Are Malaysians ready for e-commerce?
By Karamjit Singh November 2, 2012
- Rakuten believes so and is confident its online mall will draw in shoppers
- The MD of baby and shoe distributor, Kinderdijk, does not think so
MALAYSIANS now have yet another mall to go shopping in, but they won’t have to worry about chaotic first-day parking blues or impulse buying because they won’t be tempted by the sights and smells of a mall experience.
Welcome to Rakuten Online Shopping, which threw open its portal on Nov 1 with over 11,000 goods from retailers available and with the promise of more; saying it would give Malaysians “an entirely new online experience that is entertaining and interactive.”
Yet, Gwei Tze Co (pic), managing director of retail distributor Kinderdijk Sdn Bhd, which distributes baby clothing and shoes and is one of two distributors in Malaysia for the Crocs brand, is quite blasé about the whole e-commerce scene in Malaysia.
It’s not that Gwei is one of those hard-core brick-and-mortar guys afraid of the disruption online merchants will wreak on his business, which in 2009 had revenues in the RM70 million (US$23 million) range.
He claims to be one of the first Malaysians to set up a portal – www.klonline.com.my – in the country back in 1995. At that time, I myself had not even heard of the Internet!
Unlike someone like Alvin Koay, who struck it rich with his e-commerce foray in the late 1990s, Gwei moved from e-commerce into brick-and-mortar a few years later, 1998, and that is where he has stayed. But he has tried a number of online sites to push his products, quietly, so as to not antagonize his over 600 retail partners all over the country.
The experience has been “poor.” He has tried AirAsia’s online mall, he has tried Pos Malaysia’s online shopping site and he now is trying Zalora.com.my, owned by Rocket Internet from Germany.
“While I can sell 2,000 pairs of shoes at a popular store a month, so far being with these online malls has not even netted me 50 shoes a month in sales from any particular site.” He has also advertised online to push sales but with limited success.
Meanwhile Rocket Internet’s model in Malaysia bemuses him. “They are spending so much in marketing and branding themselves online that I wonder how sustainable their business can be.”
While Rakuten expects to tap the Internet retailing market in Malaysia which is expected to exceed RM1.9 billion (US$623 million) by 2016, according to Euromonitor International, 2011, Gwei’s experiences have left him thinking that Malaysians are not ready for e-commerce.
“I think we are 10 years away. Malaysians right now will only buy online for two reasons – if they can’t get the item in a brick and mortar store in Malaysia or if it is cheaper.”
This is why online malls like to push for exclusivity when retailers want to peddle products on to their sites. But for established distributors, this exclusivity is almost impossible to offer.
Which leads to the cost issue: “It is hard to be cheaper than physical outlets when delivery charges are not competitive and therefore not supportive of e-commerce,” he says.
As proof of sorts, he shares that many of his online buyers for Croc shoes originated from the Malaysian states of Kelantan, Terengganu, Sabah and Sarawak – places where he initially did not have merchants carrying the brand.
He was also careful to price the shoes at a cost comparable to what merchants offered in their stores. “I would occasionally absorb the shipping costs but even this hardly did anything to move the needle.”
So, while he will be watching Rakuten carefully, he is skeptical that they can move the e-commerce needle very much. At least, not in the near future.