KUALA LUMPUR: One of the biggest challenges facing e-commerce merchants in the current and post-pandemic environment is how to grow their businesses given increasingly intense foreign competition.
Commerce.Asia DotAsia Ventures Sdn Bhd (Commerce.Asia) group executive chairman Ganesh Kumar Bangah said merely having a digital presence online is insufficient.
He said a substantial number of e-commerce players do not know how to differentiate themselves from foreign competitors.
"We have encountered numerous situations whereby local e-commerce players do not have sufficient capability or knowledge to grow their business of, say, RM50,000 or RM100,000 a month to RM1 million a month," Ganesh said in a virtual panel discussion called Next Stage of e-commerce in Malaysia - The Challenges & Opportunities organised recently by cloud service provider Exabytes Network Sdn Bhd.
Moderated by the Selangor Information Technology & Digital Economy Corporation (SIDEC) e-commerce assistant manager Salman Ahmad, the panel discussion also included Malaysia Digital Economy Corporation (MDEC) e-commerce director Song Hock Koon.
Ganesh further said while consumers have taken to e-commerce and are now buying online, they tend to be buying more from foreign suppliers.
"Inherently, they are not investing enough into their marketing.
Ganesh said for a local company to set up its e-commerce store on Lazada or Shopee is easy, but how do the company stand out from the other half-a-million sellers?
Ganesh, the former National Tech Association of Malaysia (PIKOM) chairman and currently the chairman of its think-tank arm called Future Digital, said this was primarily a mindset issue among local businesses.
"A lot of traditional retailers, when they start their e-commerce store, they do not see marketing as an investment.
"They need to take the RM20,000 they spend on rental in a shopping complex – which they don't need when setting up a digital store – and spend that on marketing.
"Today, sales may be growing organically because of the lockdown, but in the future, that may not happen," he said.
According to Ganesh, the e-commerce ecosystem can be broken down into three components – supply, demand, and enabling infrastructure (or service providers).
"Concerning supply, the biggest issue is that suppliers are mostly foreign in nature. Malaysians tend to be mostly consumers and not developers of technology," said Ganesh.
"Even more localised platforms such as Lazada or Shopee have mostly foreign merchants. So what we really need to focus on is to build up the capability of local merchants, especially when it comes to growth.
"We really need to focus on merchants that we can grow to the RM1 million a month level to ensure that they can scale," he added.
Hence, to meet local demand, both the sales capacity and the number of sellers must be adequate.
"I think the number of sellers is not an issue because of the lockdowns since last year. So they had no choice but to start selling online. However, the sales figures are not as high as they ought to be," Ganesh said.
MDEC's Song said stakeholders should not focus solely on a single area of the ecosystem.
"The approach has to be more holistic. Yes, the sellers need to be on board, but so do the consumers and the service providers – last-mile delivery, logistics, digital and e-marketing, for instance. So we have to see how we can connect all of them," said Song.
Ganesh highlighted that product demand has increased significantly over the past year or so – a fifty per cent growth year-on-year.
"In fact, demand has grown faster than supply. Meanwhile, the enabling infrastructure takes time to build," said Ganesh.
"This has resulted in longer delivery times and delays, as warehouses were unable to hire fast enough and logistics companies were unable to purchase sufficient vehicles fast enough.
"As the enabling infrastructure gets put in place, and hopefully demand normalises after the lockdowns are lifted, it will all reach equilibrium," he said.
Commerce.Asia is a Malaysian one-stop ecosystem that enables brands and businesses to sell online while managing and integrating all aspects of their online businesses, from developing their own online stores to managing product sales across multiple e-marketplaces.
The company covers various aspects of e-commerce that businesses often have to struggle to learn, including warehousing, payment, delivery, marketing and order management, and integrates them to provide a one-stop solution for brands and small and medium enterprises (SME).