Special COVID-19 Report: Impacts on Business, E-commerce & Dropshipping in Malaysia

COVID-19 is changing the way we live and work. There’s little doubt that by the time the Movement Control Order (MCO) lifts in Malaysia, we’ll go back to a world far different from the one we left.

For business owners and those interested to start a new venture, these pandemic-led changes can bring uncertainty to their plans. Should you continue investing in marketing? Should you shut down your brick-and-mortar business? Should you start a drop-shipping business?

While I don’t promise to have all the answers to these questions, I thought it would be useful to share some trends I’ve noticed to help you better understand how the pandemic is affecting businesses in Malaysia.

First, let’s take a quick look at how the COVID-19 situation developed in Malaysia, and our government’s response to it was like.

COVID-19 in Malaysia (Brief Timeline)

January 25, 2020

First COVID-19 Case in Malaysia

A 66-year-old man in Malaysia tests positive for COVID-19.

January 25, 2020
March 17, 2020

First COVID-19 Death

A 60-year-old man from Sarawak becomes first Malaysian to die from COVID-19.

March 17, 2020
March 18, 2020

Movement Control Order (MCO) Starts

All businesses in Malaysia ordered to close except for those in essential services.

March 18, 2020
March 27, 2020

RM250bn Stimulus Package Announced

Government announces second economic stimulus budget focused on Malaysians in the B40 income group.

March 27, 2020
April 6, 2020

RM10bn Stimulus Package Announced

Third economic stimulus budget focused on SMEs announced.

April 6, 2020
May 5, 2020

Conditional MCO Announced

Conditional MCO, allowing most sectors to open, announced in Putrajaya on Labour day.

May 5, 2020

Is Anyone Thriving in Pandemic Season?

The short answer is yes.

Even with dooms-day messages everywhere about SMEs shutting down, there are both winners and losers during this time.

So, what types of businesses thrive, and what others fail?

My observation leaves me to believe that whether a business thrives during this season hangs on two things:

  1. The products they sell, and
  2. Their business resilience

Let’s take a closer look at these two areas:

The Products They Sell

Businesses that are most likely to do well right now are those selling in-demand products. What’s in-demand, however, changes based on where we are right now on the pandemic and MCO timeline:

Phase 1: Essential Goods & Services

In the first phase of MCO, Malaysians went into survival mode and so we see most of the buyers’ money going into essentials like groceries, toilet paper and so on.

The first thing that grows at this phase are online stores selling essential items.

If Singapore’s Sheng Shiong handing out a 1-month salary worth of bonus to its employees is any sign, it’s most likely sales have at least doubled at grocery chains nationwide.

For businesses selling groceries, especially those with existing e-commerce infrastructures, Phase 1 of MCO likely brought in a massive increase in revenues.

Phase 2: Beyond Essentials – “Hair Colour” Phase

As we move beyond essentials, we enter what Walmart CEO calls the “hair colour” phase.

With people adjusting their life and work within the restrictions of the MCO, their buying interests expand beyond essentials to include items not just for survival but to enhance their quality of life.

We are moving up Maslow’s hierarchy of needs.

maslow’s hierarchy of needs

Businesses selling products or services that fulfil the needs in this phase will also experience massive gains. The best products to sell at this phase are those that can support life or self-enhancement at home. These include home workout equipment, hair dye, toys for kids, grooming kits and so on.

Their Business Resilience

Only when the tide goes out do you discover who’s been swimming naked.


When times are good, being careless with our money won’t cost us much – we’ll just wait for the next paycheck to arrive.

However, if a lack of financial prudence has always been the rule rather than the exception in a business, they’ll likely be in for a rude awakening in trying times like now.

Even if a business is selling products and services people want now, they may still struggle to survive if your business fundamentals are weak (low cash, high debt, low margins, high credit).

In short – the more resilient businesses are more likely to come out as winners compared to their less resilient counterparts.

Businesses Hard-hit by the Pandemic

It’s probably obvious that the first businesses hit by the MCO are businesses that depend on walk-ins or physical use of space. These include:

  • Hotels, hostels, Airbnbs
  • Co-working spaces
  • Kindergartens, daycare centres
  • Supply chain dependent businesses
  • F&B
  • Events

Combined, these businesses make up a significant part of our local economy. And a lot of them, unfortunately, are shutting down.

So, Should You Still Start a Business/E-commerce Store/Dropshipping?

Yes, but under two conditions.

First – you must be able to afford it. You need to have at least 6 months in emergency funds before you invest in any business now.

The reasons are simple: the market is volatile, and you might lose everything if you don’t anything to back yourself up.

Second – do your research and understand the changes in consumer trends. Google Trends is always a good place to start. If you are into local e-commerce, do an extensive study on fast-moving products on marketplaces by observing the review dates on products – the more the reviews and the more recent they are, the higher the product is in demand. Facebook groups are also a good way to gather insights.

I’m only scratching the surface here, but I hope you get my point.

To summarise: you can start a business now, but manage your finances and spend a lot of time planning everything first. Be a keen observer of trends as this will shape most consumer decisions for the next 6 – 18 months.

Prepare for the Next Pandemic

Understand: COVID-19 is not a black swan (it was predictable)

As much as we’d like to pat ourselves on the back and say, no one could have known, it’s not true.

At least two of the world’s most popular thinkers, Bill Gates and Nassim Nicholas Taleb (NNT) did “predict” a pandemic of this scale.

In this famously viral video now, Bill Gates talks about how unprepared we are for the next outbreak in 2015:

Similarly, NNT described the potential scale of epidemics in his book The Black Swan 13 years ago:


Neither Bill Gates nor NNT have special crystal balls they look into for ideas on what the future might look like.

The predictions were likely the result of a thought experiment and modelling.

It may not arrive in the form of a pandemic. Every catastrophe shares common

Prepare: Pandemic-proof your business

(I’m using the term “pandemic-proof” loosely here, but I think you get what I mean)

As we observed above, a business will survive if they fulfil two factors: selling products people buy under strict restrictions and having a business with good fundamentals.

While we can’t predict consumer trends, what we can control is our own business fundamentals. A business with good fundamentals will be agile enough to adapt to changes that come their way. One with poor fundamentals, however, is fragile, and likely to break apart at the instance where sweeping changes take over.

A few ways to pandemic-proof your business:

  • Reduce unnecessary debt – don’t take on more debt than you need to
  • Increase your cash reserves – prepare a 6-month safety net
  • Diversify (reasonably) – don’t put all your eggs in one basket
  • Cut the fat – don’t hire unnecessarily either

Again, I’m just scratching the surface here, but the point stands: build good business fundamentals.


Life and work aren’t going back to how it was before March 2020 in Malaysia. The MCO won’t – and can’t – last forever, but its impacts will.

If you are in a business where it’s unlikely for you to continue or restart even after the MCO lifts, I have only one piece of advice for you: start a fresh one based on the current demands.

Do anything to survive.

If you’re on the verge of deciding whether to start a new business, my advice is to go ahead, but use new data. Give up on whatever assumptions you have and be open to accepting recent trends and buyer behaviours.

In short, the adaptable will thrive, and the rigid will die.

What are your thoughts on starting and running a business in the current pandemic season? Share them with me in the comments below!


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Welcome to Entrepreneur Campfire and thanks for reading my articles

Lu Wee here, and I am the pen behind Entrepreneur Campfire. I like diving deep into business trends, review business tools and create in-depth tutorials for people just like you.

If you have any questions about your business, or want to collaborate, send me a message.

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