PIKOM: eCommerce is the future for Malaysia’s SMEs even though most players are foreign-owned

The National Tech Association of Malaysia (PIKOM) has stated that eCommerce is “the future of the retail industry”—globally and locally. They also added that local brands will stand to benefit “if they have a comprehensive eCommerce plan as part of the retail strategy”.

“The major eCommerce players in Malaysia are foreign-owned; that is why quite a number of the products you buy from them are being shipped from overseas. This is also why we believe it is imperative that our local small and medium enterprises (SMEs) build a strong brand presence through online channels,” said PIKOM chairman Danny Lee.

The statement was made after Mydin’s Managing Director Ameer Ali Mydin spoke in an interview with BFM about how foreign-based companies are benefiting at the expense of local businesses. He also stated that brick and mortar retail helps shift the economy better.

“When you do so-called eCommerce… seriously… two of your multinational, foreign suppliers, basically… I don’t like to mention them… but they’re the only ones making money out of everybody else. They charge 30% for F&B delivery… Minting money! And what are we doing? Support, support, support,” he said.

Mydin hasn’t mentioned which eCommerce companies he was referring to. However, services like Foodpanda and Grab charges between 25% to 35% commission—similar to what Mydin was talking about.

Here’s how local SMEs can thrive

However, PIKOM says that the government can help local SMEs increase their online presence. This would include online marketing, brand building, product positioning, pricing strategy and omni-channel rollout.

“Currently, local SMEs may not have the necessary expertise, so we need to have initiatives to support it. With the right support, SMEs can reap the benefits of eCommerce as proven by some local brands have seen their sales grow by 10 to 20 times within a year after partnering with local eCommerce enablers,” said Lee.

Last year, Malaysia Digital Economy Corporation (MDEC) rolled out the SME and Micro SME eCommerce Campaign and the Shop Malaysia Online campaign to help boost local online sales. It involved RM300 million of funding under the Permai Assistance Package.

However, Lee stressed that the majority of the funding should be channelled to SMEs—“and not foreign giants”. He added that the issue was not eCommerce, but rather the emphasis to help local SMEs sell online.

To help develop local eCommerce merchants, PIKOM has been organising the #MYCYBERSALE—a yearly national initiative in collaboration with MDEC. It contributed RM392 million in Gross Merchandise Value (GMV) during the 7-day sales in 2019. Lee also suggested that high level dialogues be hosted by the government with local SMEs to ensure growth in the industry to benefit local retailers.

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