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Is e-commerce paying off for retailers?

KUALA LUMPUR (Jan 30): With the long drawn out effort to combat the Covid-19 pandemic, e-commerce has been touted as the saviour for retailers as consumers spend less time and money at physical stores.

According to Commerce.Asia executive chairman Ganesh Kumar Bangah,  the gross merchandise value (GMV) for e-commerce in Malaysia was estimated to have “more than doubled last year to around US$6 billion from US$3 billion in 2019”, The Edge Malaysia reported in its issue this week.

“We forecast that this year, the e-commerce industry will grow 50% to around US$9 billion to US$10 billion as people become more familiar with the online platform. There’s more trust about buying online, coupled with the logistics infrastructure getting more mature.

“E-commerce has indeed revolutionised consumer buying patterns with many households now turning to the convenience of shopping online,” he added.

But are things really taking off in the e-commerce realm for local retailers?

The weekly wrote that: “Looking at discretionary consumer stocks in the retail space with a market capitalisation above RM150 million, many have shown a significant increase in online retail sales in recent times. Nevertheless, it is worth noting that this only comprises a small percentage — below 10% — of these retailers’ total revenue.”

The Edge added that “it would be realistic to say that the online sales channels have not made up for the loss of footfall to physical outlets last year, given that many retailers posted weaker earnings or losses for the quarter affected by the Movement Control Order (MCO) implemented on March 18 last year”.

E-commerce’s performance has therefore at best seen “varying results” but Ganesh explained that retailers “should not only pay attention to their online presence but also invest in performance marketing to ensure that they capture online customers”.

“Whether you like it or not, the future is going to be online. The beautiful part about advertising online is that you can actually get a return on ad spends, meaning you can calculate how much you get in revenue for every dollar that you spend on advertising.

“It’s about investing in influencer marketing, performance marketing and so on. The problem with online today is that there’s a lot of competition from foreign players that are investing a lot of money in digital marketing and have better expertise in executing online campaigns,” he added.

Read the full report in this week’s The Edge Malaysia

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