The Race To The Top: The Internet Economy In Malaysia

How Each E-commerce Platforms are Unique & Their Approach Towards the Internet Economy in Malaysia

Malaysia total visits on desktop mobile

Pexels / Pixabay

The Malaysian e-commerce market is on a growth trajectory set to reach 21% growth by 2020, according to the Malaysia Digital Economy Corporation (MDEC). In a 2018 interview with International Trade and Industry Deputy Minister Datuk Ahmad Maslan, he stated that this growth rate would contribute to over 211 billion GDP values, hence increasing the importance of the e-commerce market in the Malaysian economy.

Get Our Activist Investing Case Study!

Get the entire 10-part series on our in-depth study on activist investing in PDF. Save it to your desktop, read it on your tablet, or print it out to read anywhere! Sign up below!

Q2 hedge fund letters, conference, scoops etc

In Malaysia: Lazada, Shopee and Lelong have climbed up the ranks for the current most visited webpages (total visits on desktop & mobile web). Lazada, founded in 2012, is in the forefront with more than 21 million monthly visits (as of Q1 2019). Shopee, founded in 2015, the company garners about 19 million monthly visits, and Lelong, founded in 1998, with more than 4 million monthly visits. Carefully curated strategies have allowed these platforms to dominate the Malaysian market, which are highlighted as follows.

Lazada

The acquisition of Lazada by Alibaba has allowed for the application of successful marketing strategies to the Malaysian market through its recent RM4.15bn investment. Namely, Lazada is known for the vast numbers of sales and deals held yearly. Their signature 11.11 and 12.12 yearly sales have increased their popularity amongst Malaysians, as the hunt to find the best deals still persist. Lazada’s marketing policy, such as the “Slash it” campaign, allows users to invite other people to slash the price of a featured product by a certain percentage. The more people you invite to slash the price for you, the higher the discount, which can go up to 90% off. Not only does this allow consumers to enjoy incredible discounts while marketing their sales, but it also increases their user base. In a recent interview with Diana Boo, Lazada Malaysia’s CEO, on their mega mid-year sale, she stated: “whenever we have a sale, our traffic would surge and our sales do really well.” The ability of discounts to go as high as 90% is due to the combined efforts on subsidies by both Lazada and its brands. Brands are able to subsidize at a higher rate due to a reduction in marketing and labour costs through selling online.

Shopee

A recent study conducted by the Malaysian Communications and Multimedia Commission (MCMC) has revealed that 93.1% of Malaysians prefer using smartphones to access the Internet over any other devices. Shopee realized the potential and importance of mobile e-commerce due to this, and therefore introduced its own app from the beginning of its establishment, making it a mobile first company. Due to its long-term establishment, the Shopee app has climbed to the top of both the AppStore and the PlayStore ranks, grabbing 1st place in the first quarter of 2019. Additionally, the introduction of Shopee Coin has enabled users to accumulate rewards and save more, hence encouraging more shopping and attracting more consumers.

Lelong

Lelong is Malaysia’s very own homegrown ecommerce platform and is also the oldest Malaysian online marketplace, remaining resilient throughout the years when many other online businesses have not been able to do so. The company’s maturity has also enabled them to trial and error numerous strategies over the years. Additionally, while other competitors were just beginning to enter the market in the mid-2000s, Lelong had already established its own market base. As Lelong has chosen to only operate in Malaysia, it has allowed them to specialize and focus solely on the Malaysian market, and hence perfecting their local approach. This has resulted in their success whilst only employing around 65 employees, compared to its close competitor such as Lazada and Shopee, who have employed around 516 and 443 employees respectively.

All data on total visits on desktop & mobile web stated in this article were data recorded by SimilarWeb obtained for Q1 2019 and data is accurate as of April 2019.

***

Insights article by Alyssa-Claire Filippi from iPirce Group (https://iprice.my)



About the Author

Jacob Wolinsky
Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Prior to ValueWalk, Jacob was VP of Business Development at SumZero. Prior to SumZero, Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver