MALAYSIAN COMMUNICATIONS AND MULTIMEDIA COMMISSION, 2018The information or material in this publication is protected under copyright and, except whereotherwise stated, may be reproduced for non-commercial use provided it is reproduced accuratelyand not used in a misleading context. Where any material is reproduced, the MalaysianCommunications and Multimedia Commission (MCMC), as the source of the material, must beidentified and the copyright status acknowledged.The use of any image, likeness, trade name and trademark in this publication shall not be construedas an endorsement by the MCMC of the same. As such, the inclusion of these images, likenesses,trade names and trademarks may not be used for advertising or product endorsement purposes,implied or otherwise.Published by:Malaysian Communications and Multimedia CommissionMCMC Tower 1, Jalan Impact, Cyber 663000 Cyberjaya, Selangor Darul EhsanTel: 603 8688 8000 Fax: 603 8688 1000Aduan MCMC: 1-800-188-030 CONSUMERS SURVEY 20182


TABLE OF FIGURESFigure 1: Percentage of e-Commerce consumers. 12Figure 2: Percentage distribution on knowledge of e-Commerce and . 13Figure 3: Percentage distribution of e-Commerce consumers and adoption rate by age 13Figure 4: Percentage distribution of e-Commerce consumers and adoption rate . 14Figure 5: e-Commerce adoption by state . 15Figure 6: Reasons for not conducting e-Commerce activities . 16Figure 7: Percentage of e-Commerce consumers on product research and platform used. 17Figure 8: Social media aspects that influenced online shopping behaviour . 18Figure 9: Motivation factor for online shopping . 18Figure 10 : Device used to shop online . 19Figure 11: Challenges while shopping via mobile devices . 19Figure 12: Percentage distribution of e-Commerce consumers who used smartphone toshop online and adoption rate by age . 20Figure 13: Frequency of online shopping by age . 21Figure 14: Frequency of online shopping by average monthly income. 21Figure 15: Usual day to shop online . 22Figure 16: Usual time to shop online. 22Figure 17: Cross-border e-Commerce market . 23Figure 18: Products categories purchased by online shoppers in Malaysia . 24Figure 19 : Types of goods or services purchased by gender. 25Figure 20: Top three types of goods and services purchased by age group . 26Figure 21: Average amount spent per transaction in the last twelve months by productcategory (RM) . 27Figure 22: Preferred payment options . 28Figure 23: Most important delivery factor . 29Figure 24: Most preferred delivery location . 30Figure 25: Reasons for returning products . 31Figure 26: Issues encountered when returning purchased products . 31Figure 27: Online shoppers’ satisfaction on purchasing and delivery service . 32Figure 28: Online shoppers’ level of concerned on security and areas of concerned . 33Figure 29: Online shoppers’ level of concerned on privacy . 33Figure 30: Areas of concerned on security . 34Figure 31: Areas of concerned on privacy . 34Figure 32: Experiences on fraudulent activities. 35Figure 33: Percentage distribution of e-Commerce consumers and adoption rate bygender . 36Figure 34: Percentage distribution of e-Commerce consumers by age group. 37Figure 35: Adoption rate of e-Commerce consumers by urban-rural . 37Figure 36: Percentage distribution on e-Commerce consumers by employment status . 38E-COMMERCE CONSUMERS SURVEY 20184

SECTION 1:EXECUTIVE SUMMARYThe e-Commerce Consumers Survey 2018 (ECS 2018) is the first purpose builtsurvey conducted by Malaysian Communications and Multimedia Commission(MCMC) to understand characteristics and behaviours of e-Commerce consumers 1in Malaysia. In addition, the survey also covers challenges faced by consumers toadopt e-Commerce.Based on sampling methodology, the sample for this survey reached 2,401respondents at national level. This is to give a confidence level of 95% andprecision of 2%. Respondents were selected at random and all interviews wereconducted through computer assisted telephone interview (CATI) system.The survey focused on selected key indicators including the following:i.e-Commerce experiences;ii.purchasing;iii.product delivery;iv.product return; and privacy; anddemographics and socio-economics background of consumers and nonconsumers.The survey draws attention to the following findings:i.Percentage of e-Commerce consumers at national level stood at 51.2%,adoption of e-Commerce is higher among adults who were in their 20’s andFor the purpose of this survey, e -Commerce consumers defined as respondents who have make onlinepurchasing or selling (according to e -Commerce definition) in the last 12 months.1E-COMMERCE CONSUMERS SURVEY 20185

30’s including those with relatively high average monthly income (RM3,000and above).ii.Shoppersshop online for variousreasons, mainly on convenience,accessibility, pricing, selection, product information and ease of payment.iii.Smartphone is the most popular device for shoppers to purchase goods andservices online (78.3%), particularly among those below 30 years old. Incontrast, those who were in their 40’s preferred to use laptop, notebook anddesktop for e-Commerce transaction.iv.Online banking is the most preferred payment method for e-Commercetransaction (62.1%). This is followed by credit card (32.7%), debit card(28.5%) and cash on delivery (17.3%). Cash on delivery is prevalent amongretirees and housewives.v.On average, an individual in Malaysia spent around RM470 per transactionin the last twelve months. Clothing and accessories were the most popularproduct categories purchased delivery also influenced decision of online shoppers to shop online.Almost 50% of consumers opted for free or low delivery cost with deliverywithin five days. Only 9.9% opted for premium delivery cost with deliverywithin two days.vii.Majority of online shoppers (57.2%) prefer home delivery. Meanwhile, theremaining 42.8% choose other than home delivery due to unavailability ofpeople at home and convenience to collect parcel at their own time andlocation.E-COMMERCE CONSUMERS SURVEY 20186

viii.Security and privacy related issues are relatively high among online shopperswith 53.4% are concerned on cards fraudulent, fake online retailers, identitytheft, etc. Meanwhile 59.0% cited that they are concerned on privacy issuessuch as misused of information, browser tracking, etc.E-COMMERCE CONSUMERS SURVEY 20187

SECTION 2:INTRODUCTIONBACKGROUND OF SURVEYThe e-Commerce market in Malaysia is showing a positive trend, with gross valueadded contributed 6.3% to gross domestic product (GDP) in 2017. Furthermore,value added for e-Commerce increased from RM75.0 billion in 2016 to RM85.8 billionin 20172. The growth of e-Commerce reflects the need to measure and track theadoption of e-Commerce at national and state level. Therefore, MCMC commissionede-Commerce Consumers Survey 2018 (ECS 2018) as a purpose built survey to gaininsights pertaining to behaviours of e-Commerce consumers as well as to identifyrecent trends towards online shopping in Malaysia. Data gathered from this surveycould assist MCMC’s internal and external stakeholders to support their policydevelopment needs.SCOPEECS 2018 distinguishes between core and trends data. Core data will be collectedyearly for time series analysis and trends data is based on topical e -Commerceconsumers’ behaviours peculiar during the survey period. Specific requests frominternal stakeholders were taken into account during the process of developingquestionnaires. Table 1 illustrates the core and trends data captured in ECS 2018:Table 1 : Types Of Datai. Demographic & socio-economicsGender, age group, strata, employment, average monthly incomeCore Dataii. Consumer behaviour:Experiences, reasons not performing e-Commerce transactionsi. PurchasingTrends Dataii. Deliveryiii. Product returniv. Security and privacySource: Information and Communication Technology Satellite Account 2017, Department of StatisticsMalaysia (DOSM)2E-COMMERCE CONSUMERS SURVEY 20188

SURVEY LIMITATIONS AND CHALLENGESIn the course of conducting this survey, some limitations and challenges wereencountered. The limitations and challenges are described as follows: Difficulties to reach required number of samples. For this survey, a total of35,147 calls were made to achieve 5,348 samples consists of e-Commerceconsumers and non-consumers. Of the total calls made, we received noresponse from 54.3% respondents, 5.8% refused to participate and 22.6%numbers were inactive or invalid numbers. In other words, we have to make15.4 calls to get one success interview. Efforts to reach respondents became more difficult when selected CATICentre’s telephone numbers were reported as an unwanted call with a mobileapps named Truecaller. Mobile users used this app to block calls and SMSesfrom these unwanted numbers. As a result, we are not able to reach about 48number of respondents during the survey period. Samples collected at the state level was only adequate to calculate the levelof e-Commerce adoption for each state due to time and budget constraints.This limitation has not allowed us to analyse trends and behaviours of eCommerceusers for each state. Moreover,reaching the number ofrespondents in states with small population such as Perlis, W.P. Labuan andW.P. Putrajaya was proven to be difficult. Due to the same reasons mentioned above, samples collected at the nationallevel was only adequate to analyse trend data based on online shopperbehaviours, while core data involves online shoppers and sellers as accordingto e-Commerce definition.E-COMMERCE CONSUMERS SURVEY 20189

SECTION 3:METHODOLOGYMETHODOLOGY AND ANALYSISThe sample population was drawn from users of mobile-cellular with Mobile StationInternational Subscriber Directory Number (MSISDN)identical to randomlygenerated numbers. They are the main users of mobile-cellular number.ECS 2018 was canvassed and administered using a Computer Assisted TelephoneInterview (CATI) system operating out of MCMC CATI Centre in Cyberjaya. Fieldworkfor this survey started on 28 August 2018 and ended on 27 November 2018. Thesurvey adopted confidence level of 95% and precision of 2% for national level, andreached to a sample of 2,401 e-Commerce consumers. As for the state level,confidence level was at 95% and 7% precision to reach 200 respondents for eachstate.There was only one stage of sample selection as the survey adopted a simplerandom sample (SRS). Sampling was done with probability proportional to prefix interms of subscriptions for mobile-cellular.Data quality check was administered throughout the survey fieldwork. Basicfrequency count was computed to assess the results pattern. Cross tabulation wasimposed between relevant indicators to identify significant relationships that woulddeduce meaningful inferences pertinent to the objective of the survey.Important findings are featured in the form of a report, complemented withsupporting charts and tables for the convenience of readers. Findings on currenttrends were analysed against evolutions that took place around the world.Information from external sources are included as supplementary data to supportany findings. The definitions of terminologies adopted in this survey were referencedto the international standards and existing frameworks.E-COMMERCE CONSUMERS SURVEY 201810

Full results of the survey are appended in the form of percentage tables at the endof this report.DEFINITIONE-Commerce3Organisation for Economic Co-operation and Development (OECD) defines an eCommerce transaction as the sale or purchase of goods or services, conducted overcomputer networks by methods specifically designed for the purpose of receiving orplacing of orders. The goods or services are ordered by those methods, but thepayment and the ultimate delivery of the goods or services do not have to beconducted online. It includes orders made in web pages, extranet or Electronic DataInterchange (EDI). The type is defined by the method of making the order. Itexcludes orders made by telephone calls, facsimile, or manually typed e-mail.3OECD Guide to Measuring the Information Socie ty 2011E-COMMERCE CONSUMERS SURVEY 201811

SECTION 4:MAIN FINDINGSE-COMMERCE EXPERIENCEE-COMMERCE CONSUMERSBroadly, the survey determined that percentage of e-Commerce consumers 4 inMalaysia stood at 51.2%. Comparing with other countries in the region, Malaysia isnumber two after Singapore as reported by Statista 5. Approximately, there were16.6 million6 e-Commerce consumers in 2018. Of this, 93.3% respondents claimedto be online shoppers only, 6.1% were online shoppers and sellers and the remaining0.5% claimed to be seller only.Figure 1: Percentage of e-Commerce consumersConsumers,51.2%Nonconsumers,48.8%However, awareness on e-Commerce in Malaysia was relatively high where 75.8%of respondents claimed to have knowledge on e-Commerce 7 while 65.7% ofFor the purpose of this survey, e -Commerce consumers defined as respondents who have make purchasing orselling (according to e-Commerce definition) in the last 12 months.5 Source: Statista, “Digital Market Outlook: eCommerce,” selected countries, 2018, reported in World BankGroup, Malaysia’s Digital Economy, A New Driver of Development.6 Computed based on Current Population Estimates, Malaysia, 2018, DOSM – November 2018 revision7 Respondent’s knowledge on e -Commerce is based on the e-Commerce definition.4E-COMMERCE CONSUMERS SURVEY 201812

respondents reported to visit any e-Commerce platform i.e. websites, mobile apps,etc. in the last twelve months (Figure 2).Figure 2: Percentage distribution on knowledge of e-Commerce andexperiences in visiting e-Commerce websiteKnowledge on e-CommerceVisited %Adoption of e-Commerce were mainly comprising of adults in their 20’s and 30’swhere they accounted 54.1% and 56.6% respectively. Besides, it is also apparentthat the adoption rate and age are inversely correlated for respondents aged 40 andabove (Figure 3).Figure 3: Percentage distribution of e-Commerce consumers and adoption rate by age60.0%54.1%56.6%Percentage distributionAdoption .9%10.0%15.2%4.5%6.2%0.0%Below 20's20's30's40's50's1.6%Above 60'sConsumers with higher income bracket (RM3,000 and above) have higher tendencyto perform e-Commerce transaction as compared to those with low income level(Figure 4).E-COMMERCE CONSUMERS SURVEY 201813

Figure 4: Percentage distribution of e-Commerce consumers and adoption rateby average monthly incomePercentage distribution70.8%75.8%Adoption rate44.1%36.1%25.1%29.2%25.4%24.7%16.7%4.0%RM 1,000 andbelowRM 1,000 - RM3,000RM 3,000 - RM5,000RM 5,000 andaboveDependentAt the state level, Wilayah Persekutuan Putrajaya topped the list of e -Commerceadoption at 70.5%. This is followed by Wilayah Persekutuan Labuan and Perlis at60.5% and 44.5% respectively. The adoption of e-Commerce consumers as shownin Figure 5 is calculated based on the population for each state. However, in absoluteamount the percentage of e-Commerce adoption for each state is relative to itspopulation.E-COMMERCE CONSUMERS SURVEY 201814

Figure 5: e-Commerce adoption by ng32.5%Pahang24.0%Perak22.0%Selangor40.0%W.P.Kuala Lum pur38.0%MALAYSIA51.2%Kelantan22.0%Johor26.5%W.P. Labuan60.5%Sabah22.5%Melaka32.5%NegeriSem bilan27.5%Sarawak24.0%W.P. Putrajaya70.5%NON E-COMMERCE CONSUMERSDespite the rise in e-Commerce, 48.8% of respondents were hesitant to conduct eCommerce activities.The main reason for not performing online shopping is because they prefer to shopat brick-and-mortar stores, this consists of 49.1% of non-e-Commerce consumers.Other reasons are lack of knowledge, confidence and skills (43.0%) as well as notinterested (34.3%) in performing e-Commerce transaction.Moreover, concerns on data security and privacy are also impacting the adoption ofe-Commerce in Malaysia. Almost 25% of respondents said they did not performonline transaction due to this reason. Nonetheless, 50.6% of these respondentsagreed to perform e-Commerce transaction if online retailers are certified byauthorised agencies.E-COMMERCE CONSUMERS SURVEY 201815

Other reasons include delivery(15.7%),trust (14.7%),unstable internetconnectivity (5.7%), bad experience with online retailers (4.0%), complicatedwebsite navigation (3.9%) and unavailable postage address (1.3%).Figure 6: Reasons for not conducting e-Commerce activitiesPrefer to go to physical store49.1%Lack of knowledge, confidence or skills43.0%Not interested34.3%Privacy and security concern24.4%Delivery concern15.7%Trust concernsUnstable internet connectivity14.7%5.7%Bad experience with online shop4.0%Website navigation is complicated3.9%Don’t have address for postage1.3%PURCHASINGWHAT MOTIVATE ONLINE SHOPPERS TO SHOP ONLINEShoppers shop online for various reasons, mainly on convenience, accessibility,pricing, selection, product information and ease of payment.Convenience is the main factor for shoppers to shop online as it gives opportunityfor shoppers to shop 24/7 and accessible to various online shopping platforms.These features provide convenience for about eight in ten shoppers (84.4%) whocited this reason as a motivation factor for them to shop online.Almost three quarters (73.0%) of shoppers stated that better prices offered byonline retailers encourage them to shop online. Competitive pricing strategies byonline retailers such as special deals, discount vouchers, festive sales, memberE-COMMERCE CONSUMERS SURVEY 201816

privileges, etc. have provided shoppers with options for cheaper pricing as comparedto traditional channel.Another determinant factor is the simpler buying process whereby, shoppers caneasily do research and gather product information prior to any purchas e. Forinstance, there are many platforms designed to simultaneously compare productsand prices across different retailers i.e. Trivago, Skyscanner, etc. In addition,shoppers are able to visit number of online stores which offer wider choice ofproducts that far exceeds the number of physical stores.The survey shows that 87.2% of respondents conducted research on the productsbefore they proceed for online purchasing. Of this, about seven out of tenrespondents (70.5%) used search engines to find product information while 64.2%of respondents browsed retailers’ website to seek for product details and reviews.Social media nowadays has evolved and become an impactful platform forbusinesses’ marketing strategies. As shown in Figure 7 and Figure 8 below, 44.1%of respondents who carried out product research used social media to validateproduct quality through reviews, comments and feedback (82.5%), discoverpromotion and discount (57.5%) and discover new and current trends (31.4%)Figure 7: Percentage of e-Commerce consumers on product research and platform used70.5%Did not conductproduct research,23.8%64.2%44.1%Conducted productresearch,87.2%Search engine Retailer’s websiteSocial mediaE-COMMERCE CONSUMERS SURVEY 201817

Figure 8: Social media aspects that influenced online shopping behaviourReviews, commentsand feedback82.5%Promotional offerings57.5%Advertisement44.6%Current trends (eg:Fashion, etc.)31.4%Furthermore, ease of payment method is another key reason why shoppers shoponline. Various types of payment method such as, online banking, credit card, cashon delivery, etc. give more flexible options for shoppers. Additionally, the advent ofthird party online payment such as PayPal, Alipay, MOLPay, iPay88, etc. haveprovided shoppers with alternative online payment.Delivery options which are reliable, flexible and affordable constitute 49.5% factorsas motivation to shop online.Figure 9: Motivation factor for online OMMERCE CONSUMERS SURVEY 201818

PREFERRED DEVICE FOR ONLINE SHOPPINGAccording to the survey, smartphone is the most popular device used to shop online.More than three quarters of consumers (78.3%) cited that they used smartphonefor online shopping. Preference toward mobile apps is not surprising as smartphoneusers are able to download e-Commerce apps on their device. Using mobile appsare convenient to shop online, especially if shoppers are not making a one-off visitto an online store. For starters, there is no need to remember a URL and login toaccess the shop8. Nonetheless, shopping experience through smartphone or othermobile device can be a stumbling block due to screen resolution issue. Slightly morethan 70% of shoppers cited this issue when they were asked about challenges whileperforming e-Commerce transaction using mobile device. Almost 40.0% shoppersmentioned that product information is very limited when browsing through mobiledevice as compared with desktop while 32.2% stated they need to switch to desktopversion to search for more product information.Figure 10 : Device used to shop book/Desktop / PCTabletSmart TVNetbookFigure 11: Challenges while shopping via mobile devices871.9%37.9%32.2%29.6%29.3%Need toenlarged imageon the screenLimitedproductinformationNeed touse desktopversionWebsite isnot userfriendlyWebsite is notcompatible withmobile ile-app-for-ecommerceE-COMMERCE CONSUMERS SURVEY 201819

The used of smartphone to shop online was more popular among women than men(81.9% versus 75.9%). It was also more popular among younger consumers andbeing used by 90.2% of those below 20’s, and 84.8% of those in their 20’s (Figure12).Figure 12: Percentage distribution of e-Commerce consumers who used smartphone toshop online and adoption rate by age90.2%84.8%77.4%Percentage distributionAdoption rate69.9%61.8%39.8%60.5%35.4%13.5%5.3%Below 20's4.9%20's30's40's50's1.2%Above 60Second most popular device (29.7%) that consumers used to shop online waslaptop, notebook or netbook. These devices were more popular among consumerswho were in their 40’s (34.9%) compared to those below 20’s (22.3%), and beingused by more men than women (31.1% versus 27.7%).Almost 3 out of ten (27.1%) respondents used desktop or PC to shop online. Thisdevice, was preferred by shoppers who were in their 40’s (44.7%) and also favouredby more men than women (30.6% versus 21.9%).E-COMMERCE CONSUMERS SURVEY 201820

FREQUENCY AND TIME OF PURCHASEAmong different age groups, younger shoppers aged below 40 made frequent onlinepurchases than any other age group. The survey found that about 50.0% of theseage groups shop online few times in a month.Figure 13: Frequency of online shopping by ageBelow %49.2%40.7%40.6%6.6%Above 60's 2.6%35.7%50.0%34.2%55.9%23.7%71.1%DailyFew times in a weekFew times in a yearOnce a yearFew times in a monthFigure 14 shows the frequency of online shopping by average monthly income.Figure 14: Frequency of online shopping by average monthly incomeRM 5,000 and aboveRM 3,000 - RM 5,0009.5%7.1%RM 1,000 - RM 3,000 4.2%RM 1,000 and below5.2%Dependent 5.3%DailyFew times in a week50.3%37.2%47.7%47.1%34.4%44.3%Few times in a month42.4%45.7%51.0%47.5%Few times in a yearOnce a yearE-COMMERCE CONSUMERS SURVEY 201821

Moreover, almost seven out of ten online shoppers in Malaysia (68.1%) prefer toshop online during normal days 9 while remaining 31.9% were more likely to shopduring their off days or holidays.When asked about their usual time 10 for online shopping, 44.4% revealed that theypurchased their goods and services at night, while 37.0% normally shop in theafternoon. For 14.7%, their usual time were in the morning, while the remaining3.9% prefer late night (12 a.m. till 6 a.m.) shopping.Figure 15: Usual day to shop onlineFigure 16: Usual time to shop onlineAfternoon,37.0%Off day/Holiday,31.9%Morning,14.7%Night, 44.4%Normal day,68.1%Midnightandbeyond,3.9%ONLINE SELLER BY COUNTRYThe survey found that majority of online shoppers in Malaysia (93.6%) havepurchased goods and services from local seller, while more than half (52.2%)shopped cross-border.When further asked about location of cross-border e-Commerce market, 84.8%mentioned they purchased goods from China, as Chinese merchants sell massive9 Including weekdays as we

value added for e-Commerce increased from RM75.0 billion in 2016 to RM85.8 billion in 2017 2. The growth of e-Commerce reflects the need to measure and track the adoption of e-Commerce at national and state level. Therefore, MCMC commissioned e-Commerce Consumers