Some 10 years ago, there used to be huge crowds of people flooding all the major mall locations, with long queues at payment counters during year-end and festive sales. However, things have changed in recent years with the rise of e-commerce. While there’s still a substantial crowd that flock at malls during these times, we see sales numbers drop, as well as closure of some brick-and-mortar stores globally. These stores have either closed for good or have moved their operations online to fully-serve a new generation of shoppers.
So, how did this paradigm shift in shopping come about? The first few e-commerce platforms that we heard of were Amazon and E-Bay in the 1990s, but online shopping only started to boom in Southeast Asia over the past five years.
Last year, Forrester Research said that it expects B2C online retail in Southeast Asia to rise from its current US$19 billion to more than US$53 billion in It also highlighted the favourable market conditions for online retail as internet and smartphone penetration is high in the region.
Further to that, Forrester Research also expects fashion and cosmetics to lead category growth due to lack of availability of brands in offline retail channels. This forecast is of no surprise to youths who are in-tune with high street fashion trends within the region. In Malaysia, we see homegrown street fashion grow from scratch through social media and their online stores. And only a few of these fashion brands would open up brick-and-mortar stores due to its high maintenance cost.
Not just that, we are also seeing how e-commerce platforms like Lazada, Shopee, Zalora, Fashion Valet, etc. have grown from nothing to becoming a household name. This shows how fast-paced the e-commerce industry is moving and hence we also see how these players are learning from each other to improve their operations, services, and marketing tactics to drive sales. Of course, this includes the infamous Singles Day Sales that sets off-the-charts sales records.
SINGLE DAY SALES
Singles Day Sales started off as an online sales stint by Alibaba’s T Mall (formerly known as Taobao Mall) on 11 November 2009, which generated better-than-expected sales numbers. Since then, the Singles Day Sales also known as Double 11 Shopping Carnival became T Mall’s annual shopping festival.
This year, Alibaba Group announced that it generated US$38.4 billion in gross merchandise value (GMV) on 11 November 2019 through its 11.11 Singles Day global online shopping extravaganza. These sales records have way surpassed Cyber Monday sales in the United States, which only pulled in US$7.9 billion in online sales last year.
Undoubtedly, the 11.11 sales have been replicated by Chinese and other Asian e-commerce players, such as JD.com, 11th Street, Lazada, and Shopee. Since 2012, leading e-commerce player, Lazada has made 11.11 one of its key industry growth drivers. Through years of refining its online platform and services, in 2017, Lazada Malaysia broke its sales record on 11.11 when it kicked off its month-long Online Revolution campaign. On that day, it claimed to have generated more than RM100miI of GMV.
Fast forward to 2019, Lazada sold over 1 million items within the first hour of its 11.11 sale and said that they delivered the first parcel of the 11.11 sale to a customer in 13 hours. Furthermore, Lazada also said that the Lazada Wallet was the highest-used payment option during the 24-hour sale.
Meanwhile, Lazada’s key competitor, Shopee also broke its own record as it received three times more orders in the first hour of the 11.11 sale this year, as compared to the same period last year. This year, Shopee sold 1 million items by 2pm on 11 November.
E-commerce Industry Outlook
The rise of the e-commerce in Malaysia has not only changed the way Malaysians shop, it also contributes a significant amount to our national GDP. According to the International Trade Administration, Malaysia’s e-commerce growth rate is expected to reach a GDP contribution of US$53 billion by 2020.
In turn, this would also boost foreign investor confidence. According to the `e-Conomy SEA 2019′ report by Google, Temasek, and Bain & Company, funding remains healthy in the region despite global headwinds. It noted that more than US$37 billion of capital has flowed into the Internet economy, mainly investments into e-commerce and ride hailing unicorns over the past four years.
Current consumer trends and foreign capital flows show that digital is the way forward and e-commerce has a promising future in retail, perhaps until the next paradigm shift.
