After recording its first case of the novel coronavirus on January 25, 2020, and the bump in cases following the occurrence of the tabligh cluster in early March, Malaysia moved to flatten the curve by implementing the Movement Control Order (MCO) which restricted interstate travel, enforced physical distancing and allowed limited economic sectors to be opened, though it has recently allowed more to go back to work.
E-commerce was one of those few sectors initially permitted to continue operating, and appears to have flourished as more have turned to the Internet and technology to find and get what they need.
Making gains through e-commerce
During the MCO period, Malaysians have been limited in their mobility which only allows them to perform necessary duties such as obtaining medical supplies, buying food supplies, and other daily necessities.
With this limitation, it is no surprise that many have turned to e-commerce platforms to buy desired products and services.
Hence, those with presence on e-commerce platforms have a comparative advantage as they are able to obtain a wider reach.
Further, businesses that have been leveraging e-commerce are better placed to offset the lost sales from traditional means, as well as swiftly respond to changes in consumer behaviour during and even after the MCO is lifted.
In 2019, the e-commerce sector in Malaysia generated RM15.95 billion in revenue and it is expected to thrive further during this MCO period.
Having said that, not all businesses on e-commerce have benefitted equally.
The Covid-19 pandemic and the MCO have driven a change in consumer behaviour, where a vast majority have prioritised purchasing essential goods first.
Businesses selling essential household supplies such as food and hygiene products, healthcare products such as disinfectants and hand sanitisers, as well as products that support activities at home, have done very well in this regard.
As Malaysians adapt to the “new normal”, items such as kitchen appliances, home fitness equipment and electronic devices have seen increased demand.
Observations also suggest large online retailers have been able to recover quicker than small businesses, in terms of addressing the supply chain disruption.
During lockdowns, delays are expected when sourcing products outside of local areas and especially from high infection zones. During this uncertainty, such disruptions not only affect international suppliers but also local ones as some are unable to operate under such restrictions.
This has resulted in online businesses facing low inventory levels, thus taking longer to resume or restock for online operations.
Nevertheless, it is expected that large businesses with stronger and longer online presence and capacity are capable of adapting to change rapidly, whether it is being on established e-commerce platforms or having the logistical means to get their goods to consumers within the desired time frame.
On that note, more opportunities have emerged for logistics companies to fulfill online consumer demands. Although cross border e-commerce transactions have been trickier to deal with due to global supply chain disruptions, that has not stopped more people from filling up e-baskets and delivery slots.
The National Tech Association of Malaysia (PIKOM) suggested that food delivery and online content providers would garner instantaneous gain during the MCO period, and that has proven to be the case.
E-commerce has not lifted all boats
However, while businesses who have digitised and innovated themselves thrived in e-commerce, this is not felt equally across the board.
During this period of time, there is no doubt that brick and mortar shops, those who have yet to establish an online presence, have suffered and are forced to transition to online channels to sell their products.
Even for those who are able to transition to e-commerce, they have faced devastating blows from a variety of factors, including on both demand and supply sides.
For example, the retail industry looks bleaker now with more countries registering negative outlooks after the outbreak of Covid-19.
In the United States, retail sales suffered record declines in March, plunging $46.2 billion (RM198 billion) or 8.7 per cent — the biggest decline since the government started tracking it in 1992.
Issues also exist for those who are able to keep a steady demand for products online. As we become more reliant on e-commerce to meet our needs, it has placed more pressure on manufacturers to deliver on such demands. This has, unfortunately, put a strain on the workers — leading to cases of labour abuse and layoffs.
While companies have tried to assure customers that health and hygiene precautions are being taken in package fulfilment facilities, employees are still exposed to risks of Covid-19 in warehouses with insufficient provision of personal protection and employer welfare.
It has reached the stage where workers from Amazon, Walmart, FedEx, Target, Instacart and Whole Foods have built a coalition to strike against their employers.
For workers elsewhere, they have to contend with the realities of unemployment. Major fashion brands and retailers — they might have a strong presence online but are suffering themselves with luxury goods not on the minds of consumers for now — have had to cancel and stop orders and payments.
This has led to many workers, especially in poorer, developing nations losing their rice bowls, with 10 per cent of factories in Yangon, Myanmar estimated to have been closed.
What’s next for e-commerce in the time of new norms?
While many businesses will hope for the situation to return to “normal” after the lockdowns around the world are lifted, there are concerns that new normals have already been developed.
Consumer behaviour, for better or worse, have already changed to a point of possibly no return to the pre-coronavirus days.
Once lockdowns are lifted, Wazir Advisors warned that consumers may hesitate to shop for apparel at stores, due to health concerns and consumers prioritising other essential products first such as groceries and medicines.
As the governments around the world including Malaysia prepare to reopen their economies, businesses will need to re-strategise to attract consumers again.
An obvious answer will be to digitise their business models through emerging digital technologies and e-commerce opportunities. The government has nudged in this direction, with the Malaysia Digital Economy Corporation (MDEC) aiming to modernise and digitise rural internet centres into e-commerce hubs.
Internally, businesses may need to diversify their line of products and consumer acquisition approaches to suit new trends, such as highlighting brand aspects relevant to new consumer norms.
They should also be aware that as more rely on e-commerce and technology to run their businesses, they as well as consumers become more susceptible to cybersecurity threats.
The growth of e-commerce especially in this time of crisis might also change the way businesses store their products in warehouse facilities.
With the concept of same-day or fast deliveries becoming more important to consumers, businesses may look to convert existing urban and suburban retail spaces into industrial warehouses to meet such needs, rather than incur new costs for developing new industrial spaces.
As we try to recover from this pandemic, even with the reopening of more economic sectors post-MCO and lockdowns, it is inevitable that some or even many people and businesses will struggle.
But new opportunities such as those in e-commerce will arise. Therefore, it has become necessary, now more than ever, for people and businesses to evolve and adapt to these new realities.
Article by
Dr Moonyati Yatid and Ryan Chua
first appeared on The Malay Mail, 3 May 2020
