E-Commerce Logistics in Malaysia: How Small Businesses Can Deliver Fast and Keep Costs Low

Introduction

With every aspect of life becoming more digital than ever, businesses have had to adapt to taking their services online in order to stay relevant to consumers.

Consumers have also adapted to getting their products delivered right to their doorstep as quickly as possible.

That said, small businesses have had to quickly adapt with their customer’s preferences especially when it comes to e-commerce logistics.

Why Logistics Are a Game-Changer for E-Commerce SMEs

Although for a small business, adapting quickly to the e-commerce space can be a hill to climb, logistics have become a game-changer for e-commerce SMEs in ways you cannot imagine.

Long gone are the days where your product and pricing are the most significant features that win customers. Today, fast, reliable shipping solutions help to build trust for brands and are quickly becoming the differentiating factor that drives repeat sales from consumers.

The narrative of how people shop has also gone through a big shift. Customers are able to place grocery orders and receive them as quickly as within the hour. Meanwhile, businesses are turning towards creating their own delivery fleets to keep up with Malaysian consumers who increasingly expect quick delivery, even from small businesses.

Thanks to these changes, e-commerce logistics in Malaysia has become a major growth factor for many SMEs. By providing quick shipping and delivery options, small businesses particularly can easily win and keep their customers.

Common Shipping Challenges Faced by Malaysian SMEs

Although we agree that e-commerce logistics in Malaysia can make all the difference for small businesses, there are still many shipping challenges that these businesses face. Let’s take a look at some of these common challenges:

Rising Courier Costs

Shipping rates in Malaysia have gone through some major fluctuations in the last five years. The current Prime Minister’s move to change the fuel subsidies have definitely impacted courier costs domestically.

In fact, DHL confirms that one of the biggest business expenses that small businesses face is indeed shipping costs. Although shipping is at the heart of any e-commerce business, rising courier costs are definitely a challenge for small businesses to face. (DHL, 2023)

Managing Small Volumes Efficiently

For larger players, managing volume and utilizing bulk discounts are pretty standard. However, for small businesses, the lack of volume when it comes to shipping means that they do not have the perks of larger discounts.

Balancing Speed and Affordability

Consumers are also increasingly expecting faster and more efficient delivery. Unfortunately faster services can cost a lot more than standard delivery. DHL emphasizes that the only way small businesses can continue to deliver value to its customers is by striking the perfect balance between service and budget.

How to Reduce Shipping Costs Without Sacrificing Service

While logistics for small businesses in Malaysia might pose a few challenges, there are also a couple of handy ways to reduce shipping costs without sacrificing service, which these businesses can put into practice. Let’s take a look at some of them:

Compare Rates Across Couriers Regularly

Did you know that there are online tools available that can help you easily compare shipping rates in Malaysia?

Yes, the best way to keep shipping costs down is to continuously compare rates across courier providers so that you can go with one that does not break your bank. As small business owners, you can leverage platforms like EasyParcel to check multiple courier rates in one place.

While it might feel cumbersome, shipping to your customers everyday will make a massive difference when it comes to cost, even if it’s only RM 1 or 2 for each parcel across different providers.

Negotiate Better Rates When Possible

If your small business is growing rapidly, you can always choose to reduce shipping costs by negotiating directly with courier providers. DHL suggests approaching couriers for custom pricing when you have a solid volume growth.

As a small business owner, you can also prepare a business case with shipping data which highlights growth to negotiate rates with courier providers.

Offer Flexible Shipping Options to Customers

Another method to offer customers is to have them choose between standard or express shipping, based on their needs. In fact, Lalmove reports that up to 25% of consumers are willing to pay a premium fee to enjoy same-day delivery. (Lalamove, 2020)

While offering flexible shipping options to customers can keep costs low for small businesses, Easy parcel suggests that businesses stay transparent with courier rates, and delivery times so that customer’s expectations can be managed easily.

Use Flat-Rate or Consolidated Shipping for Savings

According to DHL, flat rate shipping ‘offers a straightforward pricing method with a fixed cost for shipping packages, regardless of distance (within defined shipping zones), weight, or size.’

They suggest small business owners use flat rate shipping as a way to simplify pricing and avoid surprises since flat rate shipping utilizes a fixed rate for a fixed weight to be sent to a fixed destination.

You can also group your orders heading to the same area to reduce cost-per-package. Planning and consolidating shipments may result in bulk shipping discount offers from courier services.

Smart Packaging Strategies to Cut Costs

Packaging can play a big role in shipping costs. Let’s take a look at some packaging strategies that can help cut costs.

Reduce Parcel Size and Weight

When shipping, volumetric weight is usually taken into account aside from the actual weight of the parcel. Smaller, lighter parcels will reduce dimensional weight fees.

In order to keep the size of the parcel, do not use unnecessary packaging. Ask your logistics partner for the right packaging material as they tend to have various choices for shipping different goods.

Most carriers determine the cost based on either the actual weight or volumetric (dimensional) weight, whichever is greater. Hence, minimising unnecessary volume of the package can help reduce excessive shipping costs.

Source Packaging Locally

Sourcing packaging locally can also mean that you keep packaging costs lower in general. It also helps as lead times will not be longer than getting them from overseas. DHL highlights that in the long run, sourcing packaging locally can have a beneficial impact on sustainability too.

Implement Eco-Friendly Packaging

Consumers are also constantly looking to minimize the impact of their online purchases and opting for sustainable business practices which results in eco-friendly packaging becoming a popular choice.

Eco-friendly packaging is also lightweight and sturdy, so it is directly able to lower shipping costs for small businesses.

Inventory and Fulfilment Tips to Speed Up Delivery

Store Fast-Moving Items Close to Key Markets

According to DHL, “last-mile delivery accounts for 41% of the total cost of delivery” (DHL, 2023) To reduce last mile delivery time as well as costs, DHL recommends that you place inventory closer to customer hubs.

Leverage Fulfilment Services or 3PLs

“3PL stands for third-party logistics: the process of outsourcing logistics operations to a third party” (DHL,n.d.) By using a 3PL, small business owners can reduce the necessity of maintaining a large space for storing their products.

Integrate Inventory with Your Online Store

The benefit of integrating your inventory and your online store is being able to get real time updates on your inventory levels. This prevents you from overselling and helps to improve order accuracy by helping you know which items sell fast and which don’t.

By having this data, you can plan your inventory restock and purchase from suppliers more efficiently.

Enhancing Customer Experience While Saving Costs

Be Transparent About Shipping Times and Costs

The key to keeping your customers coming back is to have good customer service. Be transparent with your customers about shipping times and costs. This way you can manage their expectations from the get-go and reduce complaints or any product returns. Clear communication is definitely key in these situations.

Encourage Larger Orders to Offset Shipping Costs

Free shipping can definitely boost sales with your customers but it does not have to affect profit for you. As small business owners, you can opt to offer shipping above a certain order value.

This can help you maintain margin even while covering the shipping costs for your customers.

Provide Tracking for Peace of Mind

Keep your customers in-the-know by providing tracking details as soon as possible so that they can follow their parcel’s journey. EasyParcel, for example, suggests integrating automated tracking so that customers are automatically informed about their parcel’s whereabouts.

Conclusion

Logistics for small businesses in Malaysia can be tough to navigate but as we all know e-commerce logistics, particularly, is here to stay.

Thankfully, there are several easy steps that business owners can take to navigate logistics for their small businesses. To begin with, they can look at reducing logistics costs by comparing rates across courier providers, or even negotiating rates with providers based on their own shipping volume.

Small business owners can also keep their shipping rates in Malaysia at a manageable level by applying some smart packaging strategies that will help them minimize shipping costs overall.

It is important to accept that logistics isn’t just a cost—it’s a competitive edge and with small, simple steps it can be quite easy to handle e-commerce logistics for your small business.

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