Unlocking Malaysia’s e-commerce growth: The role of logistics

SOUTHEAST Asia’s digital economy is at an inflection point, with e-commerce driving rapid digital adoption and reshaping consumer habits at an unprecedented pace.

Today, Malaysia sits at the heart of this transformation, uniquely positioned to harness the e-commerce boom sweeping across the region. Yet, to fully capitalise on its potential and not lose ground to its neighbours, Malaysia must confront key challenges, including its logistics infrastructure.

As part of Blackbox Research’s continued commitment to decoding the region’s economic dynamics, I am pleased to introduce our latest whitepaper Grasping the E-Commerce Opportunity in Southeast Asia.

This study zeroes in on Malaysia, not only for its central role in Southeast Asia but also for its untapped potential to become a regional e-commerce powerhouse.

Through 30 hours of in-depth interviews with 17 expert voices within the e-commerce and logistics sector, we explored the critical opportunities and barriers shaping Malaysia’s e-commerce landscape.

Malaysia’s strategic location, strong courier networks, and growing digital consumer base provide a solid foundation for e-commerce success. However, logistical inefficiencies leading to service inconsistencies and increasing delivery costs are major challenges that could hinder the nation’s e-commerce growth.

Malaysia’s strategic position in Southeast Asia’s e-commerce landscape

Malaysia has steadily emerged as a key player in Southeast Asia’s digital economy, ranking second in regional e-commerce performance – narrowly edging ahead of Indonesia and Thailand – according to the perceptions of the experts surveyed in our study. With high mobile penetration and a digitally savvy population, Malaysia is poised to cement its role as a vital hub for the region.

Despite these advantages, Singapore leads the pack, with 59% of experts ranking it first for its advanced infrastructure and strong government backing. Malaysia must close the innovation and logistics gaps to compete at this level.

Strategic initiatives such as the National eCommerce Strategic Roadmap and the Digital Free Trade Zones are already in place to catalyse this growth. But further effort and solutions will be needed including fostering inclusive and consistent dialogues with policies shaped by input from all stakeholders – including e-commerce platforms, sellers, and logistics providers alike.

The logistics sector: A backbone in need of strengthening

Logistics is the critical lifeline of any e-commerce ecosystem, and in Malaysia, it has become a double-edged sword. High logistical costs, especially for shipping between Peninsular and East Malaysia, are major bottlenecks that stifle business growth: only 6 of 17 experts in our study considered Malaysia’s logistics infrastructure as supportive of sector development.

For those who feel the system is hindering progress, the accumulation of costs borne by sellers such as rising logistics expenses, import costs, and taxes, combined with currency fluctuations, is making it increasingly challenging for them to remain cost competitive.

Advanced logistics technologies such as AI-powered route optimisation and real-time tracking, hold the promise of unlocking greater efficiencies. Experts in our study emphasised the need to prioritise the establishment of regional e-fulfillment centres to tackle last-mile delivery challenges and streamline logistics nationwide, a move that could greatly enhance Malaysia’s regional competitiveness.

However, the bare truth remains that rising base costs of logistics pose a serious threat for sellers, creating a ripple effect that erodes already slim profit margins and places smaller players in an increasingly precarious position.

For some, this escalating financial pressure could spell the difference between survival and being forced out of the market, particularly for those already struggling to compete in an intensely competitive landscape.

As businesses grapple with rising operating expenses and consumers face inflated prices, Malaysia risks losing its competitive edge. This underscores an urgent need for targeted measures to reduce delivery costs and bridge the gaps between Peninsular and East Malaysia, as well as underserved areas.

The role of public-private collaboration in driving growth

Insights from the study’s experts highlighted that aligning public and private efforts is key to positioning Malaysia as a competitive e-commerce and logistics hub in Southeast Asia, unlocking new opportunities and shared prosperity for the sector.

This is especially evident as leading e-commerce nations thrive on a symbiotic relationship between public and private sectors.

For Malaysia to achieve a similar transformation, collaboration among e-commerce platforms, third-party logistics providers, and government bodies will be essential to addressing last-mile delivery inefficiencies and cross-border shipping complexities.

Our whitepaper highlights the importance of targeted infrastructure investment in rural regions: our study found that delivery costs could be reduced by up to 60% with the establishment of fulfillment hubs.

These improvements, coupled with ongoing digitalisation initiatives and leveraging established e-commerce trends like social selling and customer-centric services such as same day delivery – practices that are common in neighbouring countries – will position Malaysia’s e-commerce sector to thrive on a global scale.

A call to action for Malaysia’s e-commerce future

Malaysia’s e-commerce story is one of great promise, but the next chapter depends on decisive action. Gross Merchandise Value in Malaysia is expected to double by 2030, but this forecast growth rate lags some of its Southeast Asian neighbours.

It can be said that the stakes have never been higher. The findings in our whitepaper illuminate the path forward: invest in logistics innovation, foster inclusive public-private dialogue, regulate with dexterity and creativity, and build infrastructure that supports both urban and rural markets.

As always, Blackbox Research is glad to contribute to this critical discussion. By addressing logistical inefficiencies head-on, Malaysia has the potential to secure its position as a regional leader, delivering prosperity to businesses and consumers alike.

I invite policymakers, industry leaders, and stakeholders to join this journey of transformation, ensuring that Malaysia realises its e-commerce potential.