PayPal’s Cross Border Insights 2013

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Malaysia (2 April 2014)PayPal, a leader in online payments, today released data underlining the success and massive growth potential for local businesses, especially Small and Medium Enterprises (SMEs), to trade globally online, with the hottest growth opportunities coming from within Asia.

PayPal’s Cross Border Insights 2013 found that online exports from Malaysia on PayPal’s global payment platform saw strong growth of 29 per cent year-on-year (YoY). The same year, Malaysia’s overall exports grew by only 2.4 per cent or RM17.17 billion to RM719.81 billion1. Cross-border trade, projected to reach over US$307 billion by 20182, is a quarter of PayPal’s business today. This data underscores an opportunity for local businesses to extend their reach and go where the demand is – to millions consumers around the world, without the costs of traditional geo-expansion.

In 2013, PayPal merchants in Malaysia saw healthy, double digit growth for top online export corridors; the United States (20% YoY), Australia (50% YoY), Singapore (38% YoY), United Kingdom (18% YoY) and Canada (26% YoY). This is in contrast to single-digit or declining growth in Malaysia’s overall top export corridors last year – Singapore (5.1% YoY), China (9.2% YoY), Japan (-4.4% YoY), United States (-4.5% YoY) and Thailand (6.1% YoY)3.

Furthermore, while overall the top export corridors for Malaysia were predominantly within Asia, the top online export corridors were dominated by markets outside of Asia, including the United States, Australia, United Kingdom and Canada. This highlights how Malaysian merchants exporting online are able to tap into traditionally bigger consumer markets with larger populations of technologically savvy online shoppers. As the internet transforms the face and form of retail, cross-border shopping is only projected to grow. This presents a clear opportunity for local businesses in Malaysia to embrace e-commerce in order to create new opportunities and become competitive players in the global marketplace.

Opportunities for local merchants continue to be the hottest in Asia, which spells good news for Malaysian businesses who already have longstanding export ties within the region. The fastest growing PayPal Malaysia export markets in 2013 were Brunei Darussalam (96% YoY), India (78% YoY), China (58% YoY), Indonesia (56% YoY) and Hong Kong (55% YoY). Large emerging-market economies such as India, China and Indonesia were also among Malaysia’s top overall export corridors for 2013, however growing at much slower rates than online exports did, at -12.2%, 9.2% and 19.9% year-on-year respectively.

As Asia sees a fast-growing and more connected middle class, eMarketer projects that more than 44 per cent of the world’s digital buyers will reside in Asia Pacific, nearly two and a half times the size of that in Western Europe, which will have the second-largest number of digital buyers1. With more Asian consumers moving online for their purchasing needs, Malaysian businesses are in a unique position in which they can continue to focus exporting in a region they have strong ties with, while enhancing growth opportunities in Asia by building up a robust online strategy.

“The international demand we are seeing is a clear signal to businesses in Malaysia to look for new ways to grow their sales by expanding across borders. This is especially so for SMEs who form the backbone of the Malaysian economy. As a globally trusted payment platform, we connect local merchants of all sizes with over 143 million active PayPal users in 193 markets worldwide, enabling them to sell internationally with ease and convenience,” said Audrey Ottevanger, Country Manager for Malaysia and Thailand.

She adds, “It has never been easier for consumers to shop online directly from merchants around the world. Coupled with the new government initiatives in Malaysia to boost local SME capabilities to internationalise, there is no better time for Malaysian businesses to ride the e-commerce wave, and tap into a very lucrative global revenue channel.”

Increased demand for local products around the world
Overall, exports in Malaysia have traditionally been dominated by oil and manufacturing categories. However, Malaysian businesses exporting online have found significant growth opportunities and

global demand in non-oil and manufacturing categories, particularly in consumer retail, signalling opportunities to diversity the range of goods and services being exported around the world. Malaysian businesses found the biggest opportunities in exporting Cellphones (120% YoY), Travel Services (85% YoY) and Fashion (79% YoY).

Merchants like Wan Zaki Wan Taib, Founder and Executive Director of Jelitasara Corporates Sdn Bhd.com which sells hijab both online and in physical stores, have adopted cross-border e-commerce as a sustainable business strategy. “Today with the internet, shoppers are no longer constrained by physical borders and can explore fashion around the world. By exploring the e-commerce route and integrating an internationally-trusted payment solution on Jelitasara.com, I was able to expand my business globally so that Muslim women around the world can follow global fashion trends.”

He adds, “Running an e-commerce business, we are always concerned about fraudulent transactions online, especially with a significant number of customers coming from overseas. PayPal’s Seller Protection policy helps reduce that risk and keep our transactions safe. In addition, customers all over the world recognise the PayPal brand and know that they can make purchases on my website more securely and conveniently, from the comfort of their homes.”

Alex Cheong, Founder of Web2ship.com, a Malaysian business-to-business (B2B) e-commerce service provider shared, “Web2ship.com processes shipments for clients in more than 100 different countries around the world. Being in the B2B market for over 10 years, we understand the challenges faced by online sellers when it comes to shipping their products internationally. By offering PayPal as a payment solution we have been able to provide a more reliable service to our global clients enabling them to make payments securely. PayPal helps me accept payments from clients fast, conveniently and safely, with no sign-up or monthly fees, as well as in multiple currencies to meet the needs of our international customers.”

PayPal continues to lead in e-commerce globally, processing a total payment volume of US$180 billion in 2013, a 24 per cent increase from the previous year. Cross-border trade accounted for approximately 25 per cent of PayPal’s total payment volume last year.