E-commerce complaints: Malaysian industry calls for clampdown on ‘unauthorised’ online sales

MADSA said its association members, which include supplement brands and direct-selling firms, have voiced concerns on the sale of their products via unauthorised retailers on third party e-commerce platforms.

Products sold via these channels are not registered in Malaysia and therefore do not come with a MAL registration number​. They are usually sold at a lower price as compared to those sold in pharmacies. 

This puts dietary supplement firms at a disadvantage since they had paid registration fees to get their products to be sold in the country, which is something merchants selling online can circumvent via cross-border e-commerce.

While the problem is not new, it has magnified since the COVID-19 Movement Control Order (MCO) was enforced in the country during March last year, ​general manager at MADSA, James Pereira, told NutraIngredients-Asia.​

He said that consumers have been buying more dietary supplements due to the pandemic and low-priced products on third party websites have become widely popular.

“Since the MCO started last year, we reported more of such issues, which is about a three-fold increase as compared to before the MCO.” ​

He told us there were two patterns of supplement sales on third-party e-commerce sites, one is legitimate and involves authorised pharmacies partners selling the products via their official accounts on these sites. An example is Watsons’ Official store on Shopee and Lazada, he pointed out.

Unauthorised sellers, on the other hand, he said, included pharmacies based overseas or individuals who could get their supplies from overseas.

Due to the proliferation of unauthorised online retail sales, the association is urging the authorities to create new laws with tough penalties and has since wrote to the authorities.  

“Our proposal is to target the e-commerce platform as well as the merchant selling on the platform. So far, there is no penalty for the e-commerce platforms for facilitating the unauthorised sales of dietary supplements.” ​

The letter to the authorities proposed to “impose a fine and/or imprisonment for owners, managers and directors of locally based merchants who sell unregistered supplements on any Malaysian e-commerce platforms and websites.”​

It also proposed to “impose a fine and/or imprisonment for owners, managers and directors of Malaysian e-commerce platforms and websites who facilitate local and/or foreign merchants that sell unregistered supplements.”​

In Malaysia, natural products, including herbal and traditional products, are required to be registered.​

“Companies need to pay a large sum to get their products registered for sale in Malaysia. Allowing the sale of unregistered dietary supplements by unauthorised individuals is unfair to the companies which have registered their products,”​ Pereira said.

He added that allowing such retail practice also puts the brands’ reputation at risk, as the products have entered into the country without the relevant custom inspection.

“There is also no guarantee that the products were stored and transported using the correct methods. Using the wrong storage and transport means could compromise the products’ quality and make them less effective,”​ he said.

Moving online ​

On the other hand, brand owners themselves are seeking new retail channels, such as working with healthcare practitioners’ platforms in selling dietary supplements amid falling foot traffic to pharmacies.

Due to the worsening spread of COVID-19, Pereira said that offline pharmacies retail hours have shorten while consumers were also less willing to visit pharmacies, especially those located inside shopping malls.

According to MADSA, Malaysia’s dietary supplement market was worth between RM$2.1 bn (US$519m) to RM$2.2bn (US$544m) last year and pharmacies were the main retail channels.

In view of falling foot traffic to pharmacies, Pereira said brands, including its member companies such as Bayer, Blackmores, and Cambert – the firm behind the brand Kordel, have been working with digital healthcare platform “DoctorOnCall” in selling their products.

Other brands available on the website include Flavettes from Duopharma and Neurobion.

In the upcoming months, the association will also publish quarterly reports to member companies in order to inform them of changes in consumer spending trends.