Malaysia’s e-Tail Market: The Nurturing Nest for Regional Growth Stories

28 Feb 2018



The development of Malaysia’s e-commerce retail (e-tail) market has gradually expanded over the past years and is ready to finally take off as the market enters a next stage of development: From penetration stage, where growth is driven by increasing number of users, to value growth stage, where growth is driven by the increasing range of goods purchased by users online.

Solidiance’s latest white paper, “Malaysia’s e-tail market: The nurturing nest for regional growth stories” outlines the business potential and challenges of Malaysia’s e-tail market and reasons why it may become an important platform market in Southeast Asia.

Unlike the other emerging countries in Southeast Asia, Malaysia is seeking the e-commerce market growth through the value spent per user as it stands in relatively advanced stage of market penetration. The country has shifted from penetration stage, where growth is driven by increasing number of users, to value growth stage, where growth is driven by the increasing range of goods purchased by users online. With a market size of US$ 900 million, only standing fifth in Southeast Asia, Malaysia is expected to outpace the other countries in the region in terms of growth in 2022.


Source: Solidiance research and analysis

Our White Paper also highlights that Malaysia will likely become an important platform market in the region as the cultural diversity makes it an ideal testing ground for new concepts and act as a driver for e-tail development in the region. The Southeast Asia’s fourth biggest economy has a perfect balance of e-commerce cost and readiness when compared to mature markets like Singapore and the lower cost penetration stage markets like Vietnam, Thailand and Indonesia.


Source: Solidiance research and analysis

Malaysia’s e-retail landscape is also diverse, meaning it is heavily impacted by global players yet with more than half of the market in hands of regional, local and other firms. Foreign e-commerce players are enjoying the Malaysia’s value growth effect, as they normally aim to enter and establish in a given e-tail market with a few “classic” categories and then strive to add as many new product groups as possible over the years.






For Malaysia to fully benefit from its potential key role in Southeast Asia’s landscape, companies and policy makers must observe a number of key success factors present in the market while the momentum is still hot. The enabling factors toward confidence growth of Malaysia’s e-retail market include a well developed digital and urban infrastructure for serving e-tail clients, well specialized intermediaries, increasing acceptance of e-tail as a source for common goods as well as cultural and ethnic diversity which creates a testing ground for multiple markets. While the increases of dominance of global players, scarcity of e-commerce talents and cyber security are problems to be addressed by policymakers and companies to secure the promising market growth.

Source: Solidiance research and analysis


Opportunities for growth in Malaysia’s e-tail market

  • True 24/7 services. Same-day deliveries for non-food items as well as daily needs etc. do not exist yet
  • Offline to Online conversion of conventional business to e-tail. E.g. a firm offering transformation, marketing and incubation services for small to medium enterprises (SMEs)
  • Healthcare related e-tail and e-commerce businesses are not common yet in Malaysia.
  • New payment methods and business models: Online players will keep trying to reduce the amount of old fashioned cash-on-delivery transactions with new gateways and models
  • New Digital Free Trade Zone (DFTZ) to be built aimed at facilitating international e-commerce and invigorate internet-based innovation in the country


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