How to Start an Ecommerce Business in Malaysia

By Stephen Paul Samynathan on July 21, 2022

Before we dive deep into the how, let's share a bit about what ecommerce itself is. An ecommerce business by definition is a business that participates in the process of electronically buying or selling of products on online services or over the Internet. 

Retail ecommerce sales worldwide reached almost $5 trillion in 2021. A figure that is expected to exceed $7 trillion U.S. dollars by 2025. While here in Malaysia, the amount is reaching RM1 trillion. With that in mind, there has never been a better time to start an online or ecommerce business.

A lot of us have probably dreamed of starting your own ecommerce store and building a business that gives you a sense of achievement and freedom. We hope to help you make that dream come true step by step in this guide.

Let’s get started

Sourcing Product

Image was AI-generated by Dall-E

Finding a product to market

The first thing to do when starting an e-commerce store, is to figure out what kind of products you want to sell. 

There are many ways to find product ideas, including brainstorming, researching competitors, and using social media. 

Once you have a list of potential products, you can start looking for trends. Trending products are products that are selling well right now, and there are many tools available to help you identify them. 

Example of tools that could help you in this are Google Trends (https://trends.google.com/trends/?geo=MY) , Twitter trending section.

Finally, once you have a list of trending products, you can start thinking about how you might be able to create or sell similar products.

Evaluating your idea

How do you know if your product idea will sell? 

There are many ways to validate your product idea. 

You can start by talking to friends and family about what they think about your idea. You can also talk to other entrepreneurs about your idea. 

If you’re looking for feedback on your idea, you can ask your friends and family to give you honest feedback. 

You can also get feedback from your peers at school or college. 

But keep in mind, these people who you are looking to get feedback should be part of your target audience.

Obtaining your product

So now you have idea of your product and based on initial validation you know there is demand. Now your next steps are figuring out where and how to get your products. We have covered a few different models for getting your products, along with their pros and cons in this article.

Research and Prepare

Find our more about your competition

Found the Product ✅

Validate product ✅

Supplier / Manufacture sorted ✅

What’s next?

Next we research and find out more about our competitors so that we will have some idea on what we are up against and how we can stand out from the crowd.

Here are a few things we need to find out about our competitors:

  1. Competitors' analysis
  2. Competitors’ strengths and weaknesses
  3. Competitors‘ pricing strategy
  4. Competitors' marketing strategies
  5. Competitors' sales channels
  6. Competitors' product range
  7. Competitors' website

We need to understand all of this because it helps us decide which one is better suited for us.

Now that we have more information on our competitors we can utilize these information to helps us to plan our ecommerce business.

Writing a business plan

A business plan is a planforachievingsuccess. It is a written roadmap for the company from marketing, financial, operational, and other standpoints. Ithelpsyou

  • to understand what you need to do to reach your goal
  • identify the obstacles
  • give you a clear idea about what you need to do and when you need to do it
  • help you define your target audience
  • help you create a marketing plan. 
  • help you prepare your budget. 
  • help you determine your sales channels

Here are some key elements that should be in the business plan

  • An executive summary
  • sections on products and services
  • marketing strategy
  • financial planning
  • budget.

Before we proceed to setup our ecommerce business, there is a very important aspect that we have to look into and adapt to ensure that our business can grow without any problem.

Understand Malaysian Law

Here are some of the key things that we must follow when setting up an ecommerce business in Malaysia.

This is a good time to put the disclaimer: We are merely sharing available information regarding the law in Malaysia. We are not certified law practitioners and as such the following should be taken as opinion and not matter of fact

Having said that, let's continue

  1. The E-Commerce Act 2018

The E-Commerce Act 2018 was introduced in Parliament on the 20th February 2018. This act came into effect on 1st April 2018.

This new legislation provides additional protection to consumers and merchants by introducing measures such as mandatory disclosure requirements and anti-fraud provisions.

It also introduces a number of changes to existing laws to make them easier to comply with.

  1. Anti-Money Laundering (AML) Regulations 2016

In order to prevent money laundering and terrorist financing, the Malaysian government has enacted certain regulations including the Anti-Money Laundering Regulations 2016.

These regulations provide that every person involved in any transaction involving cash or monetary instruments above RM10,000 shall register with the Bank Negara Malaysia.

  1. Goods and Services Tax (GST)

Goods and Service Tax (GST) is a value added tax imposed on goods and services sold within Malaysia. GST is levied at varying rates depending on the type of good and service being taxed.

  1. Data Protection Act 2014

Data Protection Act 2014 (DPA) is a Malaysian data protection law regulating the collection, use, storage, sharing and transfer of personal data by organisations in Malaysia.

  1. Companies Act 1965

Companies Act 1965 (CA1965), which replaced the old Companies Ordinance 1937, is the primary statute governing companies incorporated under the Companies Act 1965.

  1. Trade Marks Act 1974

Trade marks are trademarks that identify the source of a particular product or brand. They may be registered with the Registrar of Trademarks and Patents.

  1. Securities Commission Act 2013

Securities Commission Act 2013 (SCA2013) regulates securities trading in Malaysia.

  1. Insolvency Act 1976

Insolvency Act 1976 (IA1976) is a Malaysian insolvency law that deals with bankruptcy proceedings.

  1. Income Tax Act 1967

Income Tax Act 1967 (IT1967) imposes taxes on taxable income.

  1. Consumer Protection Act 2010

Consumer Protection Act 2010 (CPA2010) aims to protect consumers against unfair trade practices and deceptive acts in the marketplace.

  1. Electronic Transactions Act 2002

Electronic Transactions Act 2002 (ETA2002) allows electronic transactions to take place without requiring physical signatures from parties involved.

  1. Banking Regulation Act 1953

Banking Regulation Act 1953 (BR1953) regulates banking activities in Malaysia.

  1. Companies Act 1965

Under Companies Act 1965, a company can only carry out one business activity if it operates through more than one legal entity.

  1. Personal Property Security Registration Act 1984

Personal Property Security Registration Act 1984 (PPSRA1984) requires all persons who acquire ownership rights over movable property to register their interest with the PSSR Office.

  1. Customs Duty Act 1966

Customs Duty Act 1966 (CDA1966) sets the duties for imported articles and determines whether they are subject to import duty.

  1. Penalties & Forfeiture Act 1971

Penalties & Forfeiture Acts 1971 (PPFA1971) provides guidelines for courts when imposing criminal penalties on offenders.

  1. Courts Act 1964

Courts Act 1964 (CA1964) gives power to the federal courts to hear civil cases between individuals or corporations. It also empowers state courts to try offences committed outside Malaysia.

Failure to comply with law could result in your ecommerce business being terminated, or could lead to hefty fine or even jail time.

Now that we are clear on why we should follow and comply with the law, we are ready to move to the next stage

Setup your business

Choose a business name

By now, we think you would have a clear idea or at least a vague idea on what to name your business. Here is a few pointers to take into account before you rush off and put the name into writing,

1. Name that is easy to pronounce or spell

2. Domain name ( this is the name of the url for example facebook.com) is still available

3. Can be registered in SSM

4. Not offensive. You wouldn't want to sideline potential customers even before starting a business would you ?

Additionally, try not to include any term that was/is famous seasonally. You need a long time to build and grow your business. By that time, maybe that term will lose its trending factor. Imagine you named your business Dalgona Painters. After five years or even as you are reading this article, you would wonder what is Dalgona and what is the significance to the name.

Creating a logo

A logo represents your company and helps customers identify you. It should be unique and memorable. A well designed logo can help you stand out from competitors and attract new customers.

Understanding search engine optimization (SEO)

Understanding the basics of SEO before you launch your online store can be helpful. You will have to know what keywords to focus on, how to optimize your site for each keyword, and what type of traffic you want to attract.

Prepare product photos

There are 2 paths that you can take when it comes to product photography. DIY or professional photography.

If you are just starting out and trying to keep costs as low as you possibly can, you should probably go for the DIY option. Get your handphone camera. Snap your product photos. You could look for some videos or tutorials on this topic.

If you have some budget, go for a professional product photographer. They do not only capture the beauty of the products but also give them a professional touch.

This helps to build visibility and credibility to your products and help you in the journey to stand out from the crowd.

Choosing your sales channels

You might decide to sell through different channels like Amazon, eBay, Alibaba etc. Each channel has its pros and cons.

Amazon is popular and widely used by people who prefer shopping online. However, there are limited options for sellers. If you choose to sell through Amazon, make sure you have set up your fulfilment centre properly.

eBay is good for those who wants to get their hands dirty with shipping logistics. The downside is that there are no guarantees on payment.

Alibaba is similar to Ebay where buyers pay via Alipay. This means that you dont need to worry about receiving payments. But you must remember to register your business first before you start selling.

Popular option in Malaysia would include Shopee and Lazada.

You  could also get your own website that is tailor made for your own ecommerce business. That way you can re

main in control of your marketing, pricing and product decisions.

Launch Time

Before launching, we need to think and finalize our shipping strategy. Whether to ship product ourselves or outsource it to a third party. We need to understand the pros and cons of both these options. If the choice ends up being to ship it ourselves, it is best to take into consideration these factors:

1. How many products?

2. What type of packaging?

You should also set up KPIs before launching so you know what measures of sucess to track after you launch.

Post launch

Congrats you are now a proud owner of an ecommerce business. What's next ?

Getting your first customer

After launching a store, the hard work begins. You need to drive targeted traffic to your store. There are a number of ways to do this, including SEO, social media, paid advertising, and more. We'll share a few strategies that will help you get started.

Marketing your store

Your are on your way to success and would have already closed a few sales. Time to party. Well not really. You would need to invest the profit back into business and spend more on marketing. You’ll need to what kind of marketing is working for your business and what doesn't. You’ll need to focus on expanding your marketing efforts into other areas to drive more traffic and conversions.

Tips for starting an ecommerce store

  1. Reinvest Profit Early On

As we mentioned earlier, building an ecommerce business in a journey. So the best way to move forward in the journey is to reinvest your profit into the business to allow for experimentation and eventual business growth

  1. Know thy customers

Knowing who you are targeting will help you make better decisions when designing an online store. You need to understand what they want from their shopping experience, how they use the web, and where they spend their money. It helps if you know whether or not they're likely to buy something from you.

  1. Experiment with marketing and advertising

After you launch your product, it’s important to keep an eye on what’s working and what isn’t. Try different marketing strategies to see where your audience hangs out, and respond accordingly.

Try different online marketing tactics like Facebook ads, Google AdWords, etc.

Test different online marketing tactics like:

  • Facebook Ads
  • Google Ads
  • SEO
  • Affiliate marketing
  • Instagram ads
  • Checkout upsells and cross-sells
  • Loyalty programs

Use the data that you get from each of the tactic to help you to make decision on which channel to focus on

Conclusion

Ecommerce is a great way to start your own online business. You can choose products that interest you, evaluate them, figure out how to produce them, create a website, and market and sell them. It’s a lot of work, but it’ll be worth it when you see your first sale.

We hope we have helped you in starting your ecommerce journey. As always, feel free to reach us in case you have any question or feedback about this article.

Article written by Stephen Paul Samynathan
Co-founder of Specflux Solution, he builds IT products that work. He is also running Ipoh based website design agency with his partner. If not working on client's project, he's a part of a vibrant IT community in Ipoh locally known as Digital Perak.

Leave a Reply

Your email address will not be published.

Related Posts

crossmenuarrow-down