KUALA LUMPUR: The trend moving forward for e-commerce players will be the omnichannel strategy to increase the industry's presence in brick and mortar, Hong Leong Investment Bank Bhd (HLIB) said.
HLIB said the e-commerce industry had blossomed from modest beginnings into an essential part of worldwide retail when most are derailed and cooped up at home during the pandemic.
Apart from providing a boost to online shopping, the firm said the pandemic had shown the fragility of global supply chains where e-commerce fulfillment and strategy needed to change.
"On the back of this, we opine that the trend moving forward for e-commerce players will be the omnichannel strategy to increase its presence in brick and mortar," it said in a report.
According to HLIB there was a massive potential for growth of e-commerce in Malaysia as it was still in its nascent stage.
It said Malaysia's e-commerce as a percentage share of total retail sales stood at seven per cent in 2020 and forecasted to grow to nine per cent in 2021.
Additionally, HLIB opines there is plenty of room for growth of e-commerce (across multiple categories) in Malaysia when compared to other countries.
"Emulating the two e-commerce giants from our case studies (Amazon and Alibaba), we gather that Malaysia's e- commerce market is matured enough to chart strategy to progress into increasing visibility to brick and mortar.
"We already see some of this example panning out in terms of physical presence by Lazada pop up store and Taobao retail store in Malaysia and most recently Grab's interest in Jaya Grocer and Country Heights collaboration with JD.com," it said.
The firm identified nine retails spaces in Malaysia that have the requirement needed to provide the e-commerce players with an edge of physical stores.
They are Aeon, Mr DIY, Mynews, Parkson, FamilyMart, 7-Eleven, Jaya Grocer, Guardian and Watson.
"We further make comparisons based on the four criteria including supplier competitive advantage that could boost up margin, entrenched network of stores to facilitate last-mile delivery, variation of product categories and large retail space as a warehouse to boost up sales.
"We opine that the listed retail players under our coverage namely Aeon Co (M) Bhd ("Hold", target price RM1.25) and Mr D.I.Y. Group (M) Bhd ("Buy", target price RM4.51) are poised to benefit from this potential," it added.