B2B (Business-to-Business) is the exchange of products, services or information between businesses, instead of between businesses and consumers. Over the years, a complex and dynamic value chain has developed for buyers and sellers to request proposals, source for suppliers and submit tender documents. Businesses and SME are harnessing the power of eCommerce by sourcing and procuring processes online to increase efficiency and reduce cost. Expansion to Malaysia therefore without a doubt one of the strategic market that SMEs B2B is considering.
Opportunity: An Increasing Growth of B2B eCommerce Industry – Expansion to Malaysia
According to Malaysia’s National eCommerce Strategic Roadmap 2016, nearly 70% of B2B buyers now purchase goods online, 18% spend more than 90% of their budgets online, and 30% go online to research at least 90% of the products before buying. Malaysia is seeing high growth in online sales. It is an expanding market with eCommerce contribution to GDP estimated to be RM68 billion in 2015, and over RM170 billion (with additional initiatives) in 2020. B2B eCommerce is valued at approximately RM62 billion in 2015 and RM145 billion in 2020.
Challenge: SMEs Difficulty in Accessing Finance
As B2B eCommerce increases, the number of companies using credit payment is projected to increase as well. Yet, Malaysia’s SME access to finance remains low. A staggering 38% of SMEs are unserved1 and 10% of the SMEs are underserved2. This can partially be explained by high business loan rates for SMEs and poor financial infrastructure such as low SME coverage by credit bureaus and registries. Without adequate financing and cash flow, businesses are unable to have continuous innovation and build up the competitiveness to stay sustainable in today’s competitive economic climate.
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1Unserved: SMEs who do not have a loan or overdraft but require a loan
2Underserved: SMEs who have a loan or overdraft but face financing constraints
Deloitte Southeast Asia Ltd. (2015). SME: An unserved and underserved market. Deloitte Southeast Asia Ltd.
MDEC; A.T. Kearney; . (2016). Malaysia’s National eCommerce Strategic Roadmap. Malaysia Digital Economy Corporation.