Digitalisation in the Malaysia context
Written by: Kingsley Lye
In recent years, we’ve come to witness the dawn of the digital era. Technology has been progressing at an accelerated rate as massive tech companies continues to churn out products year after year. With new and exciting innovations each day, how has Malaysians been keeping up with the latest trends? Or have we been left in the dust? Let’s find out!
What is digitalisation?
With reference to the above hyperlinked article, this period of online shopping frenzy has shifted how consumers use e-commerce. The majority of consumers previously used e-commerce to purchase discretionary non-essential goods. This has changed as a result of the pandemic. Consumers are now confident to buy fresh produce and even furniture online!
The reality however, is not so sweet. Existing businesses may have high transition costs to migrate to e-commerce platforms. Businesses also have to factor the uncertainty over the returns they may or may not receive when migrating to virtual marketplaces.
Further considerations include competition among small businesses especially on platforms like Lazada or Shopee where even large firms compete. Moreover, there is also the high costs associated with building a brand/trust and advertisements. In fact, there is also the unfortunate circumstance where digital platforms charge 20% – 30% commission, thus narrowing profit margins further. Most importantly, some businesses, and even some industries such as aviation, cannot transition online.
Ultimately, this is why e-commerce alone is not the solution.
Although digitalization has in some ways cushion the impact of
the pandemic, and even with government aids such as grants and subsidies, it is evidently not enough. The Malaysian Reserve reports that up to 580,000 businesses are at risk of closure by October.
This begs another question – what is there to do at this impasse?
‘Digital transformation is less of a digital problem than it is a transformation problem.’ – George Westerman | MIT Abdul Latif Jameel World Education Lab
In a recent webinar for MIT Sloan Management Review, Westerman argued that digital transformation is more of a leadership issue, and unless organizations relook into their strategies and fundamentals, technology will not do much for any business.
Taking AirAsia for an example, despite their many creditors, AirAsia has transformed their business from aviation, to becoming a super app, providing a multitude of services such as e-hailing, food deliveries, and so on.