Vital lessons from Malaysia’s most successful local e-commerce platforms
THE FINAL quarter of 2018 is beginning soon, and along with it comes Malaysia’s most vital online sale periods.
This includes the 11.11 (also known as Singles Day), Black Friday, 12.12 Sale and more. This is e-commerce’s most crucial period as revenue and online traffic is set to double during the sale festival.
A flashback to 2015, most consumers would have little or probably no idea what Singles Day or what 12.12 sale is. But in 2017 and beyond, these two sale periods are now the most vital events in Malaysia’s digital space.
This was evident last year when we reviewed what were the most popular online sale periods of 2017 and this trend is expected to continue for the next foreseeable years.
What’s more interesting is that these online sale periods garnered more interest when compared to more traditional sale periods that have been around for decades, such as the Chinese New Year sale or Hari Raya sale periods.
At this time, all e-commerce platforms experienced exponential growth in online traffic. Lazada recorded US$250 mil (RM1 bil) by end December 2017 in gross merchandise value (GMV) when they concluded their online sale event and this trend is expected to grow year on year.
This shows how fast consumers’ preferences can change in just a few years. As such, the key winners in the industry are the ones who are able to keep up with consumers’ behavior and take it to the next level to become trendsetters.
So, what can we learn and adopt from trendsetters in e-commerce? The best role-models to look up to are the most successful locally-based platforms in Malaysia. The Map of E-commerce currently ranks Lelong.my, Hermo, and Fashion Valet as the three most visited platforms as of Q2 2018. Here’s what we can learn from them.
Relentlessly evolving to remain relevant
In the modern economy of e-commerce, staying relevant according to current trends is very important. One such player who has braved through the tough times and remained relevant is Lelong.my.
To date, Lelong remains one of the key pioneers in e-commerce in Malaysia. Unlike other players, Lelong is the only e-commerce platform that was established prior the turn of the millennium. They have been around since 1998 and recently celebrated their 20th anniversary.
Richard Tan, co-founder of Lelong stated that he believes in starting out small and building on a niche before expanding. During the 90s, there was no lack of hype surrounding online shopping and Amazon’s huge success in the US.
However, consumers were still very new to online shopping and unsure if merchants can be trusted. This issue was similar from a business’ point of view as well, where retailers have only relied on traditional brick and mortar shops to sell their products or services. Lelong identified this challenge and decided to take on various initiatives to build trust between sellers and buyers.
After several years as an auction site, Lelong evolved to become a B2C marketplace and has remained relevant to shoppers in today’s uber-competitive internet industry. This was evident in the study on the History of E-commerce Malaysia where Lelong has consistently remained among the top five most search e-commerce platforms in the past 10 years.
However, their journey was never smooth sailing. Richard was never disheartened even if it took 7 years before Lelong became profitable in 2005, as they saw consistent growth year after year.
Today, the e-commerce platform has remained profitable as a private company, and on a monthly basis garners more than 5 million visitors in Malaysia.
Lelong continues to evolve its platform to better meet consumers’ needs as seen in its recent rebranding exercise. At the same time, Lelong continues to play a significant role in the digital ecosystem by empowering and equipping local businesses for the digital economy.
Replicating foreign success in Malaysia
While various e-commerce platforms were able to come up with original products and solutions for the market, sometimes it might be best to replicate and localize successes seen abroad. This was the inspiration behind Fashion Valet (FV).
In an interview the co-founder, Vivy Yusof stated her inspiration for a fashion e-commerce platform came while she was exposed to consumerism in the United Kingdom.
With a just a few clicks on the mouse, consumers can easily have products delivered to their doorstep. She experienced further validation for an online fashion platform when she experienced frustrations being stuck in traffic jams, crowded parking lots at retail areas and the lack of options in the online space.
Together with her partner Fadzarudin Shah Anuar, FV was launched in 2010 with a minimal budget of RM100k from their personal savings and loans.
In the following years, FV garnered a huge following and has successfully obtained funds securing approximately USD$75 million in equity funding to date.
Today, they are listed as amongst the most well-funded startups in Southeast Asia by CB Insights, receives about 438k visitors on a monthly basis and has four flagship physical stores across Malaysia
Though FV was born out of a western e-commerce model, Vivy was able to localize her business by giving a personalized touch in the way she connects to consumers. This was mainly done through social media channels where Vivy was able to directly connect with users.
Her ability in connecting with Malaysians has been apparent years before she initiated FV. Under the domain proudduck.com, Vivy regularly blogged on topics such as love, life, motherhood, and family.
Her personal connection with consumers was not void of challenges as well as she often received criticisms from various users such as the recent fake ‘telekung’ issue. Nevertheless, Vivy leverages social media to quickly mitigate issues and makes the effort to personally connect with and appreciate her customers.
You don’t need to be an expert to be successful
Unknown to many consumers, the founders of Hermo had little idea about beauty and cosmetic products prior to its founding.
Similar to FV, the founding of Hermo was inspired by a popular online beauty site in China named Jumei.com. Co-founders PS Chong and Ian Chua entered the scene as sneaker sellers on LowYat.net and discovered a market need where there was lack of beauty products available online.
In 2010, Hermo was founded and today garners about 758k visitors on a monthly basis. When asked in an interview what was the secret to their achievement, they plainly stated Hermo was successful because they try really hard to understand consumers’ needs and work really hard to meet their needs.
Hermo received further validation as their ex-investors Gobi Partners recently received the “Exit of the Year” awards from the Malaysia Venture Capital Association for receiving an IRR (internal rate of return) of 91 percent during its exit. In May 2017, Hermo was acquired by listed Japanese company iStyle.
The successes of the three e-commerce platforms mentioned above remain the tip of the iceberg as the e-commerce industry in Malaysia is expected to grow exponentially.
This is evident as we see a big influx of new local and international players entering Malaysia and Southeast Asia in recent years. Expect to hear more success stories in the years to come.
This is an expert article by iPrice Group