Better e-commerce service for higher consumer spending

Credit: Macrovector/freepik

By Farhan Kamarulzaman,

As the usage of e-commerce platforms by Malaysians is on the increase during the Covid-19 period, e-commerce providers should take this opportunity for significant gain by enhancing their services to make them a more effortless and secure source of product purchase.

Plus, it will multiply the efforts on boosting consumer spending for the benefit of the economy during this Covid-19 crisis.

As highlighted in a study pioneered by the Singapore-based social research agency Blackbox Research and Consumer Intelligence Platform Toluna, the Covid-19 pandemic has led to an increase in online shopping – 59 percent of respondents are now using e-commerce to shop online.

Besides, most of them had a good e-commerce platform experience while suggesting that e-commerce providers should enhance their services to provide a more frictionless experience.

Of course, people’s criticism of e-commerce platforms does not mean that everything is negative.

There is a good point that can be derived here, which is how e-commerce, through high consumer spending, has effectively benefited the economy.

Specifically, the existence of e-commerce, that facilitates people’s purchasing processes will continue to boost consumer spending and strengthen its role as a critical driving force in the economy, especially in helping the country to spur the economy throughout this Covid-19 crisis.

The transition of consumer behaviour from the tendency to visit physical stores before the start of Covid-19 to the cultivation of the new norm of relying on e-commerce platforms to buying goods has undoubtedly highlighted the role of e-commerce as a key trigger to increase consumer spending during this Covid-19 era.

But how can an e-commerce service be enhanced?

Any consumer concern should be taken into account as the best way to enhance services, especially the top three key e-commerce obstacles that disrupt people from satisfying their shopping desires, which according to Blackbox’s international commercial director Yashan Cama, are delivery time, delivery costs and product prices.

Another important thing that makes the consumer think twice about dealing with e-commerce is the security problem, as for example, during the Movement Control Order period, e-commerce fraud made up the highest number of scams – 2,500 e-commerce scams involving RM17mil worth of losses.

To improve consumer trust in using e-commerce, e-commerce providers need to have effective preventive measures, and consumers need to learn from the public mistakes by doing their best to avoid being scammed.

Put simply: the e-commerce providers should ease the product purchase procedures from the opening of the shopping catalogues until the end of the transactions.

For example, in the product delivery aspect, Shopee, which is the strongest among e-commerce players, has managed to address the issue through their own delivery service, which is Shopee Express.

This could be the result of so many public complaints received by them about the delivery problems, mainly on product quality after distribution and delay issues, urging them to decrease their reliance on other couriers to deliver their goods.

Furthermore, rather than using other couriers, handling their own delivery service will be more convenient, which also means lower costs incurred.

As for the price, in any situations regardless of e-commerce or not, it will always be the conversation piece because it depends on the people’s level of spending, especially the lower-income groups who typically tend to buy products at lower prices.

Nonetheless, some well-known e-commerce providers have come out with various steps to tackle the price issue, such as rebates and promotions over a specific period. They should be given credit for being able to offer affordable products for the community, although these were just one of the business strategies.

Indeed, the strong e-commerce providers have made a lot of improvements to deliver the satisfaction of people on using their platforms. But, always bear in mind that there is still room for improvements.

Since the successful e-commerce providers such as Shopee, Grab and Lazada got various strategies in hand to deal with the consumer challenges, e-commerce start-ups should adequately follow their steps and criteria on how to provide good e-commerce services.

It would also be an excellent example for small and medium-sized enterprises (SMEs) that have not yet adopted e-commerce to begin relying on it to cope with people’s desire of using e-commerce as an effortless way to shop.

As e-commerce provides the public with a convenient shopping experience, this service, which can be accessed at one’s fingertips, will generate demand. It will then ensure that the SMEs are on track to sustain their cash flow, while also keeping them from laying off workers during the crisis.

However, Muhundhan Kamarapullai, director of Business Digital Adoption at the Malaysia Digital Economy Corporation (MDEC), stated that the top three obstacles to digital adoption among SMEs are a lack of knowledge and skills, the investment concern and the cash flow needed to support the transformation.

Thus, the government should resolve the concerns of SMEs regarding digital adoption so that SMEs are not left behind in e-commerce adoption to achieve greater product outreach, which is also for our country’s economic good.

After all, significant efforts to improve the e-commerce service and help the SMEs on e-commerce adoption are essential to bringing more economic benefits to the country in the future.

Farhan Kamarulzaman is a Research Assistant at EMIR Research, an independent think tank focused on strategic policy recommendations based on rigorous research.

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