Issues and Trends in Online Purchases in the Malaysian Halal Cosmetics Industry

International Journal of Advanced Science and Technology Vol. 29, No. 3, (2020), pp. 10055 - 10061

RosziNaszariahNasni Naseri1 * and NorfaridatulAkmaliah Othman2 1Universiti Teknikal Malaysia Melaka and UniversitiTeknologi MARA Melaka, Malaysia 2Universiti Teknikal Malaysia Melaka [email protected], [email protected]

Abstract The global halal industry has emerged as a new sector in the global economy that is rapidly expanding and establishing a strong presence in various developed countries. At present, the halal industry has expanded beyond food products and is further tapping into the economic potential of halal cosmetic products. This paper aims to enhance the understanding of the concept and definition of halal cosmetic products and provide an overview of the issues and current trends in e-commerce in the global arena and more specifically, Malaysia. This study also highlights some of the halal cosmetic products that have been successfully sold through e-commerce platforms. Owing to the growing importance of halal-certified cosmetics and personal care products, this review addresses the current state of the halal cosmetics industry and e-commerce developments in the halal cosmetics sector.

Keywords: Online purchase; online shopping; halal; cosmetics industry; issue; trends; Malaysia

1. Introduction

The rise of the internet usage worldwide has created a new phenomenon of consumer behaviour, in which the consumers‟attention has shifted towards online purchasing. According to the Internet World Statistics [1], there are over 4.6 billion internet users globally, thus representing a 1,187% increase in growth compared to the global population of internet users in 2000. This trend indicates that online shopping has a lot of potential and benefits to societies and businesses worldwide. Many traditional consumer-oriented businesses and start-up projects alike have been gradually shifting away from business models that are shop-based to those that are virtually borderless and customer-centric. According to John and Wichayachakorn [2], the most crucial factor that influences online shopping is convenience. Hence, with the rise of internet usage, the convenience offered by the internet has led many companies to use online advertising as an important tool to provide information, create brand awareness, and influence customer perception and attitudes [3]. In Malaysia, online purchasing is gaining popularity and growing rapidly among consumers. The convenience offered by websites such as practicality as well as reduced time and energy has strengthened buyers‟ intention to make online purchases [4]. Based on the findings by the Malaysian Communications and Multimedia Commission [5], the adoption rate of e-commerce mainly comprise individuals aged between 20 to 30. This finding is consistent with the global Online Consumer Report [6] indicating that the majority of online consumers belonged to this age group.

International Journal of Advanced Science and Technology Vol. 29, No. 3, (2020), pp. 10055 - 10061

Many initiatives and programmes in Malaysia have been carried out by the government to promote e-commerce. One of the initiatives performed as part of the Malaysian government policy in e-commerce is “making digital tangible” that aims to enable Malaysian businesses to move towards digitization [7]. Various technological developments have improved customers‟ intention to purchase via the Internet as many products are now available online. A study by the Malaysian Communications and Multimedia Commission [5] showed that there are various products such as clothes, furniture, computer equipment, and many more being sold on the internet. One of the growing online product purchases is cosmetic products. As shown in Figure 1, both genders were buying cosmetic products, with 64.7% of women and 35.3% of male consumers purchasing cosmetic products online [5].

Figure 1. Types of Goods or Services Purchased According to Gender [5]

2. Halal Cosmetics Industry

Malaysia has experienced a rapid increase in the beauty and health industry over the past few decades. According to the recent report from Euromonitor [8], Malaysia‟s strong GDP growth of 5% indicated that consumers were more confident in buying various beauty and personal care products such as colour cosmetics and skincare products. The significant growth in the beauty and health industry is due to several reasons such as the development of latest trends in fashion and beauty [9]. Hence, consumers are willing to spend their money on beauty products to keep up with the latest trends and fashion. This trend is also due to the positive evolution of the Malaysian workforce. Besides, exposure to international fashion styles and beauty trends has also influenced the growing use of cosmetic products in Malaysia [8]. To date, the majority of Malaysians are actively involved in employment, thus leading to a rapidly increasing growth rate of 9.4% annually in the cosmetics industry in Malaysia. The increasing trend in the purchase of beauty products is largely due to young professionals having higher incomes and are thus able to afford it [9].

International Journal of Advanced Science and Technology Vol. 29, No. 3, (2020), pp. 10055 - 10061

According to Statista [10], the cosmetics and toiletries industry in Malaysia is presently valued at US$351 million and it is expanding with a growth rate of 13.6% annually. Moreover, consumer buying patterns have also changed due to the influence of branded international retailers and social media on consumers [9]. Nevertheless, the use of cosmetics and personal care products that are „halal‟ is a priority for Muslims. Phuah and Wan Jamaliah [11] defined „halal‟ as the “products that are lawful or permissible to be consumed or used”. Khattak [12] indicated that the ingredients used in various cosmetics and personal care products were always a concern for Muslim consumers. According to Euromonitor [8], the growth of halal-certified products among the Muslims in Malaysia has led to the demand for various halal beauty and personal care products. The growth of the halal cosmetics industry in Malaysia is very encouraging. In addition, the industry has been gaining substantial attention from various industry players [13]. The global Muslim population market size is expected to reach 7.4% billion in 2050 (Pew Research, 2018) [14], thus creating many opportunities for the growth of the „halal‟cosmetic products and personal care industry. Moreover, the rising economic strength of various Muslim countries has enabled them to spend more money on beauty products and personal care products [15]. According to Halal Development Corporation Berhad [16], Malaysia is a pioneer in the halal industry with more than 40 years of experience in the development of products in the industry. There are several institutions and governmental organizations that promote the use of halal products such as cosmetics for local customers and the export market. For instance, JAKIM (Department of Islamic Development Malaysia) and MATRADE (Malaysia External Trade Development Corporation) are the institutions responsible for promoting halal products in the local and international markets and for ensuring that these products are „halal‟.

3. E-Commerce in the Halal Cosmetics Industry

There are several strategic plans by the government to support the trends in online shopping. For instance, in the Halal Industry Masterplan 2030, Malaysia has stated their intention to embrace the „internet of things‟ for a brighter future and to facilitate more competitive Bumiputera participation in the halal industry [16]. At present, Malaysia is listed among the top 10 producers of halal cosmetics in the world. The profitable beauty industry has seen the rise of several independent local beauty brands, whereby some of the top homegrown brands in halal cosmetics and skincare are SimplySiti, Pretty Suci, Sol.ek, Nurrasysa, Duck Cosmetics, and Elhajj Halal [17]. The majority of these companies have either their own product website or use other online platforms to sell and promote their halal cosmetic products. Some of the websites include Didaforwomen.com (Dida for women), Prettysuci.com (Pretty Suci), SolekCosmetic.com (So.Lek) and Fashionvalet.com (Duck Cosmetic) [18]. The increasing demand for halal cosmetic products has led various local firms such as Southern Lion Sdn. Bhd., Wipro Unza (Malaysia) Sdn Bhd., and Simply Siti Sdn. Bhd. to obtain halal certification for their products. A report featured in Salaam gateway, the largest online directory for halal products, has indicated that other multinational companies such as Johnson & Johnson Sdn. Bhd. as well as Colgate-Palmolive‟s mouthwash and toothpaste brands have also followed suit, while Japan‟s Shiseido Company now has 28 halal-certified products under its Za cosmetics brand. On the other hand, South Korea‟s Talent Cosmetic Co. was the first Korean company to become halal- certified in Malaysia, with 147 of its 550 cosmetic products now being certified as halal [19]. These halal cosmetic products have been distributed through a few different platforms to the customer. According to Mordor Intelligence [20], the distribution chains of halal cosmetics include supermarkets, specialty stores, convenience stores, and online stores.

International Journal of Advanced Science and Technology Vol. 29, No. 3, (2020), pp. 10055 - 10061

However, Statista [21] reported that the sales of these halal cosmetic products were still low as compared to other distribution mediums. It should be noted that while the percentage of total online retail sales is growing, most of the consumer purchases still occur in shops. As seen in Figure 2, the sales of halal cosmetics through the online platform have been lagging since 2017 and it is projected to increase starting 2021-2024.

Figure 2. Sales Channels in the Personal Care Segment [21]

The observation of this trend is due to the lack of understanding about online shopping and its influence on marketing and advertisements (Chua, Khatibi& Ismail, 2006) [22] as well as insufficient knowledge on factors that influence online shopping and consumers‟ attitudes (Muniandy, Al-Mamun, Permarupan&Zainol, 2014) [23]. This trend was also observed by Harn, Khatibi and Ismail (2006) [22], Ahasanul Haque et al. (2009) [24], and Lim et al. (2016) [25] who reported that online shopping in Malaysia is still evolving and less familiar among consumers. According to the Malaysia Digital Economy Corporation (MDEC) [26] report in 2019, Malaysia is still at the initial stage of e-commerce maturity and it lags behind other Asian countries such as Singapore (figure 3). Therefore, it is important to address factors that could influence the shopping behaviours of consumers (Azeem, 2012) [27]. Ignoring consumers‟ attitudes is likely to result in the limited success of a marketing strategy campaign (Ashish Bhatt, 2014) [28]. Faqih [29] also noted that the features and characteristics of online shopping were still unfamiliar to many consumers in developing countries.

International Journal of Advanced Science and Technology Vol. 29, No. 3, (2020), pp. 10055 - 10061

Figure 3. Evolution of e-commerce [17]

In addition, studies by O‟Cass and Fenech [30] and Rezaei and Ismail [31] revealed that online retailers should focus on the online purchasing intention of the internet users as a mechanism to attract them. Hence, internet retailers need to incorporate these mechanisms in the development of their general business strategies as well as their online retailing strategies. Despite the abundance of literature studies on the buying behaviour of online consumers, studies that focus on consumer behaviour in developing countries are relatively few. Moreover, it has been noted that while intentions are recognised as a precondition for making a purchase, a consumer‟s behavioural intention may not necessarily be followed by their intended behaviour [32]. Since the purchase behaviour of consumers can only be measured based on the actual sales numbers, studies on consumers‟ intentions is an appropriate method to understand consumers‟ attitudes and their feelings towards making a possible purchase [32].

4. Conclusion

In view of the increasing consumer interest and attention shown on halal-certified products, this study explores the issues and trends in e-commerce in the halal industry sector. The online shopping trend is growing in Malaysia due to the increasing use of the internet.Retailers are able to expand their e-market segment for customers who may not be able to visit the physical store to make their purchases. An important feature of online shopping is to attract customers who frequently use the internet. Additionally, another benefit of online shopping is based on their unique service that offers various online payment methods which can be an attractive feature for customers. Nevertheless, it is widely anticipated that online stores will improve their technology, thus allowing for an easier and more realistic online shopping experience. More importantly, retailers who seek to understand the factors that motivate customers to shop in-store or online will be better positioned to create diverse sales channels that fulfil their customers‟ evolving

International Journal of Advanced Science and Technology Vol. 29, No. 3, (2020), pp. 10055 - 10061 preferences and needs.As the retail industry continues to evolve and grow rapidly, retailors will require more advanced e-commerce business strategies to maintain their competitive edge (Safesforce commerce cloud, 2017) [33]. Therefore, in line with the Malaysian government policy of “making digital tangible”, it is important to understand the consumers‟ purchase intentions of Halal Cosmetic within the e-commerce platform as well as the current issues and trends regarding online purchases in Malaysia.

Acknowledgements The researcher would like to convey heartfelt gratitude to the Faculty of Technology Management and Technopreneurship (FPTT), UniversitiTeknikal MalaysiaMelaka, and UniversitiTeknologi MARA Melaka for the opportunity to carry out this study.

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