By Poovenraj Kanagaraj
“We have always been an agile business with a fluid management and operational style,” says Ian Ho, regional managing director of Shopee in a response to the Covid-19 pandemic.
“We listen to specific online shopping needs of people in our region and turn our understanding into well-executed localised strategies,” the managing director tells Business Today.
While the Covid-19 outbreak caught Shopee off-guard as it did with the rest of the world, the e-commerce platform ensured giving up was not an option.
“The pandemic and the implementation of the Movement Control Order (MCO) posed a different set of challenges to businesses in the country,” Ian says. Reports had shown that 71 percent of small and medium enterprises (SMEs) in the country only had cash balances to keep sustaining for another month or two.
In Malaysia, the retail sector was one of the most impacted, causing many traditional outlets to face the possibility of either a temporary or permanent closure.
And as fear settled in among consumers, many turned to the online space to shop for essential household items and daily necessities in order to avoid leaving their homes. Food and grocery deliveries came into higher demand.
While some businesses saw this as an opportunity and immediately acted fast, others stood by believing the pandemic was a temporary storm. The MCO that was imposed on March 18, has since seen two extensions, with a possible end-date currently on May 12.
“Many retailers and traditional businesses need to find a way to digitise their businesses fast to cope with the changes in order to have an alternative revenue stream,” Ian says.
While general traffic and demand rose during this period, Ian points out that now more than ever platforms such as Shopee should remain steadfast on their commitment to provide access, convenience and value to their users.
In a response to the ongoing crisis, Ian and his team evaluated the situation and took decisive steps to answer the needs of both retailers and consumers.
Introducing a support package
“Many businesses have been adversely affected by the Covid-19 outbreak. After having studied the industry and through feedbacks, we introduced a RM 15 million Shopee Seller Support Package,” Ian says.
The support package announced by the e-commerce platform is expected to benefit over 70,000 Malaysian small and medium enterprises (SMEs).
Shopee through the package aims to aid local SMEs and businesses in various sectors including retail, fresh produce and food and beverage among others by driving digitalisation of traditional businesses and bringing them online.
The package also seeks to support all its sellers by creating sales and growth opportunities, reducing operational costs and facilitating sustainable development through funding, subsidies and education.
The ongoing pandemic has not just resulted in operations being shut down, but has also disrupted supply chains across segments in the markets, particularly with local fishermen and farmers.
According to Shopee, businesses in the supply chain have either reduced their operation hours or experienced a complete halt. Even with sufficient supply, the conundrum now lies in getting the supplies directly to end-consumers.
“In order to overcome this, we have been working closely with authorities to help minimise the disruptions, and this includes managing the supply chain hand-in-hand with the industry and regulators,” Ian says.
The e-commerce platform has also been working closely with 1,000 brands and retail partners as well as 800,000 of their sellers nationwide.
Shopee has also collaborated with the Federal Agricultural Marketing Authority (FAMA) and the Fisheries Development Authority of Malaysia (LKIM) among others to sell fresh produce such as poultry, seafood and vegetables directly from farmer and fishermen to Malaysians on Shopee.
The initiative is expected to support 1,500 local farmers, 100 Agribusiness Industry entrepreneurs under FAMA and up to 56,000 fishermen to retain their income.
E-commerce industry holds potential but faces obstacles
“The e-commerce industry in the country is still at its infancy, but Malaysia’s robust infrastructure and healthy policy environment provides a solid foundation for it to grow and thrive,” Ian says.
However, barriers remain despite the vast potential the industry holds.
According to the e-Conomy SEA 2019 report, e-commerce transactions in the country have tripled since 2015, exceeding $3 billion in 2019. However, online retail only accounts for about two to three percent of total retail sales.
This in comparison to the e-commerce penetration rate in powerhouses such as China which records over 30 percent makes the online retail transactions in Malaysia seemingly miniscule.
Ian attributes this to the lack of access to the knowledge and skills among entrepreneurs in order to diversify their businesses online. Addressing this issue, Shopee rolled out a free seller workshop called Shopee University in order to train and equip entrepreneurs with digital skills.
To date, the programme have empowered over 10,000 entrepreneurs.
“The industry can also benefit from improved payment gateways in the country. The current technology and limited bandwidth mean banks would have to initiate daily maintenance from time to time to address any issues,” Ian highlights.
“On Dec 12 last year, over 600,000 items were sold within the first hour however facing this downtime was very disruptive for both retailers and buyer,
“Additionally, this creates poor consumer purchasing experience which then hinders the adoption of e-commerce especially for first-time online shoppers and also for retailers as it distorts the supply-demand flow for online trade,” Ian tells Business Today.
Last year, the e-commerce platform had also crossed over into the e-wallet space and introduced ShopeePay in order to facilitate smoother transactions as a response to this challenge.
“Compared to over two decades ago, digital infrastructure has improved drastically and the internet has become readily accessible. Today, with greater access to affordable smartphones and wider internet access, mobile internet consumption is rising steadily in the country,” Ian points out.
Mobile cellular penetration in 2017 had reached 131.8 percent while smartphone penetration stood at 70 percent in the country.
According to Opensignal, an average mobile user in Malaysia was connected to the WiFi 30.5 percent of the time between 16 to 22 March, which is a 9.7 percent increase week on week.
Ian urges business owners and retailers to expand their businesses digitally if they want to keep up and to widen their customer reach across the country.
Following an engagement between the e-commerce platform, retail associations, commerce chambers and business owners, two pain points had been identified.
SMEs are looking for new sales channels such as e-commerce but are unfamiliar with the go about process and a huge number of existing online sellers are struggling with increasing costs and significant revenue loss due to low sales volumes.
With the introduction of the support package, Shopee is hoping the initiative will further drive the digitalisation of traditional businesses in the country.
However, embracing e-commerce also means investing in the right technology for stock tracking, developing a dedicated e-commerce team and data optimisation for improvement in operations as measures such as these are required to take the business right into an online shopper’s palm.