Examining the AI Technology development of Lazada Malaysia

Source: https://theedgemalaysia.com/content/advertise/lazada-becomes-go-to-e-commerce-platform-for-merchants-and-consumers-during-uncertain-times

Introduction

The rapid transformation of the digital economy and the continuous improvement of internet technology have led businesses to do online shopping through e-commerce platforms such as Lazada Malaysia. Recently, Lazada Malaysia, an e-commerce market, has thrived, resulting in a remarkable growth rate. In 2025, the revenue of Lazada is estimated to be around 16 billion USD, where it is one of the top shopping sites for Southeast Asia (Loh, 2025).  There are around 25.84 million current users and roughly 16.53 million online shoppers, which account for 80% and 50% of the population, respectively ("Malaysia Country Commercial Guide," 2019). Businesses have experienced an unprecedented progression in sales, resulting in revenue growth. The brand also presented the usage of artificial technology (AI) to transform Lazada to operate efficiently, which regards as one of the prominent e-commerce platforms in Southeast Asia. To understand the complexity of this e-commerce site, this study will examine the technological innovation and consumer behavior patterns of AI technology on Lazada Malaysia, which is one of the successful e-commerce platform for online shoppers.

Discussion of the Trends

AI Technologies

The rise of AI-powered e-commerce has shifted the attention of AI technology to 63% in Southeast Asia marketing, including Lazada Malaysia (Ravimalar, 2024). Lazada Malaysia currently uses so-called AI-powered technologies. It has adopted various types of artificial intelligence by the e-commerce platform. According to Lazada, about 68% of the online sellers are well aware of the employment of AI on Lazada Malaysia. The high percentage of allowed businesses to increase productivity as the technologies meet sufficient needs and to the business owners. Moreover, the presence of AI provides cost-savings and long-term benefits where it could lessen the time-consumption and slight human intervention (69 Percent Malaysian Online Sellers Have Good Understanding of AI - Lazada, 2025). The purpose of introducing AI in e-commerce platforms is the develop AI solutions that are accessible and address the existing issues faced by the vendors. For example, a business owner who struggles with the high volume of sales. In this case, the sellers have insufficient time to provide details and engage with the numerous orders. As a result, an AI-powered chatbot was established to enable the function of a human and become a virtual chatbot in assisting human needs. Another interesting point is that Lazada introduced AI Lazzie, which is regarded as a virtual assistant that suggests a personalized online shopping experience and AI recommendations to consumers. For instance, a messaging function on Lazada prompts messages to customers after the purchase. It states the appreciation messages, production suggestions, and exclusive coupons for future purchases. Additionally, the AI technology also provides augmented reality (AR) to their respective clients on certain products to try on without having to go to the physical stores. It is time-saving and productive for both consumers and business owners, where both maximize their purchase interests. The evolving roles of AI and the usage of AI in the digital economy have unlocked potential growth and improved customer experiences in every aspect of marketing experience (Zhang, 2024). A virtual assistant, sometimes refers to as a Chatbot, which is built by AI and machine learning technologies, which gives it the ability to behave like humans. It interacts with customers, ranging from providing product recommendations to customers, follow-up questions, tracking orders, and customer services (Afrina et al., 2025). Furthermore, features such as image search allow consumers to effortlessly search and find products they wish to look for by uploading the desired image or item on that platform. The built-in technology utilizes AI and large data analytics to hasten the product-discovery process for shoppers. Thus, the shoppers feel helpful and enthusiastic about the feature, making them more positive towards the brand. AI technology is also central to logistics and inventory management. For example, when consumers purchase products on the e-commerce site, the product algorithm will determine the stocks and provide a predictive estimate of the delivery time. In this regard, it is very helpful in monitoring the stocks efficiently and effectively. It also ensures that the consumers get the information about the delivery details accordingly. (The Future of Online Shopping: Lazada’s Vision for AI-Driven Personalization, 2024). As a result, the merchants can observe and cope with the stockouts and overstocking, while communicating and preparing with the upcoming demands for customers to avoid delay or products that are likely to run out of stock (Brown et al., 2024).

Fraud Detection System

In 2021, the brand reported that there had been a rise in cybercriminals who disguised themselves as e-commerce platforms, which as Lazada Malaysia. The scammer would ask the customers to make online payments to their respective banks rather than its payment platform. The customers were unaware of this situation, which resulted in the loss of Rm 200,000 in financial losses. There were various cases regarding the fraud, losing over RM 219,271. Lazada Malaysia had to pay the victims for falling into this kind of malicious attack to resolve the cases. In addition, the new SMS phishing attacks with an illegitimate link target customers to steal credentials and data from famous people, such as actors and enterprises. The targeted attacks would likely aim at the young adults and older people, who are slightly unaware of the possible scamming issues. Additionally, the attack also appears to target businesses, companies, and organizations. On the other hand, the brand started to employ multiple tactics such as customer awareness, SMS messages to prevent future attacks (Cyber criminals in Malaysia are posing as Lazada agents, 2021). Presently, the rise of online shopping activities is increasing rapidly, resulting in a remarkable climb in the digital economy sector. As the online transactions are going up significantly.  Many e-commerce platforms, including Lazada, have come up with effective methods to reduce suspicious fraud activities such as scamming, phishing, and money fraud. The adoption of transaction technologies has a tremendous impact on businesses' growth and on buyers. The machine learning in detecting fraud achieved a 93% accuracy of detection rate in identifying scam websites and illegal tricks to lure the victims (Azzuri & Sulaiman, 2024).

Critical analyses of the Lazada Malaysia

The implantation of AI technologies of Lazada Malaysia has noticeably shaped its competitive marketing position in the Malaysian e-commerce landscape through AI technological innovation. The role of AI technologies is significant for various areas such as improving customer experience, product personalization, logistics management, and fraud detection.

 

AI Technology innovations

The National AI office (NAIO), is the center of Malaysia’s AI program, which aims to bolster Malaysia as the regional leader in AI technology and promote the awareness and widespread adoption of AI proliferation (Tan, 2025).  The employment of AI technology generates more intuitive shopping experiences compared to less sophisticated e-commerce sites. It continues to rely on traditional methods and manual adjustments. With the adaptive of technology in Malaysian e-commerce, it increased the online purchase rate to 87% in 2022 reports. Moreover, the enhancement of users' experience of the AI will also encourage online customers, particularly those in the Gen Z age group, to be more interactive and engaged with the platform. Besides that, the breakthrough of technology integration of Lazada allows businesses to personalize clients' shopping experience through suggesting relevant products based on customers' behavior. For example, the purchase of fashion products, after the first purchase of a fashion item, the app will recommend to users more fashion products with reasonable offers or exclusive prices to existing customers. Consequently, the purchasing intention is persistently cumulative, which supports both the online shoppers and sellers. Firstly, the online users who will receive desired products will get satisfaction from the brand and a user-friendly experience of the application. Secondly, the sellers appreciate the technologies that are integrated with the application, resulting in less effort in product showcase or presentation to the clients (Kaur, n.d.).

To comprehend how the development of AI technology is utilized in fraud detection systems, examining the upsurge of malicious attacks is critical in the modern digital era. As shoppers increase, the e-commerce functions featuring e-payment methods and online transactions will also rise. In 2024, Lazada is a top platform under the e-commerce category, sitting in the second position. The brand is believed to make approximately 33.6 million U.S. dollars in that year (Statista, 2024). In the second quarter of 2024, this e-commerce site reached from 293 billion Malaysian ringgit to 302 billion Malaysian Ringgit. It depicts that the growth of the platform has been progressively accumulating (Siddharta, 2024). Having seen that the data is growing, AI fraud detection in e-commerce investigates the risk by inspecting factors such as transaction size, frequency, and purchase history. The technology minimizes the risk of fraud by cross-checking the personal information and billing information of customers. Moreover, within the use of the fraud system, it ensures that the online shoppers are less worried about their personal information and credit card information, which could be stolen or breached. It also protects this business and enhances the customer retention rate throughout the shopping journey. However, there are a few challenges to the AI fraud detection system. Firstly. The data is subject to availability and error. Data sorting and quality can lead to an incomplete, invalid, or inaccurate dataset. Secondly, the AI technology needs to ensure that the brand and businesses comply with the international and regional regulations and compliance. It must protect the personal data and privacy from leaking and being exposed to the public. Thirdly, it is good to remember that human develops AI technology. Hence, the responsibility of AI mistakes lies with the human input. Therefore, both input from humans and machine learning are critically vital (Understanding AI Fraud Detection and Prevention Strategies, 2025).

Despite the helpfulness of AI in e-commerce sites, some challenges need alternative solutions to minimize risks in the future. Firstly, the price of AI and machine learning development is expensive. Small and medium-sized businesses might not be able to afford it, leaving them unattended and behind in the technological world. Secondly, AI data needs to be trained and stored effectively in an e-commerce site to prevent a probable data breach. Thirdly, the data-driven nature of AI can generate miscalculations and errors, which could bring misinformation and improper data to consumers and businesses (Generative AI Applications in Malaysian E-commerce: Opportunities and Challenges, 2024).

Consumer Behavior Impact on AI Technology   

This paper also studies consumer behavior impact towards AI technology in Lazada Malaysia. It uses the theory of planned behavior (TPB) to scrutinize the behavioral influences of human interaction with AI technology. There are three components in the theory of planned behavior: attitude, subjective norm, and behavior control. Firstly, attitude explains the sentimental and emotional preferences of consumers for certain objects. Consumer’s attitude is influenced by the attitude (positive or negative) (Sutisna & Handra, 2022). For instance, the company is using customer service (chatbot) and personalized shopping. Moreover, young adults prefer to use voice search, image search interact with the AI technology, which improves the satisfaction and interactions (Olan et al., 2024). Secondly, subjective norm refers to how the surrounding environments, like social media, peer recommendation, and social influences, impact their perspectives on AI. For instance, a positive review or rating on Lazada might urge customers to purchase the product swiftly without consideration. This purchase only involves low-context purchase, it is not associated with the high-context purchase. In the Malaysian context, a person may be influenced by a friend who is experiencing positive outcomes from Lazada’s AI features like chatbot and product suggestions, usually has positive feelings toward the AI technology, and so do the others. However, not everyone seems to have optimistic views towards AI technologies; each individual’s view varies by demographic areas such as races, incomes, beliefs, and many more (Mustofa et al., 2025). Lastly, perceived behavior control explains the mindset of each individual perceives objects or subjects based on their past experiences, available resources, and the ability to handle or act on the subjects (Li et al., 2023). It is viewed as what is best for consumers regarding the positive and negative effects of the integrated AI technology in Lazada. Consumers with high perceived behavior control will result in strong purchase intention for products on the e-commerce platforms. In addition, young adults tend to purchase products quickly on the internet faster because they have positive experiences and positive peer reviews from friends and reviews. As a result, their behavior to act towards buying online items will be quicker without hesitation. The theory of planned behavior also explains the trust between online customers and Lazada, whether the built-in AI technology in the platform is reliable and secure. Another example is that if the consumers perceive enhanced security of e-payment, it ensures online secure transactions. Additionally, consumers perceive positive feedback towards the reliability and trust in the fraud detection system, so they feel safe and are likely to adopt the e-payment method in future purchases (Zhang & Chen, 2023).

 

Marketing Strategy Recommendations

This recommendation explores the possible suggestion for AI technology that integrates with Lazada. However, there is a small percentage of Malaysians who are not aware of the adaptation of AI in e-commerce. The research study reveals that about 31% of Malaysians are not familiar with AI technology in understanding the functions of AI of Lazada. Some people are very skeptical about the use of AI because of misinformation, data concerns and lack of transparency (AI Presents Growth Opportunities for Malaysian eCommerce Sellers, Despite Adoption Challenges, Lazada Report Reveals, 2025). For long-term selling, the brand could provide a basic understanding by utilizing social media platforms and a website to promote AI machine learning to customers. In such cases, Lazada could arrange an online meeting session or an educational video about the artificial intelligence incorporated in the e-commerce for older people. This will provide additional knowledge and will assist them in understanding the app better. However, the interests of each individual might differ because of their background and influences.

Strategically, to develop effective marketing strategy in promoting the AI technology, multilingualism is necessary in the Lazada Malaysia platform. Malaysia is a multicultural society that consists of three largest groups, which are Malays, Chinese, and Indians. Thereby, cultural differences affect the language in day-to-day communication. Yet, the common spoken English in Malaysia is English; the population has preferred language to communicate in a certain way (Ramlan & Maarof, 2014). Furthermore, government initiatives should promote and adopt multilingual in all sites including e-commerce and applications; it will be beneficial for people who are uneducated as well. In addition to e-commerce, Lazada should improve the multilingual in AI by adding a few different languages, such as Chinese and Tamil chatbot to serve their demands. The added language will favor more customers from different races and religions. Thus, it expects to generate more engagement from the platforms since it will help individuals whose English language is weak or not suitable for communicate.

The AI usage in inventory and product management helps to foster the productivities. In contrast, it also creates problems such as plastic waste that affect the environment. The packaging from e-commerce, namely Lazada, has posed serious problems for environmental issues. To reduce packaging waste, government agency acquire to adopt policies and regulations that require business owners to pack consumer goods using reusable packaging materials or compostable packaging. This will reduce the waste that contaminates the landfills, water pollution, and plastic management, which leads to a healthier and friendlier living environment (Yue et al., 2024).

Conclusion 

Integrating AI technology within e-commerce platforms is critically vital for businesses and online shoppers. AI allows businesses to generate data-driven information, stock management, and personalized recommendations for products. Also, it helps to reduce unnecessary costs by saving time and operating efficiently. On the other hand, consumers can easily search for products that they wish to purchase very conveniently. Chatbots also benefit consumers in customer service and tracking orders. It also ensures safe and secure online transactions without worrying about potential fraud. Governments and firms play an essential role in managing the public sector.  They need to introduce AI technology to the audience to generate public awareness not only in e-commerce platforms but in every aspect of life.

 

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