eCommerce is the trading in products and services using computer networks such as the Internet or online social networks. The term eCommerce was brought to popularity by the emergence of Alibaba and Amazon, the two giants in the eCommerce world.
Today, the eCommerce world has become more and more competitive due to higher number of players in the market. The Malaysian eCommerce sites are Lelong, Lazada, 11street, Mudah, Rakuten and etc.
Good news for the consumers!
eCommerce sites are competing aggressively between each other to get more buyers and sellers but at the end of the day, it is the consumers that will benefit. Why?
How do eCommerce sites maximize their earnings? It is by engaging with more sellers so as to increase their product offerings. More product offerings and better deals will attract more buyers, which will then result in more traffics and transactions. Hence, more commissions will be made by the eCommerce sites!
Thanks to these eCommerce platforms, online sellers can view directly in the Internet as in what is the pricing strategy of their competitors who are selling the same products. Therefore, you can often find cheaper deals online. Besides, most of the online sellers do not own physical stores, which require significant cash outflows like rental and utilities expenses. These will not only be beneficial to the business in the sense that tremendously costs will be saved but most importantly, part of the cost-savings will be transferred to their customers, like us!
When the rivalry between eCommerce sites AND eventually the sellers who compete directly with one another gets heated up, more discounts and cheaper prices will be offered. This is exactly why the end consumers will become the ultimate beneficiary.
This is exactly why you should take eCommerce into account before you invest in certain types of businesses.
Retail Sector Hit Hard ...
For instance, retail sector is one of the sectors that has significantly felt the impact of the emergence of eCommerce. However, it is not the retail sector as a whole that are affected, only a few of them. So which retail group in particular felt the impact? - I would say those that are selling smaller size and/or lower price range goods.
Retailers that are involved in retailing of phone & tablet, electronics & appliances, cosmetics, books and etc. are the ones affected the most.
My Family Business
Hence, I wish to relate this to my family's business.
Trimas Auto Electrical Sdn Bhd is principally engaged in the manufacture and retailing of automotive wiring products, automotive accessories and spare parts. We were the pioneer in the manufacture of automotive wiring products. Additionally, we are proud to have certified ISO 9001:2008 and is SGS Test Compliance.
With the emergence of eCommerce, automotive repairers and end users do not have to travel to spare part shops to look for products anymore. Better still, they can compare and get the cheapest prices possible! (remember online sale price is often cheaper?)
Since we are one of the few that are very specialized in automotive connectors, most of the automotive repairers find it hard to look for these kind of niche items. What if they are located in other states?
As such, Lightman Tan, my eldest brother, has been the key person in our eCommerce venture. He has set up a website (www.e-trimas.com) with more than 5,000 SKUs (stock keeping units) with competitive pricing.
This online store was established to solve the inconvenience faced by most of the automotive end users who have difficulty in looking for rare car spare parts and connectors. With this platform, we are able to leverage on a better distribution network to target more customers that are either not within Klang Valley or in overseas.
The message that I wish to convey is that eCommerce has started to change the way businesses compete. It has either worsened a company's performance (not using eCommerce) or helped a business to propel further (those that use eCommerce in their business).
For the fellow investors, please think twice if the company you wish to invest in is engaged in pure retailing business and has yet to invest in an eCommerce platform.