E-commerce struggle: Brands with strong pharmacy presence reluctant to make digital shift in Malaysia
The Malaysian Dietary Supplement Association (MADSA), which has 28 health supplement firms as its members, said only one or two of them have strong presence in the e-commerce space.
The others, consisting of both local companies and MNCs, preferred to rely on the traditional methods, such as pharmacies and multi-level marketing, James Pereira, GM at MADSA told NutraIngredients-Asia.
“I do not know of any member company which has successfully implemented e-commerce as a result of the Movement Control Order (MCO). After the MCO is over, they have gone back to the old ways of doing business,” he said.
The Malaysian government implemented the MCO on March 18, where movement was restricted and only the ‘essential’ services were allowed to operate.
As the supplement industry was not considered ‘essential’, in the initial days of the MCO, dietary supplement manufacturers were not allowed to operate their factories or open their retail shops. It was only two weeks into the MCO when the supplement industry was considered ‘essential’.
A wake-up call
For companies which rely on pharmacies to sell their products, some were completely caught off-guard when the Malaysian authorities did not allow promoters to be stationed in pharmacies.
“For members who rely on promoters to promote their products, they were completely caught off-guard because the promoters were not allowed to work in the pharmacies,” Pereira said.
He said that that episode was a “wake-up call” for them to adopt e-commerce strategies.
“Some companies were solely dependent on pharmacies to sell their products and they have no e-commerce or online presence at all, and so, the MCO was a wake-up call for them to discover and encourage them to start looking into e-commerce.”
On the other hand, for companies which are dependent on sales representatives, their inability to transit to digital tools meant that they had to rely on phone calls to stay in touch with the consumers.
When it comes to consumer outreach, he also noticed that apart from the MLM firms, almost none of its members have the means to target their consumers individually.
The lack of digital engagement was not helping the situation either.
“In order for them to reach out to the end-users, they need to have some kind of digital engagement such as email marketing, which doesn’t exist for any of our members.
“Except for the MLM guys, almost none of our members know who exactly their end-users are. There are dependent entirely on the pharmacies, clinics and so on,” he said.
Why the inertia
While adopting e-commerce was a way to push product sales, some were reluctant or had problems in operating their own online businesses.
A reason was due to the lack of awareness on the e-commerce platforms available and the lack of the know-how in setting up online business.
Another reason is because they were hesitant in setting up their own online business for the fear of offending the pharmacies.
“They (brands) were reluctant because they do not want to anger the pharmacies, where the bulk of their products are being sold,” Pereira said.
E-commerce…Not all are the same
Even if the brands do sell their products online, it was mainly through the pharmacies’ e-commerce platforms or through major e-commerce platforms such as Amazon.
“This is not enough, unless it is a popular product, there is no way a product is going to sell on the pharmacies’ e-commerce sites,” he said.
Few are selling the products through their own websites. Even if they do, it is not a key sales channel because consumers do not have the habit of buying products straight from the companies' official websites.
A recent consumer survey that MADSA had published in May showed that the bulk of consumers in the country rely on health care providers for recommendations on health supplements.
Asked if this could be the reason why firms were seeing little value in e-commerce, he likened this to a “chicken-and-egg” situation.
“If the brands put in the effort (on their digital channels), maybe consumers will go straight to the brands for reliable information,” he said.
Charting the way forward
The current priority of the association is to educate its members on e-commerce use.
In case of strict movement restrictions being reintroduced - which is already seen in some cities such as Victoria, Australia due to the recurring COVID-19 spread - the association is engaging the authorities to ensure that all policies for the dietary supplement industry are already set in place from the start.
During the March MCO, the supplement companies were only considered essential two weeks into the lockdown.
Pereira pointed out that even so, there has been confusion amongst the law enforcers, with police ordering dietary supplement retailers to shut down their outlets.
“We want to make sure that the nutraceutical industry is categorised as an essential service right from the start.
“We don’t want an individual policeman or the municipality to make their own decision,” he said.
Aside from confusion amongst law enforcers, some dietary supplement firms were unable to get the approval to operate, as they were working with distributors who were not from the ‘essential’ healthcare industry.