According to analytics company GlobalData, sales through e-commerce sites in Malaysia amounted to RM31.9 billion in 2021.
It has been estimated that the country’s e-commerce market will register an annual growth of 16.1% from 2022 to reach a total value of RM69.3 billion in 2026.
However, the fulfilment of online purchases is not possible without a reliable logistics ecosystem to deliver goods to consumers.
FMT Business takes a look at how e-commerce has changed consumer behaviour as well as spurred growth in the logistics industry and improvements in the country’s overall digital ecosystem.
The growth of the logistics industry
Malaysia Cross Border e-Commerce Association president Chin Chee Seong said the pandemic served as a catalyst for the surge in e-commerce purchases and logistics activities.
It was a mutually beneficial relationship. As Chin pointed out, while e-commerce led to the growth of the logistics industry, it would not have taken off either if not for the presence of a good logistics ecosystem. “It works both ways,” he said.
He said that as consumers became more comfortable with purchasing items online, and their confidence in the system grew, it became crucial for logistics companies to provide efficient, reliable and speedy services.
Malaysia Logistics Supply Chain Association president Veera Pandiyan Kaliani Sundram said the logistics sector had “evolved” to meet the needs of the economy and changing market trends.
“Along with the rise of e-commerce in Malaysia, logistics companies have introduced innovative last-mile delivery solutions to meet the demand of online shoppers,” he said.
Veera said e-commerce has prompted logistics companies to invest in technology and infrastructure to improve their delivery capabilities, thereby playing a pivotal role in the expansion of the logistics sector.
He said that even before the Covid-19 pandemic, globalisation and increases in trade volumes and e-commerce activities had already led to the growth of the logistics industry.
Growth and challenges ahead
Veera said the logistics industry is expected to keep its growth momentum given the increasingly widespread acceptance of e-commerce.
“Logistics companies have gained valuable experience and insights from managing the challenges of the pandemic, leading to improved operational efficiency and agility,” he said.
He said industry players have already begun investing in technology to improve their operational efficiency.
However, Veera noted that logistics players may face new challenges such as evolving consumer expectations, increased competition and the need for sustainable practices.
Greater need to support logistics providers
Chin said that moving forward, logistics companies, especially third-party logistics (3PL) providers, need to have numerous warehouses closer to consumers to enable faster or same-day delivery, which would be key to the growth of the industry as well as e-commerce.
3PLs are companies that offer one-stop solutions for enterprise supply chains in packaging, warehousing, transportation and order fulfilment.
Although the pandemic brought about unexpected gains, more efficient and reliable 3PLs are required to ensure further growth of the country’s expanding e-commerce industry.
However, greater industry support and economic opportunities are required in order to realise this.