SST will not affect online sales: ShopBack

By Digital News Asia July 5, 2018

SST may push online sales if offline retailers increase their prices
Malaysians are savvy at finding deals, cashback and promo codes

SST will not affect online sales: ShopBack

SHOPBACK, an online cashback platform which partners with more than 500 online stores in Malaysia such as Malaysia Airlines, Lazada, Zalora, Taobao, Traveloka and Booking.com, foresees that the Sales and Services Tax (SST) will not negatively impact online sales.

“Given the competitive landscape, it would be unlikely for online sellers to increase prices due to SST. If they raise prices in September, customers may turn to offline stores. That’s the last thing online sellers wish to see,” ShopBack Malaysia country general manager Alvin Gill says.

He explains that there’ll be at least two e-commerce events taking place in September, namely MyCyberSale and 9.9 Rewards Day.

Customers can anticipate higher cashback as well as product offers from ShopBack and key e-commerce sellers from Sept 3, the first day of MyCyberSale until Sept 9, the last day of 9.9. Rewards Day.

“After September, Q4 2018 will see mega online sale events such as 11.11 Single’s Day, Black Friday & Cyber Monday and 12.12 Online Revolution. Even if SST poses an impact on businesses, online sellers might choose to absorb it in order to safeguard their sales in the coming months,” Alvin points out.

He also said that when GST rolled out in April 2015, many Malaysians turned online to seek cheaper options and used ShopBack for extra savings to counter the GST impact in their daily purchases. SST might push online sales growth if offline retailers increase their prices upon implementation.

“Malaysians are sensitive to price adjustments and savvy at finding deals, cashback and promo codes. In fact, we saw a 30% sales increase on the 1st of June when GST was adjusted to 0%.

“However, we don’t think consumers will rush to buy before September. Most of them are keeping a ‘wait-and-see’ sentiment until the next online sale event. The government has also assured Malaysians that SST won’t trigger inflation so we are pretty confident it won’t affect e-commerce performance.”

Malaysians don’t trust social media ads

According to Alvin, to further encourage online spending, there are several customer pain points that need to be addressed before the big sale events start.

ShopBack Malaysia recently did a survey with 300 customers who made a purchase during its Raya campaign, and found that customers avoid purchasing

Large household appliances (i.e. TV, washing machine),
Motors (i.e. engine oil, accessories), and
Insurance online.

“Customers prefer to get these offline because they could better assess quality and get it fast. Furthermore, shipping fees can be waived when customers buy at offline stores. As such, online sellers who are able to guarantee product quality (warranty programme), shorten shipping time and offer free shipping will surely have a competitive advantage,” Alvin explains.

“When analysing what factors help customers in their purchasing decision, we found that consumer review sites are most trusted after family/friends recommendations. This suggest that online marketplaces and sellers should strengthen their after-sales service and offer some bonus or freebies for customers who leave reviews. Interestingly, we found that 60% of customers are less likely to trust advertisements from social media and celebrities.”

Since February 2015, ShopBack has been working with online stores to provide up to 30% cashback to users and helped them save more than RM25 million.

For the recently concluded Raya campaign, ShopBack gave out approximately RM1million of cashback within one month.

Currently, more than one million Malaysians are using ShopBack for their daily purchases. The cashback savings can be transferred to a user’s bank account upon validation. Other than Malaysia, ShopBack also operates in Singapore, Thailand, Indonesia, the Philippines, Taiwan and Australia.