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Market Research Report

Purpose

As e-commerce sites become increasingly a common phenomenon in the countries, so is

the intensity of competition among the local and foreign e-commerce players, be it big or

small size. This report is to understand the rationales behind the many Malaysian

customers who shop online. The findings of the report are acquired through secondary

research methodology that involves collecting data from either the originator or a

distributor of primary research. In other words, accessing information already gathered.

This report also aims at identifying the major e-commerce players existing in Malaysian

market, therefore, benchmark their good case practices.

Finally, a list of recommendations is compiled. It is believed that by integrating various

strengths and eliminating the weaknesses of the existing e-commerce practices, SaleAlert

could be a viable online business.

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Wired In Sdn. Bhd

Market Research Report: SaleAlert

8 October 2014

Completed By: Max Lee

Completed For: Wayne

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Table of Contents

Page

1. Executive Summary 4

2. Description of the Problem 4

2.1 What were the Key Questions?

2.2 Research Objectives

3. Research Study Results 5

3.1 Why Malaysian Customers Shop Online?

3.2 Why Malaysian Online Shoppers Refuse to Buy?

3.3 Malaysian Online Shoppers’ Behaviors?

3.4 How did Malaysian Online Shoppers Pay?

3.5 Malaysia’s E-Commerce Trend

3.6 From Whom Malaysian Online Shoppers Buy from?

3.7 Summary of Good Case Practices

4. Recommendation 17

4.1 User Interface of the Web Design

4.2 Participate in Cyber Sales

4.3 Integrate Price Watch Ability

4.4 Process Flow

5. Appendix 20

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1. Executive Summary

SaleAlert needs to find a niche and add values to customers’ purchases.

2. Description of the Problem

There are already many existing e-commerce platforms which are very similar to SaleAlert.

SaleAlert has to distinguish itself in terms of value proposition, offerings, marketing strategies

and the usability of the website.

2.1 What were the Key Questions?

The key question is not whether SaleAlert should invest in e-commerce, but how it can do

so most profitably.

What competitive advantages can SaleAlert own?

Who is SaleAlert’s target market? What are their characteristics?

Where do our prospects position our product in the market?

How likely are customers to refer us business?

Which sales channels are most effective?

How can we improve our online sales process and presence?

What new products or services should we develop?

What are the good case practices by existing e-commerce companies?

2.2 Research Objectives

Provide a description of what information was required to answer the questions. Discuss

your initial hypothesis and document the objectives of the study. For example, the

objective may have been to test if advertisements in a specific geographic region led to

increased brand awareness.

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3. Research Study Results

This section will outline the qualitative and/or quantitative results from the study.

3.1 Why Malaysian Customers Shop Online?

For the most part, customers who shop online versus brick-and-mortar stores do so

because they think they could easily find a wide array of desired products at the lowest

possible prices. According to a PwC study, while price is still being important, it is not the

only factor favoring the decision to purchase online. The convenience factor is primary.

**assumption: Malaysian consumers shared the same characteristics of their European/US counterparts

Figure 1: Motivating Factors for Online Shoppers (PwC)

However, consumers such “shop for low price items” mindset comes as a consequence of

price war waged by companies, either on purpose or by accidence. But decreasing price

disregarding the quality erodes the values severely, see Figure 2.

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Figure 2: Price War Statistics (Simon-Kucher 2012 Global Pricing Study, n = 2,700)

Price is a common default choice if you want a value proposition that is easy to

communicate, drives penetration and works in a market which does not appear to have a

clear segmentation (Susan Lee, 2013).

The follow figure shows the Omnichannel Segmentation which indicates the reasons

behind customers make the purchases.

Based on Susan Lee’s finding (2013) in Figure 3, these four segments reflect a combination

of consumers’ need to touch and feel the product and consumers’ purchase frequency,

supplemented with data from two in-depth studies conducted by Simon-Kucher &

Partners.

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Figure 3: The Omnichannel Segmentation

Table 1: Buying Behavior and Consideration for each Product Category

Vanguard

This segment includes books, entertainment products (music and

movies) and consumer electronics. This list, in fact, overlaps very well

with the short list that Jeff Bezos considered in 1995 before he

decided that the initial iteration of Amazon.com would focus on

books. These products have both a low purchase frequency and also

a relatively low need for the consumer to interact with the product

before buying it.

The New

Frontier

This segment includes clothing, toys and sporting goods, home

improvement, health and beauty, and pet supplies. Purchase

frequencies are lower or more irregular, but “try it out” or “try it on”

remain as standard practice.

Routine

Commodities

These include laundry, household cleaning products, and paper

products. They also have a relatively low need for personal

interaction prior to purchase, but unlike the vanguard products, they

have a higher and more regular purchase frequency. This means

that existing shopping habits are well established and hard to break.

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Meal

Ingredients

Food and beverage have the highest purchase frequency and also

see the greatest desire for personal interaction prior to purchase,

which puts them into a category unto themselves.

Hence, as we can see in Table 1, consumers’ motivation for buying a product online differs

significantly across these segments. Susan Lee concluded that over 1,000 consumers

revealed that “lower prices” (24% of respondents) was the primary motivator for buyers of

vanguard products as well as for new frontier (18%). But for buyers of meal ingredients, the

top motivation was “better selection” (14%). For buyers of routine commodities, “free

shipping” ranked first, with 16% of respondents citing it. Most striking, however, is that the

vast majority of buyers in all segments did not cite “lower prices” as their main motivation.

Decisions to buy products online are complex and multifaceted. Price is only one factor

among many.

In a nutshell, shoppers surveyed (24%) cited “lower prices” as the primary motivating factor

to purchase “vanguard” products — books, consumer electronics and entertainment – the

study revealed. Meanwhile, 18% of respondents said “lower prices” was the main reason

they bought “new frontier” items such as health and beauty products, toys/sports/hobby

related merchandise, as well as clothing and furniture. However, when it came to buying

food and beverages, shoppers surveyed ranked “better selection” as the leading impetus

driving their purchase, the survey said.

3.2 Why Malaysian Online Shoppers Refuse to Buy?

There is a 9% of Malaysian online shoppers do not shop online because of trust issues.

42% stated that they cannot touch or feel the products, 37% refused due to security issues

whereas another 35% has issues with the seller’s credibility. Other minor factors are:

19% says cannot find the desired products

16% says no means to pay online

9% refuses to pay for shipping fees

7% cannot wait for product to arrive

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3.3 Malaysian Online Shoppers’ Behaviors?

Malaysian customers generally shop at night (51% early night, 41% late night). 77% of

online shoppers expect their orders to arrive in maximum 4 days. After the sales have

taken place, the customers prefer to continue engaging with seller through email on

matters pertaining to product inquiry, follow up on product delivery status and so on.

Next, what Malaysian online shoppers generally buy from local sites are:

Table 2: Product Categories Purchased

Electronics 61%

Fashion and Accessories 50%

Food and Beverage 49%

Health and Beauty 44%

Home 43%

Figure 4: How do Online Shoppers Start Online Shopping

3.4 How did Malaysian Online Shoppers Pay?

From Section 3.1, we learn that convenience is the primary factor in motivating online

shoppers to buy stuff. In this section, we will explore in-depth how Malaysian online

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shoppers usually pay. Most of the e-commerce sites offer high degree of payment

convenience, as in they generally accept comprehensive online payment options.

Figure 4: Malaysia’s Payment Options

Generally, the most used online payment methods by Malaysians are (in this order):

1. Credit card

2. Internet banking (Maybank2u, CIMB Clicks etc.)

3. Offline banking (ATM / Cash bank in)

4. PayPal (used more at foreign shopping sites)

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Figure 5: Top Online Credit Card Payment by Issuer

The top 5 credit cards (by issuer) being used for online payment are (in this order):

1. Maybank (25%)

2. Citibank (18%)

3. HSBC (11%)

4. CIMB (8%)

5. Hong Leong Bank (6%)

Figure 6: Online Payment, Master or Visa?

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Furthermore, more Malaysians are using Visa credit card (59%) to pay online compared to

Master credit card (41%). The easy integration of payment gateways such as PayPal, credit

card processors and other local banks has also facilitated the demand and supply chain in

the e-commerce ecosystem. My research also suggested that iPay88 MYR Gateway is a

locally reputable financial gateway. It is an online payment services that facilitates online

merchants or e-commerce merchants' online store in Malaysia to process online

transactions in Malaysia Ringgit currency (MYR) in large extent and securely.

Customers emphasize on trustworthiness of the payment gateway service provider due to

the fear for the leak of vital personal information. Below is a list of major payment

gateways supported in Malaysia:

2Checkout

IPay88

Payment Express PxPay

PaymentExpress

PayPal Express Checkout

3.5 Malaysia’s E-Commerce Trend

Indonesia, Singapore, Malaysia, Thailand, Vietnam and Philippines all have more than 50%

younger (below 35 years old) online populations. E-commerce in Malaysia is booming. An

estimated 16,900,000 Malaysians are avid Internet users. Out of those, around 65% shop

online. Total e-commerce Malaysia spending is expected to grow from RM1.8 billion in

2010 to RM5 billion in 2014. In reality, Malaysians are shopaholics. An ecommerce.milo

survey suggested that 54% online shoppers in Malaysia shop at least once a month online,

26% once a week.

The e-commerce in Malaysia would continue to pick up its momentum because of:

(a) High Internet Penetration

Internet penetration in Singapore, Malaysia, Vietnam is now growing faster than the world’s

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average, with Malaysia exceeding 60% internet penetration in 2011 (World Bank). Based on

Ericsson Consumer Lab report, the smartphone and tablet penetration rate is 27% and 9%

respectively. In 2011, Malaysia has 17 million internet users and is expected to hit 21

million by 2016.

(b) Cost Reduction of Technology

The cost reduction of cloud and web hosting technology and has helped paving ways to

root e-commerce in Malaysia. The ease of use of web building tools which are freely

available on the net, and the talent availability, all work in unison to grow the internet

businesses in Malaysia. There are even third-party e-commerce solution providers such as

Lelong.com.my, Mudah.my and Shopify to act as sales arm for the local SMEs.

(c) Cost Effectiveness

Opening and maintaining an online store costs a fraction of the budget required to open a

physical shop. Advertising online is less expensive than in traditional media, and it allows

business owners to reach a more targeted demographic. The Internet also allows business

to be conducted without expensive travel. In the retail industry, for example, a shop owner

can browse and purchase goods for resale from suppliers around the globe without having

to leave the comfort of his computer desk.

3.6 From Whom Malaysian Online Shoppers Buy from?

To summarize, see Figure 7.

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Figure 7: Malaysia’s Online Shopping Destinations

Malaysia’s most wanted foreign e-commerce sites are:

Amazon.com

Taobao.com

Asos

3.7 Summary of Good Case Practices

All of the sites have wide array of payment options (some allow cash on delivery) and

provide free standard shipping without or with conditions (e.g. transaction values

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exceeding certain amount). Lazada even offers interest-free installment. Some are like

Amazon, Lazada and Shopify would give away gift cards, promotional codes, coupons and

vouchers to induce sales. Some sites have mobile app, but studies shown that having a

responsive website is already sufficient. A mobile app is more on fostering loyalty among

the customers. Every site has its own niche market. For example, Zalora is a popular

Malaysian online shopping site for shoes, bags, clothes and accessories; Lazada Malaysia is

a popular Malaysian online shopping site, offering DSLR/SLR Cameras, consumer

electronics, mobiles & tablets, home appliances, fashion, health & beauty, whereas Lelong

is popular Malaysian online shopping and auction site, offering handphones, computers,

cameras, fashion accessories and more.

Another good case practice to learn from ShaShinKi is its clever technique at partnering

with reputable camera suppliers and this provides full quality assurance of its products, be

it either second hand or latest products. Customers are at ease when buying products from

the site.

Figure 8: Popular Online Shopping Sites in Malaysia

Customers become more tech savvy too. With price comparison tools and product tracking

sites becoming increasingly ubiquitous, such as Price Pinx, customers can make even wiser

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buying decision. For example, the product tracking site will alert customers about lowering

prices because they do not have to go to their website to search for products each time

and then set up individual alerts.

Table 3: Popular Product Price Tracking Sites in Web and Mobile

Web Platform Mobile Application

Top 3:

PricePinx

Gazaro

Shop It To Me

Other:

Price Ambush

Street Prices

Price Spider

Deal Alerter

Price Drop Alert

Price Please

Online Price Alert

WishPot

Price Grabber

Price Book

Price Tracker

ShopSavvy

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4. Recommendations

4.1 User Interface of the Web Design

It was estimated that online shoppers will abandon $1.79 trillion worth of goods. 67% of all

online shoppers will abandon items in their shopping cart and that number jumps to 97%

if those shoppers are using a mobile device. The problem may lie in how you move people

through the checkout. Design considerations to be given on web design of SalesAlert are:

(a) Responsive Web Design (RWD)

RWD is a web design approach aimed at crafting sites to provide an optimal viewing

experience—easy reading and navigation with a minimum of resizing, panning, and

scrolling—across a wide range of devices (from mobile phones to desktop computer

monitors). A site designed with RWD adapts the layout to the viewing environment

by using fluid, proportion-based grids, flexible images, and CSS3 media queries an

extension of the @media rule.

(b) Increase the Visibility of the Add to Cart Button

Boost the size of the Add to Cart button, change the colour so that it becomes

more outstanding. Shopping cart abandonment drops 33% with large and direct

call-to-action buttons.

(c) Tells Your Customers Their Personal Information is at Safe Hand

By providing extensive information about the site’s security on a visible space of the

web and even by including the icons of your security suppliers, the value of a

shopper’s cart increases 16% when shoppers know their personal information is

secure

(d) Reduce Navigation on Checkout Pages

By eliminating links and exit points during the final steps of the sale, there is 12%

increase in conversion rate.

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(e) Ask Shoppers to Create an Account after Checking Out

Allow users to check out as a guest at the beginning of the process first because

this would increase 45% when guest checkout is available.

(f) Place the Return Policy at an Obvious Spot

Set up an affixed or pop-up window with a rundown of your return information.

Sixty-three percent of customers view the return policy before making a purchase.

(g) Offer Free Shipping

77% of consumers say they would come back if offered free shipping.

(h) Send a Reminder Email or Tweets

When done right, personalized, retargeted email reminders can generate an average

of $17.90 per email sent. In addition, SaleAlert could even tweet its customers on

any upcoming great deals.

4.2 Participate in Cyber Sales

Increase sales and brand presence by participating in cyber sales such as

MYCyberSALE, Black Friday, Supersale Campaign held by Lazada. Or, SaleAlert could

emulate the big names by organizing its own cyber sales.

4.3 Integrate Price Watch Ability

Customers can straight input similar products from other sources at SaleAlert site,

once we realize the price is lower, it will notify the customers. In addition, we should

educate our customers about the additional benefits that we are providing other

than just price point alone. Basically, this feature would enable us to get

competitor’s information through our own customers and make something about

these information which would lure customers to our side.

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4.4 Process Flow

SaleAlert is a web platform that bridges merchant and customers. It keeps customers abreast with

special sales or promotion. See Figure 9 for process flow. To read the technical flow of SaleAlert

website, read “SaleAlert Process Flow” documentation.

Figure 9: Checkout Process Flow that Converts

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5. Appendix

http://smallbusiness.chron.com/advantages-using-internet-business-320.html

Simon-Kucher & Partners, Susan Lee. (2013, September). It’s Time for E-commerce to Grow Up.

Retrieved from http://www.simon-kucher.com/sites/default/files/its_time_for_e-

commerce_to_grow_up_najwazniejsze_wnioski_simon-kucher.pdf

The Ultimate Guide to E-Commerce Statistics of Southeast Asia & Malaysia

http://www.ecommercemilo.com/2013/08/ecommerce-statistic-southeast-asia-

malaysia.html#.VDNHqWeSz8k Posted by : CK WongMonday, 26 August 2013 eCommerceMILO

http://e27.co/the-ultimate-guide-to-e-commerce-statistics-of-malaysia-and-sea/

http://www.forbes.com/sites/barbarathau/2013/10/08/why-consumers-really-shop-online/

http://pricepinx.com/

http://netonomy.net/2013/05/10/5-reasons-customers-will-shop-online-price/

http://tech.thefuntimesguide.com/2009/11/price_alerts.php

https://www.demandmetric.com/

http://www.ecommercemilo.com/2013/06/malaysia-most-preferred-credit-card-for-online-

payment.html#.VDSicGeSz8k

http://www.pinterest.com/pin/379357968583993109/

http://www.ecommercemilo.com/2013/11/cyber-monday-in-china-and-southeast-

asia.html#.VDSoCWeSz8k

http://conversionxl.com/how-to-design-an-ecommerce-checkout-flow-that-converts/#.