Assignment UKMM1043 Basic Economics, Accounting and Management

How e-commerce and digitization could reduce the negative

impact from Coronavirus (COVID-19)?

4.0 Findings and Discussion

In this section, the findings for the ways of e-commerce and digitization in reducing the
negative impact from Coronavirus (COVID-19) will be described and the discussions will be
accomplished with each finding as well. The findings have included the actions taken by both
private and government sectors in utilizing e-commerce to reduce the negative impact from
COVID-19, the impact on people's lifestyle and consumption habits, the impact on logistic,
and the impact on online channels for sales and marketing.

4.1 The actions taken by both private and government sectors in utilizing e-commerce to reduce
the negative impact from COVID-19.
One of the best strategies to combat COVID-19 is to prevent physical contact and
maintaining social distancing. However, preventing physical contact and maintaining social
always mean that companies from various sectors will face obstacles in doing their transaction,
selling and also marketing. Thus, to minimize the impact of COVID-19, actions have been
taken by both the private and government sectors.
4.1.1 Malaysia Digital Economy Corporation (MDEC)
Malaysia Digital Economy Corporation (MDEC) is a government sector who are
charged for the management and development of the technology industry and commerce zone
in Malaysia. Before the pandemic COVID-19, the roles of MDEC was mainly on attracting
next-generation to innovate emerging technologies in Malaysia, encourage public transforming
Malaysian youth to be digital producers and to create a country of digital makers, giving advice
in digitally-powered businesses and encourages digital sector investments. MDEC was aimed
to develop a digital economy as a way to contributing country's GDP and ASEAN internet
economy.
However, in 2020, due to the global pandemic, the government has announced a cordon
sanitaire implemented as a preventive measure called Movement Control Order (MCO),
MDEC has changed their actions significantly.
 Figure 1: Pie chart of the survey on impact of COVID-19 on business
(Source: https://vulcanpost.com/693532/mdec-malaysia-campaign-sme-tech-support-mco/)

In March 2020, the Malaysian Global Innovation and Creativity Centre (MaGIC)
conducted a survey target for almost 239 local startups and social enterprises. The participants
were from various type of enterprises and the result of the survey shows that approximately
half of the enterprises may have the danger in continuing their business as usual if the COVID-
19 pandemic lasts for 3 to 6 months. Therefore, in the course of solving this crisis, campaign
called #DigitalvsCovid has been organized by Malaysia Digital Economy Corporation (MDEC)
to gathers local technology and ICT companies for extending their digital solutions and services
so that they can be able to help affected enterprises to move their business online for decreasing
the disruption from the pandemic.
Besides, by organizing programmes of eUsahawan and Go-eCommerce, MDEC
enables to cultivate the employees and the owners from the local small and medium enterprises
(SMEs) and micro-enterprises for accelerating the adaptation on the era of online business or
e-commerce nowadays. In the past, MDEC had cumulatively trained more than 330,000 micro-
entrepreneurs but this year alone, there are 26,000 micro-entrepreneurs have been trained.
Apart from that, in June 2020, YAB Prime Minister has announced to conduct Micro,
Small and Medium Enterprises (SMEs) E-Commerce Campaign which is the under the
initiatives of PENJANA e-commerce. Its purpose is for the eligibles to shift the existing
business towards digitalization and e-commerce. There have been done through the MDEC and
e-commerce platforms which support Micro, Small and Medium Enterprises (MSMEs) in
onboarding training, seller subsidy and sales support.
Recently, on 28th October 2020, 10th November 2020 and 17th November 2020,
MDEC organizes a WeChat Mini Program Briefing Sessions event which provides business
matching opportunities to the business. The briefing will include the key features and the
guidelines for the program and the registration process, respectively. MDEC also helps
participants in developing their WeChat business in the aspect of setting up merchant profile,
products listing and so on. It is specialized for brand owners, manufacturers and distributors
who are exporting to China or aspiring to export to China.

4.1.2 Government Sector

In the step to move towards to the e-commerce and digitalization, cashless payment and
transaction online are the essential stage that Malaysians must adopt and familiarize in it. Thus,
to do that, the government has announced an initiative called PENJANA E-Wallet RM50 for
Malaysians e-wallet users to receive an RM50 allowance. The government has allocated
RM750 million in this initiative and is planned approximately 15 million Malaysians will be
the recipient of this benefit. It also encourages Malaysians to adopt contactless payments and
using e-Wallet as their preferred payment method to do their transactions.

4.1.3 Private Sector

Due to consumers have gradually moved to online websites for their purchases during
the pandemic, many enterprises and companies have started their step into their digital journeys.
Therefore, many e-commerce platforms or online marketplace companies such as Lazada,
Shopee and so on have taken their role to assists others traditional private sector in
transformation of their business to reduce the impact of COVID-19 on them.
During the period between April and June, there are more than 17,000 new small and
medium enterprises (SMEs) have been enrolled in Lazada Malaysia through its Pakej Kedai
Pintar Stimulus Package. The company has funded RM10 million to assist up to 50,000 local
small-medium businesses to start their e-commerce market and making transition of their
businesses into the company's platform. Benefits such as free shipping services, fixed weekly
payments and entitled zero commission will be provided for SMEs who have joined in this
stimulus package. SMEs who conducting their business which belongs to fresh food and
groceries categories will also be enjoy zero listing fees. Moreover, Lazada Malaysia will
cooperate with these enterprises by exhibiting products for several months, promoting SMEs
to participate in promotional campaigns, giving assists in fulfilling orders, and analyzing sales
and traffic data.
Besides that, Lazada Group also has provided courses in Lazada University training
and allow the enterprises for gaining access for micro-loans as alternative funding and cultivate
skill training stream via Lazada University learning portal. Through this programme and
package, SMEs have seen their rose in sales up to 110% on that platform.
On the other hand, Shopee also organized activities to help retailers and enterprises to
conduct their business on its platform. For instance, 10.10 Brands Festival virtual activities
launched to let users enjoy benefits from exclusive RM10 deals, free shipping if the minimum
spending has exceeded RM10. Consumers can browse the Million Dollar Brands Discounts in-
app portal to buy variety of products with 100% authenticate from favourite brands. These
activities were aimed to stimulate consumers to purchase items from these retailers and allow
retailers to expose their brands.
4.2 The Impact on People’s Lifestyle by The Effect of E-commerce for Reducing The Impact
of COVID-19
Lifestyle can be reflected by people’s daily activities. Due to the implement of
Movement Control Order (MCO) on 18 March to prevent the spread of COVID-19, the nation-
wide halt all non-essential business, travel and activities. Although MCO only stand for only
two months and the restriction has then been relaxed with Conditional Movement Control
Order (CMCO), the people's lifestyle has been changed tremendously than before.
The phenomena that shows the changes in people's lifestyle due to the impact of
COVID-19 is that food delivery applications are more popular than before, and the usage has
increased than the past. One of the examples that shows this phenomena is the food delivery
companies including Grabfood, Bungkusit and Foodpanda have more than doubled their
income and are in this 2020 and online shopping applications such as Lazada has seen a rose
in sales, as more consumers purchase online.

Usage of Social Media

36%
64%

Increased Remains Unchange

Figure 2: Pie chart that showing the usage of social media

(Source: https://diabrands.com/navigating-the-next-normal-for-brands/)

Based on the pie chart, 64% of the respondence have increased the usage of social media
such as Facebook, Instagram, and so on to keep connected with family and friends who are
living far away from them and unable to visit each other due to the restriction. The increase of
usage has indirectly stated that the browsing of the e-commerce marketplace which embedded
in social media such as Facebook Shops has increased than before.
 Purchase Products via Online Purchase Products via Online
Shopping Platforms in 2019 Shopping Platforms in 2020

39%
47%
53% 61%

Yes, I have. No, I don't have. Yes, I have. No, I don't have.

Figure 3: Pie charts that show people having experience in purchase products via online
shopping platforms in 2020 and 2019
(Source: https://diabrands.com/navigating-the-next-normal-for-brands/)

The pie charts have shown there is an increase in online shopping behaviour of
Malaysians during the Movement Control Order (MCO) due to the impact of COVID-19. There
is 61% of Malaysians have purchase products via online shopping platforms such as Lazada,
Shopee, Zalora, and so on in this year. But oppositely, in 2019 which is before MCO, only 47%
of people have purchase products online.
Apart from that, subscription on online platforms for getting virtual service is also a
part of e-commerce and playing a vital part in pushing Malaysia into digitally nation. Due to
the movement limitation from MCO, 26% of Malaysians have been subscribing to online
platforms for entertainment such as Netflix, Spotify, and so on during this period. While 24%
of them have purchased groceries online and the only minority of them which is 13% have
been subscribing to online platforms to educate the kids.

4.3 The Impact on People’s Consumption Habit by The Effect of E-commerce for Reducing
The Impact of COVID-19
The pandemic has caused more Malaysians getting familiar with e-commerce and
digitalization. They have now found themselves more comfortable with online transactions.
Before the pandemic, only one-third of Malaysians stated that they preferred shopping online.
However, according to the survey that conducted from Standard Chartered (StanChart), more
than two-thirds of 73% of Malaysians polled have shown that the outbreak of the Covid-19
pandemic has made them more positive about online shopping in nowadays. This also indicates
that people's consumption habit has been changed positively towards the era of e-commerce
during this pandemic. In another survey which also took by Standard Chartered (StanChart) on
how the Covid-19 pandemic has transformed consumers' way of life. Obviously, the result has
shown that there is an increase in the emergence of a cashless, cautious and more conscientious
consumer.

Shopping Behaviour on Shopping Platforms During MCO

Foods & Beverages e-Coupons 15%
Clothes 18%
Home Appliances 20%
Babies & Toys Products 24%
Categories

Electronic Devices 25%

Beauty Products 27%
Groceries for Food 44%
Home Care Products 45%
Healthcare & Supplements 46%
Personal Care Products 47%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Percentages (%)

Figure 4: Bar Chart which shows shopping behavior on shopping platforms during MCO
(Source: https://insight.rakuten.com/wordpress/wp-content/uploads/COVID-19_Malaysia.pdf)

The chart shows the shopping behaviour on shopping platforms during the pandemic.
The shopping behaviour shows that which that products that customers bought the most
frequently and thus reflecting their consumption habits from the impact of COVID-19. Based
on the result, it is shown that the majority (47%) of the customers purchased personal care
products such as shampoo, lotion, toothpaste and so on for their daily needs. While healthcare
and supplement products are the second most popular purchase among the consumers which
has attained 46% of the total customers. This may be due to the impact of the pandemic, people
start to aware of their health and daily eating habits such as the balance of their diets. On the
other side, food and beverages (F&B) e-coupons are the least people to buy from online
shopping platforms. It is mainly because the e-coupons are always accomplished with the
usable date which buyers may have to concern about and the e-coupons always applied by
various terms and conditions.
Additionally, healthy meals are also on inclining. According to GrabFood Malaysia
data, the healthy food category is one of the sites' that most clicked categories by users, with
the second-highest conversion rate, after beverages. The application has also seen a 40%
increase in vegetarian orders since October 2019 and the number is still increasing until today.
 Consumption Habits In Investment Considerations

Purchase of Private Retirement Scheme (PRS) Funds 11%

13%

Purchase of Life/Personal Insurance 21%

Investment Purchase

Purhase of Medical/Health Insurance 28%

23%

Invesment in Stocks/Bonds/Mutual Funds 30%

34%
8%
Purchase of a New Personal Vehicle 18%
9%
Purchase of Property for Own Stay 15%

Purchase of Property for Invesment 10%

13%

0% 5% 10% 15% 20% 25% 30% 35% 40%

Percentages (%)

During MCO Pre-MCO

Figure 5: Bar chart showing the consumption habits in investment considerations

(Source: https://insight.rakuten.com/wordpress/wp-content/uploads/COVID-19_Malaysia.pdf)

The bar chart has shown that the differences in consumption habits in the aspect of
investment between during the period of MCO and before the period of MCO. In overall,
because of the strike heavily from the impact of COVID-19 to the stock market, people are
more conservative in investments but there is an increase of intention towards in purchasing
both medical and life insurances. The willing of people to do investment have been declined
significantly except the purchase of life or personal insurance which remains unchanged
regardless the existence of MCO and also the purchase of medical or health insurance, which
have increased up to 28% instead of decreased during the MCO. Generally, the declined of the
number of purchase in investment such as purchase a new vehicle and purchase a property for
their own is mainly because of the decline of the purchasing power of Malaysians as the
productivity of work has decreased due to the impact of COVID-19.
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https://www.nst.com.my/business/2019/10/530587/govt-announces-new-measures-boost-digital-
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