. Focusing on Malaysia, Vaibhav shares his insights into the evolving Malaysian ecommerce scene and how the landscape is likely to change in the coming months.

We discuss the evolution of Malaysian consumer behaviour with

How has the e-commerce and logistics scene in Malaysia changed over the last two and a half years?

The last two years have been transformational for the Malaysian eCommerce and logistics ecosystem. In this span, many marketplaces have realised the need to focus on the post-purchase experience more than on increasing the breadth of the product or the depth of the catalogue. So the focus has now shifted to the post-purchase experience, early deliveries, and authenticity of products. And due to the influence of such factors, you can see a lot of marketplaces jumping up and down in terms of ranking in Malaysia. Talking about logistics, if you divide it into fulfilment and last-mile delivery, there is a huge uptake in the last-mile delivery segment, especially due to the government incentives in Malaysia. 

During the last 2.5 years of COVID-19, eCommerce in Malaysia was considered an essential service, which was a brilliant decision. This allowed businesses to keep functioning as they did not have to stop hiring and innovating, and the investment that was blocked in their retail arm could easily be continued or diverted to their online stores. So, fortunately, or unfortunately, because of the pandemic, eCommerce and logistics have grown in Malaysia and have consolidated around what the customer needs and wants instead of what the brands intend to sell. 

I was recently going through a study by GlobalData that suggested that the market is expected to reach MYR51.6bn (US$12.6bn) by 2024, increasing at a compound annual growth rate (CAGR) of 14.3% between 2020 and 2024. This indicates that the future of eCommerce in Malaysia is definitely an opportunity for businesses to choose growth and succeed in the online space. 

Are you still facing challenges with the ongoing logistics slowdown globally?

The logistics slowdown challenges are primarily for cross-border players; hence the effect can be seen for a lot of sellers running a business from across the border on marketplaces like Shopee, Lazada, Zalora, etc. But, businesses that have been impacted have also managed to find innovative solutions to the global logistics slowdown. They have been working closely with marketplaces and companies like Anchanto to make sure that they have distributed fulfilment capabilities. This way, they don’t have to necessarily rely on air or sea freight but can work with local government and local distributors to ensure their stock is as close to their end customer as possible. 

And this is not the only way that enterprises have coped and adopted technology solutions earlier and were able to cope with the challenges better. To give an example, a system like Anchanto WMS enables them to have a distributed warehousing and a distributed delivery system across both east and west Malaysia, allowing them to cope with the logistics slowdown and eliminate any negative consequences. 

So, a timely switch to a technology platform will definitely offer the required help when it comes to logistics slowdown for all global businesses. 

You think omnichannel is the way forward for Malaysia’s e-commerce industry, but given the country’s slow digital adoption rate, is it possible for retailers to adopt new solutions in time to keep up with consumer demand?

Firstly, I would not agree that Malaysia has a slow digital adoption rate. In fact, with increasing internet penetration and a growing middle-class population that is tech-savvy, it can be argued that it is one of the fastest-growing eCommerce markets in Southeast Asia. But, there is definitely slow adoption of digital payment methods.

Secondly, when it comes to adopting solutions for Omnichannel, Malaysia has been very up and above. This is a result of organisations like MDEC (Malaysia Digital Economy Corporation) offering incentives and SME digitization programs, especially around warehousing. By going omnichannel, especially now in the post-COVID era, brands are able to only adopt a D2C strategy but are also able to incentivise customers to walk into the retail store. This leads to a larger basket to be sold, a best-of-both-worlds experience for customers in trials, exchanges, and additional purchases amounting to better revenue.

And finally, for retailers to adopt new solutions, they need to keep their focus outside the ERPs and Accounting Tools and think about the post-purchase experience that the customer today expects. Their focus should be on the delivery time, the accuracy of the products and how easy it is for the shoppers to manage their account once the order has been placed. They need to ensure a seamless experience for customers to return or exchange products, access or get credit points directly to their accounts, and so on. In all of these post-purchase experiences, retailers need to adopt technology that can complement their omnichannel strategy for a longer-term. 

Do you foresee a potential slowdown in e-commerce growth with the expected recession coming in 2023?

With the anticipated economic shift happening in the United States, Europe, and China, there is an impending proposed global economic slowdown. But when it comes to eCommerce, a potential slowdown is not something that businesses should worry about. In fact, the opposite may be true for eCommerce businesses. And the reason for this is changed customer behaviour. 

With the pandemic, the ease and convenience offered by eCommerce resulted into the demand percolating into all categories. In fact, as opposed to slowing down the popularity of online stores, there is a rapid rise in the popularity of Quick Commerce, where customers get products delivered in under an hour. 

In fact, the surge of grocery commerce is one of the various factors that stimulate eCommerce growth in Malaysia. With customers ordering and getting food, drinks, and groceries online, that too in remarkably quick delivery time, you know there is massive scope for growth. 

What’s next for Anchanto?

Malaysia has always been a crucial market for us and in the coming years, our focus is on accompanying more enterprises and brands for their digital commerce journeys. We want to forge strong local partnerships to enable a better experience to our customers. 

Equipped with our solutions, Malaysian businesses can not only conquer the digital sphere locally but also scale their presence across the globe. Our platforms fulfil the digital infrastructure requirements of our customers to help them implement their winning eCommerce strategies. Not being limited to multichannel eCommerce, businesses can go omnichannel with capabilities like ‘try-and-buy’ or ‘click-and-collect’, or also go ‘Direct-to-Consumer’ with Anchanto.

In Malaysia, we have had the chance to observe the transforming eCommerce market and adjust our offerings to best suit our customers. This is what helps us solve various challenges for all eCommerce businesses in the region. Apart from our two offerings – Anchanto OMS and Anchanto WMS, we are working on building new products and enhancing our existing product suite to adapt to new requirements and continue on the path of innovation. 

Apart from Malaysia, we are present across various markets like Singapore, Indonesia, Philippines, Vietnam, Thailand, the Middle East, South Korea, Japan, and India. As we continue to empower enterprises in the region to scale, we plan on expanding across new markets that we will be announcing soon.

Our mission has always been to simplify backend eCommerce operations for businesses of all sizes through our innovative & intelligent SaaS platforms. We aim to transform the way businesses conduct eCommerce in the region, while aggressively moving towards becoming the most customer-centric company in our domain across the globe.