Short answer: because the alternative is not free.
A brand may pay close to 20% to 25% of GMV to the marketplace ecosystem before digital marketing, and another 7% to 15% of GMV on paid marketing. At first glance that sounds expensive. It is.
If your final net profit margin is 12% to 15%, it is reasonable to ask: why give so much revenue to Shopee or TikTok Shop? Why not build a website and sell direct?
We hear this question often. After operating consumer brands across marketplaces, social commerce and D2C, our view is slightly different. The right comparison is not marketplace fee versus no marketplace fee. It is: how much does it cost to acquire a customer somewhere else? In Malaysia, that changes the calculation completely.
Is D2C actually cheaper?
Imagine you build your own Shopify store. No 20% marketplace commission. But now you need to bring people there, and for most consumer brands that means Meta, TikTok, Google, creators or other paid channels.
From our own experience with consumer and fashion businesses, once Meta campaigns scale we would not build a financial model that assumes a 5x or 6x ROAS continues forever. It may happen during certain campaigns or while spend is small. At scale, a planning assumption around 3x ROAS is usually more realistic.
The arithmetic is simple. At 5x ROAS, RM100 of revenue needs RM20 of advertising. At 3x, it needs about RM33. So you may save the marketplace commission, but customer acquisition alone can consume more than 30% of revenue. You still need payment processing, fulfilment, technology, content, customer service and everything else a D2C business runs on.
The correct question is not "why is the marketplace so expensive?". It is "what am I getting for that cost?".
Where do Malaysian consumers already shop?
This is probably the biggest reason. Malaysians do not wake up wanting to discover a new fashion brand and visit its website. They already have places where they shop.
According to Ipsos' 2026 Malaysia E-Commerce Landscape study, 74% of Malaysians had browsed an e-commerce platform in the previous 6 months and 60% had bought something through one. Among those buyers, 71% had shopped on Shopee and 62% on TikTok Shop. Fashion remained the largest category, bought by 63% of e-commerce shoppers surveyed.
When you sell on Shopee, you are putting your product where the customer already goes to buy. It is not so different from physical retail. A brand pays high rent inside a successful mall because the mall already has traffic. You could rent a cheaper standalone shop, but then the traffic problem is yours. Marketplace commission is expensive partly because traffic is valuable.
What do Shopee and TikTok each do?
Shopee captures intent. It is strongest when consumers already roughly know what they want: they open the app, search, compare, read reviews, check vouchers, buy.
TikTok creates discovery, and is becoming a shopping destination in its own right. TikTok Shop reported more than 100 million product searches a day in Malaysia in 2025, saying consumers use the platform for both discovery and deliberate shopping. Ipsos found TikTok Shop usage among Malaysian e-commerce buyers rose from 43% in 2024 to 62% in 2026.
And LIVE matters. TikTok Shop said in August 2026 that almost 6 in 10 Malaysian users prefer LIVE shopping, with LIVE sales growing 48% year on year to almost a third of platform sales. That is why we do not treat TikTok LIVE as just another sales channel. It is also media.
What did our own data show?
Look at our own commerce operation. Over the most recent 12 months, TikTok Seller Center reports our TikTok operation drew approximately:
- 513.7 million product impressions
- Around 110 million unique product impressions
- More than 15.5 million unique product-page visitors
Our own order records for the same period show more than 818,000 orders from about 453,000 customers.
The operation runs livestreaming from morning until night, alongside content, advertising and marketplace activity. We cannot say every one of those 513 million impressions came from livestreaming, and we cannot put an exact value on each impression. That is the point.
If we only calculated TikTok GMV times net profit margin, we would be significantly underestimating what the channel does for the brand. Hundreds of millions of impressions are millions of moments where someone sees the brand name, a product, a host wearing it, a customer comment or a livestream. Some buy immediately. Some search for the brand later. Some see the product again tomorrow. Some eventually walk into a physical store. Not all of that is captured by last-click attribution.
Does online activity show up in physical stores?
There is an established fashion brand we work with that has a substantial physical-store network with strong offline productivity. What sets it apart from many traditional fashion retailers is the intensity of its online activity. It livestreams constantly, morning until night, so consumers are exposed to its products, promotions, hosts and brand every day.
Can we prove that RM1 spent on livestreaming generates exactly RMX of additional store sales? No. We do not yet have a clean enough attribution system for that claim. But we would be careful about assuming the effect is zero because we cannot measure it.
There is broader evidence. Google now encourages retailers to measure store sales alongside e-commerce because measuring only online transactions undercounts the value of digital media. In Google's testing across large omnichannel retailers, combined online and in-store incremental ROAS was 3.39x, against 2.27x when only e-commerce was measured. MUJI reported a similar effect from its own analysis with Google: online engagement contributed to an estimated 14.8% of offline sales. Neither example is Malaysia-specific, but both show why retailers increasingly treat digital and physical retail as one customer journey.
Is the marketplace a sales channel or an acquisition channel?
Both. Suppose marketplace-related costs take 25% of GMV and you spend another 10% on digital marketing. That is 35%, which sounds terrible.
But suppose the alternative is a D2C site acquiring first-time customers through Meta at 3x ROAS. Acquisition alone is already about 33% of revenue. Suddenly the gap is not dramatic, because the marketplace is doing several jobs at once: traffic, search behaviour, product discovery, reviews, payment infrastructure, promotions, logistics integration and consumer trust. You are paying for access to an ecosystem where the consumer is already comfortable buying.
For a new or international brand entering Malaysia, that matters enormously. Your biggest problem at the beginning is rarely retention. It is getting the first customer. Once someone has bought, experienced the product and trusts the brand, the economics change. That is when retention takes over: CRM, membership, physical stores, owned channels, new launches, repeat purchase, community. Your first transaction does not need to be the most profitable one you ever make with that customer.
Should a brand rely on marketplaces completely?
No. We would not advise a serious consumer brand to become fully dependent on marketplaces either. If 100% of your revenue depends on one platform, you are exposed to commission changes, algorithm changes, advertising costs, voucher structures, platform policies, competition and shifts in traffic. The marketplace owns the infrastructure. You are renting access.
So our preferred model is not marketplace or D2C. It is marketplace, plus owned customer relationships, plus offline where relevant. Use marketplaces aggressively where they are strong. Use Shopee to capture purchase intent. Use TikTok to create discovery. Use LIVE and content to build frequency and awareness. Acquire the first customer, then deepen the relationship across your broader brand ecosystem.
Are we looking at the 25% the wrong way?
If you call the 25% a marketplace commission, of course it looks expensive. Part of it is better understood as a distribution and customer-acquisition cost. Physical brands pay rent to malls. FMCG companies pay distributors and retailers. D2C brands pay Meta and Google. Brands have always paid to reach customers. Only the mechanism changes.
So when a brand asks us why it should keep selling on marketplaces that take so much, our answer is: because the Malaysian customer is already there. Shopee has purchasing intent. TikTok has discovery. LIVE gives you attention at a scale that would be extremely expensive to reproduce through traditional media. And for a new brand, the first customer is often the hardest and most expensive part of the whole relationship.
The mistake is not paying 25% to a marketplace. The mistake is paying 25% without understanding what you get in return. Measure contribution margin. Measure new customers. Measure repeat customers. Measure search growth. Measure brand awareness. If you have physical stores, start measuring the online-to-offline effect too. Sometimes the GMV inside your marketplace dashboard is only one part of the value the channel creates.
How does Labu-Labu think about it?
We do not believe brands should blindly chase marketplace GMV. We also do not believe brands should avoid marketplaces because the fees look high. The objective is to use each channel for what it is good at: marketplaces acquire and discover customers, and your brand turns those customers into long-term relationships. That is where the economics start to make sense.
If you want help working out what your marketplace fees are actually buying, talk to us.