2020 will be remembered as a year when the world is gripped by Covid-19 pandemic. World Health Organization (WHO) confirmed the outbreak of Novel Coronavirus which originated from Wuhan, China. It is a disease which has greatly impacted the lives of billions around the world as it brings many sectors to a halt. In Malaysia, the pandemic was confirmed to have been widely transmitted nationwide on 20th January 2020.
At the time this article is written, the Malaysian Ministry of Health had recorded 7,762 positive cases of Covid-19, but from that number, 6,330 patients had recovered. From the same amount, the number of deaths recorded was at 115. Hence, as a measure to limit the contagion of these diseases, WHO suggested several safety procedures that need to be implemented to stop the outbreak. The Malaysian government, based on the safety procedures suggested by WHO, had introduced the Movement Control Order (MCO) commencing 18th March 2020. With MCO in place, the government took the initiative to immediately close various sectors which were inclusive of economy, commerce, and tourism. Religious and cultural activities were also banned from being held, to avoid mass gatherings. Education was another sector which was affected when all schools and universities were asked to close. Many daily activities were put to halt to stop the outbreak from spreading deeper into the community.
The pandemic had caused many people to suffer from various levels of anxiety as the implication of movement control order affected the whole economic system. Stock market at Bursa Malaysia or Malaysian Stock Exchange weakened and the currency became unstable. Factories were closed and operations were stalled to an unknown date, buying, and selling activity graph drastically dipped when most purchases made involved mainly on grocery items. Other activities were limited, and many felt the heat of these restrictions. In addition, among items which face the brunt of the pandemic are local products for the local market. With extremely limited target scope, local brands, and products, it is expected that the sale of these items will plummet.
Such uncertainty pushes the local brand entrepreneurs to seek other opportunities to optimize their sales. Consequently, online selling platform becomes the ideal alternative and statistics of sales top the chart in a matter of days. Online sales are inclusive of the popular online medium, social media platforms such as Facebook, Instagram, and Snapchat, as well as e-commerce sites like Shopee, Lazada, Zalora, Lelong and others. It is an increasing trend because 79% of the Malaysian population is active Internet users and the frequency of utilizing this platform is supported by access provided in different types of gadgets that they use. According to the report produced by Malaysian Communications and Multimedia Commission, 78.3% online sales are done using smartphones and the majority of the buyers are those below the age 30. The remaining percentage of online sales is for other devices such as laptop, tablet, and desktop. Looking at the numbers given, it is not impossible for Malaysian buyers to continue online buying in future since they are used to the new norm during the implementation of MCO. It is during this period that many international and local brands are sold online to ensure their survival.
Since the introduction of the National Policy on Industry 4.0 in 2017, technology-based development is thriving well. In support of this, Malaysia is ready to embrace the need by establishing about 200 industrial zones which include those that are specifically allocated for the purpose of technology-based infrastructure development such as Technology Park Malaysia (TPM) and Kulim Hi-Tech Park. Infrastructure development is crucial to sustaining the Malaysian economy in facing technology-based global challenges. Nevertheless, are the Malaysians ready to optimize the use of this infrastructure? or are there loopholes in the previous preparation and do they become obvious when Covid-19 occurs?
Based on the observation of the current situation, as Malaysia keeps on fighting the outbreak, online sales are not entirely new among the consumers. In the past, online sales involved only several businesses such as the purchase of plane tickets or hotel bookings. Now, the trend has expanded to include tourism, payment of bills, entertainment, and lifestyles. IT and electronic, general insurance, fashion, and beauty products as well as souvenirs and collections of specific items. Such diversity has contributed to the growth of online sales for several existing platforms. Globally, e-commerce sales had recorded $2.29 trillion in sales for 2017 and increased to $3.45 trillion for 2019. Shopee, the most popular e-Commerce platform in Malaysia, recorded 27 million clicks for the first quarter of 2020. It is believed this figure is going to increase after Shopee marked 80 million downloads even though it is in the business for only 2 years. This phenomenon creates huge business opportunities to almost 200,000 entrepreneurs from all brands which have joined the platform.
There are several factors which could influence online buying patterns in Malaysia. From a study conducted by a group of researchers from the Northern University of Malaysia in 2018, the most significant factor in online buying is the trust factor. Even though it is stated that the main problem in online buying is online payment fraud, this predicament is being rectified by the relevant platforms by improving their security system from time to time. Another factor that influences the pattern of online buying is the facilities provided. In several situations, especially when the whole nation is home-bound due to the MCO, online buying platform is the best solution since it offers various facilities such as choices of items, price comparison, hassle-free payment method, efficient delivery and other services which are attractive to the buyers. Moreover, perception towards risk and competitive prices offered on the platforms are other contributing factors to online buying. Customers tend to repeat their purchases from the same sellers (also known as return customers) because of the low-risk factor based on the previous deals. Another factor for repeat purchases is the discount given. All these create an almost perfect E-Commerce platform with numerous choices from selecting to the purchasing process and lastly, delivering items to the buyers.
World Health Organization emphasizes that communities around the world cannot get rid of the virus completely without an effective vaccine. It is estimated that six months to one year is the time needed to come out with one. While waiting for the vaccine, we are encouraged to adapt to a new norm as an effort to break the chain of the outbreak. Nevertheless, it is not an ideal time for a business to develop. Economic analysts predict that the world will slip into a recession due to weak currency. Therefore, it is crucial for all local brand producers to ensure the survival of their business. Our local brand producers must explore new frontiers through online platforms rather than being dependent on physical store sales. This outbreak proves that there are local brand entrepreneurs who are unprepared to go against the conventional method and adapt technological change causing their businesses to either suffer great loss or lose everything Business method before the pandemic must be diversified by utilizing the existing technology. The time has come for local product producers to come out with suggestions and alternatives in handling business so that the level of readiness in facing calamities can be increased and the risks can be reduced.
On the other hand, the E-Commerce platform is not the ultimate answer to business approaches in today’s world. 10 years ago, local product entrepreneurs might be sceptical towards online selling methods. Indeed, online selling is exposed to various risks but as technology advances, each weakness can be rectified from time to time. E-Commerce is one of the forms of revolution in business, which is based on the advent of technology, supported by the Internet. Local product producers must be aware of the current technological demands so they can optimize any suitable technological solution. Industrial Revolution 4.0 is the phase in which mankind is required to adapt to the advent of technology. Through embracing technology, the relationship between the customer and brand, or brand engagement can be enhanced and indirectly, it creates trust between costumers and brands.
Brand engagement can be attained through various strategies such as collecting loyalty points online, giving discounts for online sales, promoting sales to targeted consumers and other available methods to ensure that consumers continue to buy their items, online. These strategies are commonly used today. When MCO was implemented, many local producers were focused on these strategies to form an engagement between the brand and online buyers. However, they are not entirely new: these are initiatives to ensure that local brands remain relevant and competitive in the market. Perhaps in future, local brand entrepreneurs can generate more creative and effective strategies to attract buyers’ attention online – if the culture of online buying will remain the choice among post-Covid-19 consumers.
Mohd Shahril bin Abd Rashid, Universiti Teknologi MARA Seri Iskandar Branch Campus, Perak
Pictures by Filadendron (iStock), Roberto Cortese, Austin Distel, Victor He, Anastasiia Chepinska & SJ