ABDVol.30 No.1
Distributing Books in Malaysia: A Combination of Old and New Ways

Chin Saik Yoon

Brief Overview

The uneven pattern of book-flow in Malaysia has etched a network of distributors and bookshops in the country which is similarly irregular in configuration. The bulk of the flow is within Peninsular Malaysia, with the greater part of that bulk coalescing in the vicinity of Kuala Lumpur, the capital. Malaysia's book trade is marked by the multilingual composition of the titles distributed and sold in the country. Citizens read and speak Bahasa Malaysia, English, Chinese, and Tamil. The sizeable expatriate Japanese community living in Kuala Lumpur and Penang have created a significant niche market in these two cities for Japanese publications as well.
 The trade is organised in the conventional manner of distributors supplying large and small bookshops, and newsstands. Distributors distinguish themselves according to a combination of factors: their geographical coverage, and content and linguistic specialisation. The business is segmented in two parts: the school and university textbook sector: and the mass consumer market.
 Within the past year, a couple of online bookstores have been set up to promote and sell books over the World Wide Web of the Internet. These virtual bookshops represent the fledgling new generation of book distributors and shops in the country.

The Conventional Malaysian Book Trade

This review of book distribution and selling in Malaysia is based on the best estimates of selected members of the trade since no systematic survey data of the industry is currently available.

School bookshops:
The school textbook market comprises the 7,000 odd schools in the country. About half of the schools are served by on-campus bookshops. These bookshops obtain their supplies from local distributors, many of whom own and operate some of the school bookshops.

University bookshops:
There are 11 universities in Malaysia. All the campuses are served by bookshops. As several of the universities operate multiple campuses the total number of university bookshops is about 15. They are supplied by scholarly book distributors based in Kuala Lumpur and Singapore. The bookshops also order directly from local and international publishers. The university bookshops serve a secondary role of supplying various ministries and departments in the government with reference texts, and electronic products such as CD-ROMs. Their approved registration with the Malaysian Ministry of Finance to bid for government tenders enables them to act as contractors for the significant orders placed by the public sector.

Consumer outlets:
The consumer market in Malaysia is served by about 25 major book distributors. About half this number are based in the vicinity of Kuala Lumpur. Many of the distributors specialise in one of the three more frequently used languages: Bahasa Malaysia, English, and Chinese. While several of them have sales networks which cover the whole country, some of them have elected to operate geographically restricted networks which include just a few states, or provinces. These distributors in turn each supply an estimated 500 to 600 bookshops or outlets. Many of the bookshops are independently owned and operated as small family businesses. These shops tend to be housed within small premises and offer a limited range of titles. The larger bookstores are nearly all owned and operated by one of the four chains found in the country. Popular Book Co., MPH, Berita and Times Bookstores together operate about 50 large outlets in Malaysia.
 The largest chain is Popular. Apart from its size, the chain has attracted much attention within the trade for its aggressive plans to franchise small outlets within its chain to independent owners and operators. Nine such franchise holders have already commenced business since 1996 when the concept was launched, most of which are located in the Klang Valley, in the immediate vicinity of Kuala Lumpur. The chain is aiming to launch a further 10 such outlets by the end of 2000. Each franchised outlet is operating out of stores measuring 1,000 to 1,500 sq. ft. (as compared to store sizes ranging from 10,000 to 26,000 sq. ft for Popular's self-operated large outlets). Under the franchise, Popular helps in identifying suitable business premises and stock, and also provides advice on operational and marketing strategies. The aim is to develop businesses which register sales of about RM50,000 (US$12,800) per month. Popular charges a royalty of between 3.5 and 4.5 percent from these franchise holders.

Trade discounts and pricing:
The industry-wide norm for the country for sales discount is as follows, calculated from the cover or retail price of titles: Distributors: 40-45 percent; Bookshops; 25-35 percent.
 For imported books, the trade uses an inflated exchange rate for computing the prices of titles from foreign houses. The higher rates, and hence higher prices, are justified as compensation for transport and handling costs by the trade.

Beginnings of Virtual Stores

The global trend of setting-up virtual bookstores on the World Wide Web has attracted a small number of Malaysian pioneers on to the Internet. They are drawn to the 'Net' by a number of factors: the low costs of establishing a virtual bookstore; potential of reaching a global rather than local clientele; possibility of increasing revenue by selling direct to the customer (particularly in the case of publishers); and strong policy support from the Government.
 Policy support has been provided on two fronts. The first is a good infrastructure to provide convenient and affordable access to the Internet for both consumers and the industry. A major investment is being made to build the Multimedia Super Corridor (MSC) which will act as an impetus and proving-ground for the new information and communication technologies (ICTs). The MSC is a geographical area 15 kilometres wide and 50 kilometres long stretching out from Kuala Lumpur. State-of-the-art computer networking technologies and facilities are provided within this zone to facilitate and support national and multi-national companies in their operations. Visit www.mdc.com.my for more information on the MSC.
 On the second front, is a set of innovative legislation comprising the Communications and Multimedia Act 1998, which addresses the unique issues presented by the new ICTs, and the attendant potentials and risks of doing business via these technologies.
 For publishers, copyright safeguards have been enacted to protect intellectual properties created and disseminated using the new ICTs. For consumers, regulations are in place to ensure safe commercial transactions over the Net. In order to promote small business transactions which are typical of consumer purchases, a system of 'smart-cards' are being designed and tested for the country. The cards will act as charge or credit cards for payments made through the Net. These cards incorporate software and hardware safeguards to protect against fraud and misuse.
 Three online bookshops which are perhaps reflective of the alternative strategies being tested by the industry may be visited at:

The Star Online Financial Bookshop: http://thestar.com.my/bookshop
This virtual bookshop is a department of the very popular website belonging to the Malaysian tabloid newspaper "The Star" which is published daily in the English language. The bookshop is a niche store specialising in books on investment. Visitors to the bookshop use a search engine to carry out a keyword search on their subjects of interest. They can also search for particular authors. Searches are carried out on a database or catalogue which contained 1,100 titles as of mid-June 1999. The majority of titles are imported from overseas publishers. This bookshop aims to sell to an international market, and the global nature of its marketing strategy is apparent from its ordering software "shopping cart" which provides for orders from all regions of the world.

Asiabooks.com: http://www.asiabooks.com.my
This site is probably the closest adherent to the conventional "bookshop" metaphor. It offers books from a variety of publishers and on a diversity of subjects. It was launched in the last quarter of 1998 and has since catalogued about 2,000 titles from 80 Malaysian publishers. The company has three objectives: to compile a comprehensive national bibliography; provide a nationwide online book ordering service for libraries and bookshops; and to become an online distributor of content. Asiabooks.com has an ambitious plan for growth. It hopes to add an antiquated and out-of-print list to the site soon. After that the site plans to expand beyond Malaysia to include books from the People's Republic of China and Taiwan, music CDs, CD-ROMs, VCDs, and subscriptions to specialised serials. This is a site to follow closely as it is operated by experienced and highly respected members of the trade. While it was originally established to serve Malaysians, it is astutely designed with the potential of serving as the portal site for Malaysian and Asian books in the future.

Southbound: http://www.southbound.com.my
This website is published by the author and represents an attempt by a highly specialised scholarly publisher based in Malaysia to sell its titles directly to an international market, by-passing the conventional network of distributors and bookshops. It provides visitors with access to its catalogue, a brief summary of the contents of each book, the contents page, and the full text of one chapter of each book.

The Future

There is no doubt that the conventional network of distributors and bookshops will thrive and remain as the backbone of the trade for the immediate future; particularly in the school book sector. The future of the consumer market is less clear. Neighbourhood bookshops may diversify from a stock comprising purely of books to one which offers a variety of products: stationery and supplies, music CDs, CD-ROMs, and other digital products.
Bookshops dealing with the high-end book market, selling scientific, technical and scholarly books and journals published in the English and Chinese languages may face stiff competition from the new generation of virtual bookshops. This may be due to the competitive pricing, wide selection of titles, and speed of delivery offered by Internet-based stores. However, with the borderless world of the Net, this shift in business will very likely not be confined to the geographical borders of Malaysia. Malaysians are already shopping abroad, at sites such as Amazon.com. The challenge to the Malaysian industry will be to retain as much of the local business as possible, and to tap some of those from abroad at the same time.

Chin Saik Yoon
He is founder and publisher of Southbound, a specialised house for development research titles. Southbound copublishes regularly with various United Nations agencies. He is currently a member of the board for the UNESCO Chairs in Communication, and a member of the advisory committee for the 1999 World Information and Communication Report. He has undertaken global market surveys for electronic information products aimed at an international market; and currently collaborates on a number of regional initiatives aimed at creating online access and content for developing countries.
Southbound: http://www.southbound.com.my