National eCommerce Strategic Roadmap Overview Page 1 2 3 4

In this context, Malaysian eCommerce is projected to grow at

11% CAGR. However, there is potential to double this growth
eCommerce GDP contribution
(RM billion) +11% 114
15% B2C
+12%
68
49
85% B2B

2012 2013 2014 2015F 2016F 2017F 2018F 2019F 2020F

% 5.0% 5.9% 6.4%
GDP

Additional government
interventions will drive higher
GDP contribution

Critical Success Factors

Favorable demographic & Ready infrastructure and Specific government
economic trends ecosystem interventions

1
Sources: 2012 2013 data from DOSM; 2014 2020 data from EPU, MDeC, Euromonitor, WorldBank, A.T. Kearney analysis Unique Identifier
National eCommerce Strategic Roadmap Overview Page 1 2 3 4

Malaysian eCommerce is now at an inflection point; growth can

be accelerated with focused interventions
Typical growth rate in
Evolution curve of eCommerce XX
respective phases

Nascent Growth Mature

10-15% 20-25% 4-6%
?
Share of eCommerce1

Korea
Imperative for Malaysia to
accelerate into the next stage China US
Taiwan
Singapore
Malaysia
Thailand
Indonesia India
Maturity of eCommerce industry
1. Estimated transactions in B2C and B2B
Source: A.T. Kearney 2
Unique Identifier
National eCommerce Strategic Roadmap Overview Page 1 2 3 4

To accelerate eCommerce growth, 6 thrust areas have been

identified under the National eCommerce Strategic Roadmap
Malaysias National eCommerce Strategic Roadmap

Doubling eCommerce growth

Supportive Governance Framework

1 2 3 4 5 6

Lift non-tariff Make Promote

Increase Realign strategic
Accelerate barriers national
adoption of existing investments
seller brand to
eProcure- Domestic economic in select
adoption of eFulfillment boost cross-
ment by incentives eCommerce
eCommerce Cross-border border
businesses player(s)
eCommerce eCommerce
ePayment
Consumer
protection

Good and Affordable Infrastructure

Source: A.T. Kearney 3
Unique Identifier
National eCommerce Strategic Roadmap Overview Page 1 2 3 4

These interventions can double eCommerce growth and drive

eCommerce GDP contribution to cross RM 170 Bn by 2020
uplift
The trajectory path of eCommerce
1 2 3
(MYR Bn.)

2015 2020 2020

Business As With
180 3 Current
Usual Intervention
Business As Usual (BAU)
With Additional Initiatives (Uplift)
150 eCommerce
Uplift contribution, 68 114 170+
120 MYR Bn.
121
86 eCommerce 12.8 10.8 20.8
90 114 2 growth1,
61 CAGR % 201215 201520 201520
60 49

1 DOUBLE
30
current growth
projection
0
2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: 2012 2013 data from DOSM; 2014 2020 data from EPU, MDeC, A.T. Kearney 4
Unique Identifier
eCommerce for SME Page 1 2 3

eCommerce is a new way of doing business to conduct

transactions electronically
eCommerce ecosystem
Flow of goods
Flow of money
Provide payment services
End-
customers /
Businesses Payment providers

Provide goods
or services
Buyer Electronic Seller
Make purchase transaction
Retail /
wholesale

Logistics/
Fulfillment
providers
Provide fulfillment and deliver services
5
Unique Identifier
eCommerce for SME Page 1 2 3

eCommerce brings tremendous benefits for SME

Build capabilities Boost productivity Expand market access

Replace image

eCommerce outgrow offline eCommerce # of digital buyer2

business by productivity1
vs. traditional Global 1,016M

13X (2013-14)
+15%
B2B
+80%
B2C
ASEAN 6 87M
MY 16M

1. Total sales revenue divided by employment

2. 2013 estimates. 2013 estimates; ASEAN 6: Philippines 25M, Vietnam 24M, Malaysia 16M, Thailand 14M, Indonesia 5M, Singapore 3M
Sources: Euromonitor, The Star, HBR, CEER, Company websites and annual reports, A.T. Kearney analysis
6
Unique Identifier
eCommerce for SME Page 1 2 3

What should you as an SME do?

Study the opportunities! Take action! Reach out for support!

1 2 3

Learn more about various Try selling your best product Connect with partners and
eCommerce channels and and build capability from agencies to support your
decide which is most suitable there eCommerce ambition

7
Unique Identifier
eCommerce for Consumer Page 1 2 3

B2C eCommerce experience high growth in the past 5 years, Malaysia market is
expected to grow to US$ 3.4 billion by 2020
B2C eCommerce Sales Growth
(2015, USD, % sales growth compared to 2010) China:
$ 293 Bn.

86% 52%
United States:
$ 271 Bn.
Japan:
15% 79% $ 69 Bn.

14% 81%
EU 52:
$ 158 Bn. ASEAN 63:
$ 9 Bn.
15% 75%
29% 60%
World: India:
$ 21 Bn.
$ 1 Tn. Retail eCommerce market size
30% 2% (USD B)
24% 45% 7.3
3.4
1.5

$ eCommerce Sales Sales Growth Online Buyer Penetration 2014 2020 2025
1. Retail value RSP excluding sales tax
2. Includes Germany, France, U.K., Italy and Spain
3. Includes Indonesia, Malaysia, Philippines, Singapore, Thailand, Vietnam 8
Source: Euromonitor, Statistica, A.T. Kearney estimates
Unique Identifier
eCommerce for Consumer Page 1 2 3

Southeast Asias strong online culture is driving consumer behavior

towards eCommerce
Internet culture in Southeast Asia
70% of ASEAN 6 population is aged 35 or below
Young ASEAN 6

70% 63% 71% 51% 74% 74% 70%

ASEAN online users spend at least 14 hrs online / week

Connected ASEAN 6

14 16 16 17 27 26 19

They spend ~ 1/3rd of their online time on social media

Social Media ASEAN 6
addict
25% 32% 42% 16% 31% 22% 29%

ASEAN mobile users are more prone to buy online

Smartphone ASEAN 6
savvy
61% 47% 62% 48% 58% 58% 57%

9
Source:, Trend Macro, MasterCard, PayPal, Frost & Sullivan, A.T. Kearney analysis
Unique Identifier
eCommerce for Consumer Page 1 2 3

While eCommerce offers lower cost and higher convenience,

consumers should be careful to transact online
Best practices in transacting online

Compare Know the market rate Choose Make purchase only

and be-careful with reliable through a secure and
prices low pricing trustworthy website
websites

Check the Verify business Consider the total

activities through Consider the
businesss address/ license
cost and value of
hidden costs goods in local
background number with CCM1 currency

Get feedback from Obtain

Check other customers to sellers Contact the seller to
testimonials ensure reliability of
the seller
personal confirm purchases
details
1. CCM = Companies Commission of Malaysia 10
Source: kpdnkk.gov, A.T. Kearney Unique Identifier
eCommerce for B2B Buyer Page 1 2 3 4

Conducting eSourcing is critical to increase B2B eCommerce

Electronic Process /
Typical capabilities in eProcurement Solutions Contributes to eCommerce

Purchase 2 / 3 way
Requisition Authorization Receipt eInvoicing
Order matching

Procure
-to-Pay Other value-added services
Procurement network (catalog hosting, supplier information)
Procurement Card
Direct Debit

Suppliers
Management
Solicit & Analyze
eRFI / eRFP / eTender / eBidding
responses
Contract
Management
eSourcing
Other value-added services Opportunity for higher adoption
Category Management with contribution to eCommerce
Supplier marketplace
Spend analyses
Savings Tracking

11
Unique Identifier
eCommerce for B2B Buyer
Case study: Tenaga Nasional Berhad has on-boarded >9,000 of
its suppliers since 2014
Scaling eProcurement adoption successfully
Mandating eTender spend
100%
Of addressable
domestic spend
on eTender system
Key success factor for high
adoption rate is simple - making
this process mandatory, without
a parallel manual submission
option
eTender is mandatory for
procurement with value of RM20k
and above
35% - 40% of overall procurement
spend through eTender
Source: Stakeholder interview
while on-boarding large
supplier base
>9,000
Active suppliers on-
boarded to
eProcurement system
Key challenges to overcome :
SMEs mindset & level of ICT
adoption
Internal & external process
change management, and
Ensuring system
interoperability
On-boarded via general info
sessions, with follow-up hands-on
training (nominal fee of RM 700).
Page 1 2 3 4
to achieve greater savings
and productivity
RM 7.2 Mn
Annual savings from
ePO switch alone
Overall, increased productivity,
reduced paper workload
On switching to ePO system
alone, estimated savings of RM 7.2
Mn:
RM 60 per PO saved (factoring
in paper, handling and time
delay costs) for ~120K POs
annually
12
Unique Identifier
eCommerce for B2B Buyer Page 1 2 3 4

Benefits from eProcurement adoption from both global and local

adopters are well documented
Benefits from eProcurement solutions Benefits from eProcurement
global benchmark solutions local adopters
"We have already launched our eProcurement

~20% initiative back in 2014 and took specific
measures to ensure our active supplier base (8,000
Total procurement majority of which are SMEs) are onboarded to
support cost1 the mandatory program. Our savings just from
switching to ePO itself is >RM 5 Mn per year
Chief Procurement Officer, GLC

>30%
Cost of categories "We embarked on eProcurement Transformation

with high maverick journey to drive:
spend2 Single policy, process, system and tool for our
entire group
Integrated platform for subsidiaries in multiple
>10% countries
Enable effective Ability to conduct integrated spend analysis, and
drive strategic sourcing
strategic sourcing3
Chief Procurement Officer, GLC
1. Global, automated, processes incorporating best practices and eliminating unnecessary activities
2. Better management information and adherence to pre-negotiated supplier agreements
3. High quality detailed management information enables identification of cost saving opportunities through supplier spend consolidation
Source: Gartner, PWC, A.T. Kearney 13
Unique Identifier
eCommerce for B2B Buyer Page 1 2 3 4

What should you as an B2B buyer do?

Study the opportunities! Reach out for support!

1 2

Learn more about various

eProcurement solution Contact the solution
provider and decide which is providers to walk you
most suitable for your through their systems
business

14
Unique Identifier
eCommerce for Logistic & eFulfillment Player Page 1 2 3 4

eFulfillment plays a critical role in shaping the customer and

end-consumer experience
eCommerce value chain
ePlatform eFulfillment ePayment

1
Warehousing
Product Customer Shipping Last-mile
& Order Payment
Sourcing Interface Logistics Delivery
Fulfilment
2

1 Domestic
To improve domestic eFulfillment service levels that are aligned with customer expectations
eFulfillment

2
Cross-
Border To improve service levels to ensure swift and efficient flow of cross-border goods
eCommerce
15
Source: Stakeholders Interviews, Expert Interviews, Market-Back Insights, A.T. Kearney Unique Identifier
eCommerce for Logistic & eFulfillment Player Page 1 2 3 4

To facilitate eCommerce growth, eFulfillment players need to

invest across warehousing to last-mile
eFulfillment Value Chain
Order
Warehousing Shipping Logistics Last-mile Delivery
Fulfilment

Inventory
Pick and pack Sorting Delivery
management
Returns
Quality control Quality control Customs
management

Track and trace Shipping label Transportation Track and trace

Delivery and
Track and trace Track and trace
payment flexibility
Inventory
management

Pick-up

16
Source: Stakeholders Interviews, Expert Interviews, Market-Back Insights, A.T. Kearney Unique Identifier
eCommerce for Logistic & eFulfillment Player Page 1 2 3 4

End-to-end fulfillment players can potentially provide three key

benefits for Malaysia eCommerce
Case Study

Provide end-to-end Enable cross-border Value-added services to help

eFulfillment capabilities eCommerce merchants sell online

Flexible Pick-Up Timings SMEs to extend their reach Web-Hosting Services

Packing Solutions towards new markets Training / Consulting Services for
Inventory Management and Network of partnership to ease getting products online (e.g.
Fulfillment Solutions the burden of cross-border Product Cataloguing)
Transportation and Warehousing fulfillment Customer Care
Flexible Last-Mile Delivery Options Digital Marketing
Payments on Delivery
Returns Management

Source: Stakeholders Interviews, Market-Back Insights, A.T. Kearney 17

Unique Identifier
eCommerce for Logistic & eFulfillment Player Page 1 2 3 4

What should you as a Logistics & Fulfillment Player do?

Study the opportunities! Take action! Reach out for support!

1 2 3

Kick start strategic intent

Learn more about the best-in- Connect with partners and
and pilot key initiatives in
class capabilities required to agencies to support your
your respective
succeed in eCommerce eFulfillment ambition
organizations

18
Unique Identifier
eCommerce for Payment Provider Page 1 2 3 4

ePayment plays a critical role in shaping the customer and end-

consumer experience
eCommerce value chain
ePlatform eFulfillment ePayment

Warehousing
Product Customer Shipping Last-mile
& Order Payment
Sourcing Interface Logistics Delivery
Fulfilment

Payment To further encourage consumers to migrate from cash to secured ePayments

19
Source: Stakeholders Interviews, Expert Interviews, Market-Back Insights, A.T. Kearney Unique Identifier
eCommerce for Payment Provider Page 1 2 3 4

Malaysia has launched efforts to increase the use of IBG and debit
cards to spur migration to ePayment
ePayment National Agenda
Key instruments to migrate to ePayment
2011
2011 to 2015
Credit transfer to Debit card to displace
Strengthening regulatory Levers
2012 displace cheques cash
frameworks
Expanding and enhancing the IBG (Max. of 10 sen) Ceilings for
2013 market infrastructure Price signal IBFT (Max. of 50 sen) interchange fee
Unbundling of MDR
Promoting awareness and
2014 instilling confidence Faster crediting time Contactless feature
Quality & for IBG Added security with
value Payment details in the adoption of chip &
2015
proposition bank statement pin verification
Future-dated IBG
2016
Credit transfer 800,000 terminals by
2016 to 2020 Access
accessible via online 2020
points banking and ATM
2017 Strengthening coordination and
alignment on ePayment targets
Market ePayment Incentive Market Development
2018 Continuous infrastructure incentive Fund Fund
enhancement to keep pace with structure
innovation and meet user needs
2019 ePayment roadshows ePayment roadshows
Awareness Media engagements Media engagements
2020 & Workshops Township campaigns
confidence Strengthening security Strengthening security
requirements requirements
Note. IBG Inter-Bank Giro; MDR Merchant Discount Rate 20
Source: Bank Negara Malaysia, A.T. Kearney Unique Identifier
eCommerce for Payment Provider Page 1 2 3 4

Malaysias eCommerce transactions is largely around online banking

and credit/ debit card transaction
Payment methods for eCommerce transactions
%, 2015
Others
Local Offerings
(e.g. eWallets)
PayPal
Credit / Debit Card
Online Banking

6 3 5 2
16 6
10 15 18

4
10

52
23
66
70 68
75

51
42
25
15 14
4
Germany Malaysia India S. Korea Brazil China
Source: Company websites, Press releases, The World Bank, Adyen Research, A.T. Kearney 21
Unique Identifier
eCommerce for Payment Provider Page 1 2 3 4

What should you as a Payment Provider do?

Study the opportunities! Take action! Reach out for support!

1 2 3

Learn more about the latest Kick start strategic intent

Connect with partners and
innovations in ePayment and pilot key initiatives in
agencies to support your
required to succeed in your respective
ePayment ambition
eCommerce organizations

22
Unique Identifier
eCommerce for Platform Player Page 1 2 3

Platform Player plays a critical role in shaping the customer and

end-consumer experience
eCommerce value chain
ePlatform eFulfillment ePayment

Warehousing
Product Customer Shipping Last-mile
& Order Payment
Sourcing Interface Logistics Delivery
Fulfilment

Platform To provide reliable platform of services and help connect to large pool of service
Services providers across the eCommerce value chain

Source: Stakeholders Interviews, Expert Interviews, Market-Back Insights, A.T. Kearney 23

Unique Identifier
eCommerce for Platform Player Page 1 2 3

Platform Players are especially important to support SMEs to

embrace the new way of business
Value added services from Platform Players
Provide
Connect Connect customers Drive market
insights to
buyers & with service intelligence on
providers globally consumers customers behavior
sellers
intelligence

Educate policy and Encourage Create opportunities

Help ease regulatory and
new and bring new
regulation enable to export
innovative solutions
businesses beyond business
barriers to the market
own territory models

Allow sellers to have

Increase greater awareness Increase flow Provide sellers with
faster and more
competitive over their of goods and reliable transaction of
transparency competitors in the money
market goods and money

1. CCM = Companies Commission of Malaysia

Source: kpdnkk.gov, A.T. Kearney 24
Unique Identifier
eCommerce for Platform Player Page 1 2 3

What should you as a Platform Player do?

Reach our for support! Take action!

1 2

Kick-start strategic intent

Connect with partners and and pilot key initiatives to
agencies to reach out to and improve customer
equip SMEs experience in your
respective organizations

25
Unique Identifier
Any ideas, feedback or potential collaboration
write to myecommerce@mdec.com.my

26
Unique Identifier