Online retailers in Southeast Asia need to focus efforts on meeting the demands of their target markets as regional consumers are becoming increasingly sophisticated, Sharmeen Looi, Co-founder at cashback reward program ShopBack Malaysia, told the audience at TechNode’s ORIGIN conference, held during Malaysia Tech Week 2019.
Finding the correct product-market fit and identifying gaps in the market are crucial factors for any e-commerce and marketplace players with an eye on grabbing a slice of the pie, according to Aaliyah Soraya, General Manager at one-stop online sales solutions provider Commerce.Asia Enterprise, and Kenneth Kuan, Sales Director at Malaysian fintech firm Kiple. The pair joined Looi for a panel discussion on the challenges and opportunities that come with the growth of Malaysia’s e-commerce sector.
With a population of 32.25 million and more than 25 million internet users, Malaysia represents an attractive proposition for e-commerce companies based in Southeast Asia. Global, regional and domestic players are already focusing efforts on occupying the lion’s share of the market.
Consumers these days are getting smarter and savvy, employing the best tools when it comes to online shopping, said Looi, adding that the influx of foreign players will not only provide a boost for the market but also enable consumers to become even more sophisticated when dealing with digital transactions.
Marketplaces are becoming more specialized, focusing on specific target markets in line with their data accrued over time. “Marketplaces will gradually skew towards targeted segments and target consumer behaviour,” said Kuan, noting that their success is dependent on strong data analytics and a specific vertical focus.
“Think twice if you do not have the money or investment,” Soraya warned those setting up marketplaces to compete against the big players. One could consider acting as an enabler or partner for the marketplace instead, she added.
Logistics as the backbone
In terms of deficiencies in Malaysia’s e-commerce infrastructure, the speakers said that more could be done in terms of data crunching, integrated solutions between players, and last mile fulfilments.
Southeast Asia’s last mile fulfilments lag behind China, Kuan said, describing how an express parcel delivery in SEA takes around one day while it can be completed in a matter of hours in China.
“SEA logistic companies or marketplaces can consider localizing or regionalizing warehousing solutions to reduce costs and improve last mile fulfilments,” said Kuan, adding that this will, in turn, reduce the cost of adoption for customers.
Building talent pools
Demand for e-commerce talent will remain high as companies face strong competition in the industry. Seeking out such talents through recruitment advertisement, peer recommendations and networking are some viable hiring methods, according to Looi, while building a solid culture within the company is key to retention.
Industry-academia collaboration serves as a pipeline for talent too. From the employer’s standpoint, an internship offers the opportunity to trial young talent within a business and identify potential areas where they can add value. Kuan noted that it’s also a great platform to see if they are a good fit for a company’s values and culture without the need to commit immediately to a full-time position.
Investing in e-wallets
Despite the presence of a large range of e-wallet operators in Malaysia with some 48 licensed products as of May, the majority are actually loss-making with a handful of players dominating the field.
Going cashless will benefit both consumers and business owners in the long run though consumers are only likely to use one payment system for their daily lives, Looi said using the example of WeChat as a super app in China. The one prominent player will aim to manifest itself in as many aspects of daily life as possible, she added.
Understanding one’s target market is of paramount importance to the success and adoption rate of an e-wallet solution, said Soraya, adding that it doesn’t make any business sense to jump on the e-wallet bandwagon if your targeted consumers fall within the typically not-so-tech-savvy silver economy.
One upside of e-wallets is the effective use of data collected to better support operational efficiencies and customer outreach, Kuan said. Leveraging the data can help drive new and improvised products and services, he added.