16 Mar 2021

Impact on E-commerce in Malaysia since Covid-19 began

The Malaysian Government’s imposed lockdown and other subsequent forms of movement-related control orders to curb the Covid 19 outbreak have significantly impacted shopper patterns across various industries.

Vodus surveyed 15,000 Malaysian online shoppers to study the impact of Covid-19 on the market landscape and consumer usage and attitude across ecommerce sectors such as non-food items, grocery shopping and online food delivery/ meals.

The government-imposed lockdowns and movement control orders (MCO) have compelled a significant number of non-shoppers to start shopping for groceries, meals, and other non-food items online. This surge in online shopping is observed to be driven by necessity rather than convenience or discounts. 25% to 40% of online shoppers have only started to shop online after MCO have started to avoid crowded places and many of these new online shoppers are from the senior age groups (45 years old and above).

Online shopping incidence rate

Immediately after the first MCO is announced in March 2020, there is a 10% jump from 39% to 49% incidence rate of online shoppers of non-food items.

However, the incidence rate of online shoppers has since begun to plateau with only a 3% increase to 52% being recorded in January 2021. There is still about half of the Malaysian adults who do not shop online for non-food products. There are still opportunities to expand the E-commerce market by luring non-online shoppers to shop online.

Furthermore, E-commerce platforms could also look to encourage online shoppers to increase their frequency of online shopping. The average online shopper shops about 7 times a month while 1/3rd of online shoppers only shop about 1 to 5 times a month.

E-commerce platform market share

Shopee and Lazada are the two most popular platforms when it comes to purchasing non-food items and grocery online. However, since the first MCO happened in March 2020, Shopee has extended the lead for non-food items online shopping from 56% to a whopping 72% of the market share, whereas the market share for Lazada and the other platforms remained unchanged. Lazada and Shopee are market leaders in terms of share as people consider them to be much cheaper than other available platforms.

Among the online food delivery platforms, Food Panda is the market leader followed by Grab food which is preferred slightly lesser among the senior age group as compared to other age groups while Food Panda is preferred more by the 45-64 age group as compared to other age groups. Those ordering food online more than 20 times a month are more likely to be multi-platform users than lower frequency users.

Reasons to Shop Online

Covid-19 related safety concern is cited as the primary reason for ordering food and grocery online while convenience is the primary reason for purchasing non-food items online. Chinese are more likely to cite safety as a greater concern as compared to other ethnicities.

Future Outlook

The new trend and boom in e-commerce users is likely to stay even after MCO is lifted as most Malaysians state that they would shop online more frequently even after MCO is lifted. This may be due to them appreciating and getting used to the convenience, wide range of options, lower prices, and pleasant experience of online shopping. Malays and Chinese are more likely than the other ethnic groups to increase their frequency of online shopping in the future.

Ways to compete in the Malaysian E-commerce space

The Covid 19 pandemic has undoubtedly accelerated the adoption of E-commerce. Our result shows that the growth in the E-commerce space is expected to sustain even after when the pandemic has ended. Such a positive industry outlook will likely attract more players to compete in this increasingly crowded E-commerce space.

Growth opportunities in the E-commerce space will have to come from these three angles: 1) compete for existing online shoppers, 2) encourage online shoppers to shop more frequently, or 3) encouraging non-online shoppers to shop online.

To compete for existing market share in a red ocean such as the E-commerce space, you will need to create a stronger brand than your competitors. This can be attained with a brand health tracker to measure how consumers perceive your E-commerce platform brand relative to your competitors, identify the problems with your brand image and construct an ideal branding strategy to address them. This will ensure that your consumer’s brand awareness is successfully converted to brand consideration, preference, sales and ultimately recommendation to friends and family.

To encourage a higher frequency of online shopping, you will need persistent marketing campaigns and a strong understanding of consumers. This can be addressed with target market research to identify your low-hanging fruits and identify the key traits that they are looking for. With these insights, you can then construct an ideal marketing strategy to send the right message to the right audience.

If you choose to go down the path of encouraging non-online shoppers to shop online instead of competing for market share, you will need to understand the pain points of non-online shoppers with target market research and develop a strategy to address them. Expanding new frontiers of E-commerce may be challenging, but success can be hugely rewarding with higher profit margins and strong brand loyalty than competing for market share in the red ocean. 

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