This article first appeared in Digital Edge, The Edge Malaysia Weekly on April 5, 2021 - April 11, 2021
Malaysia was already enjoying strong e-commerce growth before the Covid-19 pandemic hit. The multiple rounds of lockdowns and economic shutdowns may have helped accelerate that trend, but it can be a double-edged sword, says EasyStore Sdn Bhd CEO Chen King Peng.
Specifically, with e-commerce supply chains now spanning the entire world, it may no longer be enough to simply carry on as a trading company in e-commerce form. “I think long-term success in e-commerce depends on the type of business you want to be,” Chen says.
EasyStore is a subscription-based, e-commerce software-as-a-service provider that allows small businesses to efficiently manage the full spectrum of e-commerce-related services across multiple online sales channels from a single master interface.
“There are two kinds of online merchants: the online trading company and the brand owner. As the name suggests, an online trading company simply identifies products with some demand, buys in bulk from a manufacturing hub like China, and then imports them to Malaysia to sell. Their priority really is to just get rid of their stock as quickly as possible,” says Chen.
The trading merchants, he tells Digital Edge, can be crowded out by the increasing manufacturer-to-consumer dynamic, made possible by ever more efficient multinational e-commerce-centric supply chains.
This is especially true of China-based manufacturers, and particularly noteworthy when one considers that two of the three most prominent online marketplaces in Malaysia — namely Lazada, Shopee and PG Mall — are foreign-owned.
Lazada is owned by Chinese tech behemoth Alibaba Group Holding Ltd, while Shopee is part of the SEA Group, the retail and gaming giant founded by China-born Singaporean businessman Forrest Li. PG Mall, meanwhile, is the younger, local e-commerce upstart founded by Datuk Wira Louis Ng Chun Hau.
To be sure, there are more local e-commerce players getting into the game, particularly with the Covid-19-enforced lockdowns since last year. Even so, the market is still dominated by the likes of Lazada and Shopee, with others doing what they can to grab market share.
Other than the online trading company, there is also the online brand owner. The brand owner is not concerned about selling just any product, but rather, his own product, Chen explains.
“Brand owners care about what they produce and how they are produced, and want to have some control over how and where the products are sold. They are out to build a database of stable, long-term, repeat customers.
“To be fair, for both classes of online merchants, I don’t think it’s possible to get away entirely from the fact that the vast majority of online sales in Malaysia tend to be generated from marketplaces. Brand owners may eventually get to a point where their own online portals generate much of the sales, but they will still likely operate at least a few other e-commerce stores to supplement sales.
“The difference between the two is where the online trading company is quite happy to just operate on these marketplaces, the brand owner has a longer-term plan to develop repeat customers that he can then service and sell to on his own unique e-commerce platform.
“In the long run, it makes sense to develop unique products attached to memorable brands, because studies show that long-term and repeat customers yield much more value to you as a seller (as opposed to constantly hunting for new, one-time buyers).”
This longer-term brand building strategy, Chen says, gives businesses a much better foothold in the now highly competitive and increasingly saturated e-commerce environment, where manufacturer-to-consumer delivery models can quickly overwhelm individual trading businesses.
It is for this reason that Chen believes many traditional bricks-and-mortar businesses are well placed to make the transition to e-commerce.
EasyStore provides a service that allows businesses to efficiently manage any number of online sales channels — and all the complexities that come with it (namely, marketing, payment channels, as well as logistics and delivery), while being able to continually focus on servicing and converting their already-established (and offline) customer base to an online shopping and delivery experience.
“These businesses, once they have their online presence set up, can simply blast the message out to a database of customers they have accumulated over the years, and then engage with them via their dedicated online portals, and other online marketplaces. As for us, we tend to advise our merchants to be on as many sales channels as possible, to maximise their reach,” says Chen.
This is arguably how local e-commerce platform PG Mall was able to grow so quickly since its inception in 2017.
Ng, founder of PG Mall, is also the founder and chairman of Public Gold Marketing Sdn Bhd — Malaysia’s largest gold and silver trading company. According to Marketing magazine, Ng leveraged Public Gold’s roughly half a million regional customers to build traction for PG Mall over the last few years.
EasyStore, which Chen says is staffed entirely by locals, has as its long-term objective, the digital empowerment and transformation of some 50,000 small businesses over the next 24 months. The bulk of its merchants are based in Malaysia and Taiwan, but Chen is hoping to build a presence in Southeast Asia and beyond over the next few years as well.
“While I have very clear ambitions for the business, my personal, long-term objectives are much more focused on people. I am focused on doing right by a number of key stakeholders in EasyStore.
“First and foremost are our shareholders, to whom we have a financial responsibility. Second are my colleagues in EasyStore. I am very proud of the fact that EasyStore is a locally developed digital solution.
“And then, of course, we are very focused on our merchants throughout the world who are using our solution. I am hopeful that they find outsized value in our services, and that we help them not just survive in these difficult times but thrive over the long term, post-pandemic.
“Finally, there are the customers that our merchants service and sell to. I feel responsible to them, because, ultimately, businesses are relying on us to provide the best possible experience to their customers.”
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