National eCommerce Strategic Roadmap OverviewPage 1234In this context, Malaysian eCommerce is projected to grow at11% CAGR. However, there is potential to double this growtheCommerce GDP contribution(RM billion)114 11% 017F5.9%2018F2019F2020F6.4%Additional governmentinterventions will drive higherGDP contributionCritical Success FactorsFavorable demographic &economic trendsReady infrastructure andecosystemSpecific governmentinterventions1Sources: 2012 – 2013 data from DOSM; 2014 – 2020 data from EPU, MDeC, Euromonitor, WorldBank, A.T. Kearney analysisUnique Identifier

National eCommerce Strategic Roadmap OverviewPage 1234Malaysian eCommerce is now at an inflection point; growth canbe accelerated with focused interventionsShare of eCommerce1Evolution curve of eCommerceXXTypical growth rate inrespective ve for Malaysia toaccelerate into the next stageKoreaChina urity of eCommerce industry1. Estimated transactions in B2C and B2BSource: A.T. Kearney2Unique Identifier

Page 1National eCommerce Strategic Roadmap Overview234To accelerate eCommerce growth, 6 thrust areas have beenidentified under the National eCommerce Strategic RoadmapMalaysia’s National eCommerce Strategic RoadmapDoubling eCommerce growthSupportive Governance Framework123Accelerateselleradoption ofeCommerceIncreaseadoption ofeProcurement bybusinessesLift non-tariffbarriers DomesticeFulfillment Cross-bordereCommerce ePayment ivesMakestrategicinvestmentsin selecteCommerceplayer(s)Promotenationalbrand toboost crossbordereCommerceGood and Affordable InfrastructureSource: A.T. Kearney3Unique Identifier

National eCommerce Strategic Roadmap OverviewPage 1234These interventions can double eCommerce growth and driveeCommerce GDP contribution to cross RM 170 Bn by 2020upliftThe trajectory path of eCommerce1(MYR Bn.)3Business As Usual (BAU)With Additional Initiatives (Uplift)150Uplift120eCommercecontribution,MYR Bn.320202020CurrentBusiness AsUsualWithIntervention68114170 86901142616030eCommercegrowth1,CAGR %491DOUBLEcurrent growthprojection02012 2013 2014 2015 2016 2017 2018 2019 2020Source: 2012 – 2013 data from DOSM; 2014 – 2020 data from EPU, MDeC, A.T. Kearney4Unique Identifier

eCommerce for SMEPage 123eCommerce is a new way of doing business – to conducttransactions electronicallyeCommerce ecosystemFlow of goodsFlow of moneyProvide payment servicesEndcustomers /BusinessesPayment providersProvide goodsor servicesBuyerMake purchaseElectronictransactionSellerRetail /wholesaleLogistics/FulfillmentprovidersProvide fulfillment and deliver services5Unique Identifier

eCommerce for SMEPage 123eCommerce brings tremendous benefits for SMEBuild capabilitiesBoost productivityExpand market accessReplace imageeCommerce outgrow offlinebusiness by 13X(2013-14)eCommerceproductivity1vs. traditional 15%B2B 80%B2C# of digital buyer2GlobalASEAN 6MY1,016M87M16M1. Total sales revenue divided by employment2. 2013 estimates. 2013 estimates; ASEAN 6: Philippines 25M, Vietnam 24M, Malaysia 16M, Thailand 14M, Indonesia 5M, Singapore 3MSources: Euromonitor, The Star, HBR, CEER, Company websites and annual reports, A.T. Kearney analysis6Unique Identifier

eCommerce for SMEPage 123What should you as an SME do?Study the opportunities!Take action!Reach out for support!123Learn more about variouseCommerce channels anddecide which is most suitableTry selling your best productand build capability fromthereConnect with partners andagencies to support youreCommerce ambition7Unique Identifier

eCommerce for ConsumerPage 123B2C eCommerce experience high growth in the past 5 years, Malaysia market isexpected to grow to US 3.4 billion by 2020B2C eCommerce Sales Growth(2015, USD, % sales growth compared to 2010)China: 293 Bn.86%United States: 271 Bn.15%Japan: 69 Bn.79%14%EU 52: 158 Bn.15%75%World: 1 Tn.India: 21 Bn.45%30%Sales GrowthOnline Buyer Penetration1. Retail value RSP excluding sales tax2. Includes Germany, France, U.K., Italy and Spain3. Includes Indonesia, Malaysia, Philippines, Singapore, Thailand, VietnamSource: Euromonitor, Statistica, A.T. Kearney estimates60%Retail eCommerce market size2%(USD B)7.31.5 eCommerce Sales81%ASEAN 63: 9 Bn.29%24%52%20143.4202020258Unique Identifier

eCommerce for ConsumerPage 123Southeast Asia’s strong online culture is driving consumer behaviortowards eCommerceInternet culture in Southeast Asia“70% of ASEAN 6 population is aged 35 or below”YoungASEAN 670%63%71%51%74%74%70%“ASEAN online users spend at least 14 hrs online / week”ASEAN 6Connected14161617272619“They spend 1/3rd of their online time on social media”Social MediaaddictASEAN 625%32%42%16%31%22%29%“ASEAN mobile users are more prone to buy online”SmartphonesavvyASEAN 661%Source:, Trend Macro, MasterCard, PayPal, Frost & Sullivan, A.T. Kearney analysis47%62%48%58%58%57%9Unique Identifier

eCommerce for ConsumerPage 123While eCommerce offers lower cost and higher convenience,consumers should be careful to transact onlineBest practices in transacting onlineComparepricesKnow the market rateand be-careful withlow pricingChoosereliablewebsitesCheck thebusiness’sbackgroundVerify businessactivities throughaddress/ licensenumber with CCM1Consider thehidden costsChecktestimonialsGet feedback fromother customers toensure reliability ofthe sellerObtainseller’spersonaldetails1. CCM Companies Commission of MalaysiaSource:, A.T. KearneyMake purchase onlythrough a secure andtrustworthy websiteConsider the totalcost and value ofgoods in localcurrencyContact the seller toconfirm purchases10Unique Identifier

eCommerce for B2B BuyerPage 1234Conducting eSourcing is critical to increase B2B eCommerceElectronic Process /Contributes to eCommerceTypical capabilities in eProcurement chaseOrderReceipteInvoicing2 / 3 waymatchingOther value-added services Procurement network (catalog hosting, supplier information) Procurement Card Direct DebiteRFI / eRFP / eTender / eBiddingSolicit & AnalyzeresponseseSourcingOther value-added services Category Management Supplier marketplace Spend analyses Savings portunity for higher adoptionwith contribution to eCommerce11Unique Identifier

eCommerce for B2B BuyerPage 1234Case study: Tenaga Nasional Berhad has on-boarded 9,000 ofits suppliers since 2014Scaling eProcurement adoption successfullyMandating eTender spend 100%Of addressabledomestic spend –on eTender system Key success factor for highadoption rate is simple - makingthis process mandatory, withouta parallel manual submissionoption eTender is mandatory forprocurement with value of RM20kand above 35% - 40% of overall procurementspend through eTenderSource: Stakeholder interview while on-boarding largesupplier base 9,000Active suppliers onboarded toeProcurement system Key challenges to overcome :– SMEs’ mindset & level of ICTadoption– Internal & external processchange management, and– Ensuring systeminteroperability On-boarded via general infosessions, with follow-up hands-ontraining (nominal fee of RM 700). to achieve greater savingsand productivityRM7.2 MnAnnual savings fromePO switch alone Overall, increased productivity,reduced paper workload On switching to ePO systemalone, estimated savings of RM 7.2Mn:– RM 60 per PO saved (factoringin paper, handling and timedelay costs) for 120K POsannually12Unique Identifier

eCommerce for B2B BuyerPage 1234Benefits from eProcurement adoption from both global and localadopters are well documentedBenefits from eProcurement solutions –global benchmark 20%Total procurementsupport cost1Benefits from eProcurementsolutions – local adopters“"We have already launched our eProcurementinitiative back in 2014 – and took specificmeasures to ensure our active supplier base (8,000– majority of which are SMEs) are onboarded tothe mandatory program. Our savings just fromswitching to ePO itself is RM 5 Mn per year”Chief Procurement Officer, GLC“"We embarked on eProcurement Transformationjourney to drive: Single policy, process, system and tool for ourentire group Integrated platform for subsidiaries in multiplecountries Ability to conduct integrated spend analysis, anddrive strategic sourcingChief Procurement Officer, GLC 30%Cost of categorieswith high maverickspend2 10%Enable effectivestrategic sourcing31. Global, automated, processes incorporating best practices and eliminating unnecessary activities2. Better management information and adherence to pre-negotiated supplier agreements3. High quality detailed management information enables identification of cost saving opportunities through supplier spend consolidationSource: Gartner, PWC, A.T. Kearney13Unique Identifier

eCommerce for B2B BuyerPage 1234What should you as an B2B ‘buyer’ do?Study the opportunities!Reach out for support!12Learn more about variouseProcurement solutionprovider and decide which ismost suitable for yourbusinessContact the solutionproviders to walk youthrough their systems14Unique Identifier

eCommerce for Logistic & eFulfillment PlayerPage 1234eFulfillment plays a critical role in shaping the customer andend-consumer experienceeCommerce value CustomerInterfaceWarehousing& ayment212DomesticeFulfillmentTo improve domestic eFulfillment service levels that are aligned with customer expectationsCrossBordereCommerceTo improve service levels to ensure swift and efficient flow of cross-border goodsSource: Stakeholders Interviews, Expert Interviews, Market-Back Insights, A.T. Kearney15Unique Identifier

eCommerce for Logistic & eFulfillment PlayerPage 1234To facilitate eCommerce growth, eFulfillment players need toinvest across warehousing to last-mileeFulfillment Value ChainWarehousingOrderFulfilmentShipping LogisticsLast-mile DeliveryInventorymanagementPick and packSortingDeliveryQuality controlQuality controlCustomsReturnsmanagementTrack and traceShipping labelTransportationTrack and traceTrack and traceTrack and traceDelivery andpayment flexibilityInventorymanagementPick-upSource: Stakeholders Interviews, Expert Interviews, Market-Back Insights, A.T. Kearney16Unique Identifier

eCommerce for Logistic & eFulfillment PlayerPage 1234End-to-end fulfillment players can potentially provide three keybenefits for Malaysia eCommerceCase StudyProvide end-to-endeFulfillment capabilitiesEnable cross-bordereCommerceValue-added services to helpmerchants sell online Flexible Pick-Up Timings Packing Solutions Inventory Management andFulfillment Solutions Transportation and Warehousing Flexible Last-Mile Delivery Options Payments on Delivery Returns Management SMEs to extend their reachtowards new markets Web-Hosting Services Training / Consulting Services forgetting products online (e.g.Product Cataloguing) Customer Care Digital Marketing Network of partnership to easethe burden of cross-borderfulfillment17Source: Stakeholders Interviews, Market-Back Insights, A.T. KearneyUnique Identifier

eCommerce for Logistic & eFulfillment PlayerPage 1234What should you as a Logistics & Fulfillment Player do?Study the opportunities!Take action!Reach out for support!123Learn more about the best-inclass capabilities required tosucceed in eCommerceKick start strategic intentand pilot key initiatives inyour respectiveorganizationsConnect with partners andagencies to support youreFulfillment ambition18Unique Identifier

eCommerce for Payment ProviderPage 1234ePayment plays a critical role in shaping the customer and endconsumer experienceeCommerce value aceWarehousing& ileDeliveryePaymentPaymentTo further encourage consumers to migrate from cash to secured ePaymentsSource: Stakeholders Interviews, Expert Interviews, Market-Back Insights, A.T. Kearney19Unique Identifier

eCommerce for Payment ProviderPage 1234Malaysia has launched efforts to increase the use of IBG and debitcards to spur migration to ePaymentePayment National Agenda2011Key instruments to migrate to ePayment2011 to 20152012 Strengthening regulatoryframeworks2013 Expanding and enhancing themarket infrastructure2014 Promoting awareness andinstilling confidence2015Levers2017 Strengthening coordination andalignment on ePayment targets2018 Continuous infrastructureenhancement to keep pace withinnovation and meet user needs Ceilings forinterchange fee Unbundling of MDRQuality &valueproposition Faster crediting timefor IBG Payment details inbank statement Future-dated IBG Contactless feature Added security withthe adoption of chip &pin verificationAccesspoints Credit transferaccessible via onlinebanking and ATM 800,000 terminals by2020 ePayment IncentiveFund Market DevelopmentFund ePayment roadshows Media engagements Workshops Strengthening securityrequirements ePayment roadshows Media engagements Township campaigns Strengthening 20Note. IBG – Inter-Bank Giro; MDR – Merchant Discount RateSource: Bank Negara Malaysia, A.T. KearneyDebit card to displacecash IBG (Max. of 10 sen) IBFT (Max. of 50 sen)Price signal20162016 to 2020Credit transfer todisplace chequesAwareness&confidence20Unique Identifier

eCommerce for Payment ProviderPage 1234Malaysia’s eCommerce transactions is largely around online bankingand credit/ debit card transactionPayment methods for eCommerce transactions%, 2015OthersLocal Offerings(e.g. eWallets)PayPalCredit / Debit CardOnline anyMalaysiaIndiaS. KoreaBrazilChina21Source: Company websites, Press releases, The W

Source: 2012 – 2013 data from DOSM; 2014 – 2020 data from EPU, MDeC, A.T. Kearney 1 2 3 uplift 121 114 With Additional Initiatives (Uplift) Business As Usual (BAU) DOUBLE current growth projection National eCommerce Strategic Roadmap Overview Page 1 42 3. Unique Identifier 5 eCommerce is a new way of doing business – to conduct transactions electronically Buyer