KUALA LUMPUR: E-commerce in Southeast Asia is evolving rapidly, and Malaysia is at a critical juncture in the region’s digital transformation.

David Black, Founder and CEO of Blackbox Research, said the COVID-19 pandemic was a game-changer, accelerating digital adoption and reshaping consumer behavior.

“We had a slow adoption of digital by consumers before the pandemic,” Black said. “Through the pandemic, we saw a skyrocketing number of people going online and spending online, which really boosted the e-commerce sector.”

Malaysia’s Strategic Advantage

Malaysia’s strategic location, strong infrastructure, and rising digital penetration position it as a key player in the region’s e-commerce expansion.

“There’s a huge opportunity for Malaysia to take a leading role,” Black said. “With the right fundamentals in place, the country is well-positioned to benefit from the e-commerce boom over the next five to ten years.”

However, Malaysia remains a mid-sized economy, and analysts say public-private collaboration will be essential to unlocking its full potential.

“In this region, partnerships between industry players, policymakers, and digital talent will determine who succeeds,” Black added.

Rising Middle Class, Growing Digital Market

Southeast Asia’s e-commerce sector is fueled by a rapidly expanding middle class. Over the past decade, the region’s middle-income population grew from 18% to 28%, with forecasts suggesting it will exceed 40% within the next decade.

“The middle class is growing, and so is internet connectivity,” Black said. “A decade ago, less than one in four people in the region had internet access - now it’s over 60%, and Malaysia’s numbers are even higher.”

Singapore remains the dominant e-commerce market in ASEAN, but Malaysia is competing closely with Thailand and Vietnam.

“The merchant value of e-commerce in the region is rising by about 15% annually, and Malaysia is well-positioned to capitalise on that momentum,” Black said.

Challenges in Logistics and Regulation

Despite its potential, logistics inefficiencies remain a significant hurdle, particularly in a country divided between Peninsular and East Malaysia.

“High logistics costs and delivery inefficiencies can impact customer satisfaction,” Black noted. “Expanding fulfillment hubs in East Malaysia will be crucial to improving same-day delivery services.”

Inconsistencies in logistics quality also hurt small business profitability.

“If logistics isn’t optimised, costs rise, and business growth is stifled,” he added.

The Malaysian government has taken steps to address these issues. The Malaysian Communications and Multimedia Commission (MCMC) has introduced new guidelines, including a RM5 base rate for parcel delivery.

“Regulatory frameworks like this aim to create a more balanced ecosystem,” Black said. “But ongoing discussions among e-commerce players, small businesses, and policymakers will be key to ensuring a competitive and sustainable industry.”

Malaysia’s e-commerce ambitions extend beyond its borders, with industry players eyeing expansion across ASEAN.

“This isn’t just about Malaysia,” Black said. “It’s about tapping into a massive regional opportunity. The stronger our digital fundamentals, the better positioned we are for regional growth.”

The next five years will be decisive. As competition intensifies, investments in digital infrastructure, logistics, and public-private partnerships will be crucial in determining whether Malaysia cements its position as a leading e-commerce hub in Southeast Asia.

Grasping the E-Commerce Opportunity in Southeast Asia