Thailand now capable of total online business - e-commerce pioneer
The man behind the successful development of e-commerce in Thailand, Pawoot Pongvitayapanu, has set himself a new goal: to revolutionise the system he has helped to create and to move Thailand into the "next chapter of e-commerce".
The next chapter, Pawoot explained, is the third e-commerce era, in which all e-commerce transactions will be started and completed online.
Over the past 12 years, e-commerce in Thailand has moved through the first era - called classified e-commerce - and the second era - called catalogue e-commerce. These eras were characterised by a combination of online and offline activities. The country is now moving towards true e-commerce, with transactions conducted entirely online.
Pawoot set up the online marketplace Tarad.com when he was an architecture student at Rangsit University. Since then, developing e-commerce has been a lot of heavy effort and "learning-by-doing". His Tarad.com has become a role model for e-commerce business and is recognised as the biggest and most successful e-commerce service provider in Thailand.
Pawoot launched Tarad.com during the "dot com" boom, when he was 22. He had the same hope as many other young pioneers of business on the Internet: to attract venture capital. It wasn't long before his dream came true. He attracted investment amounting to a 30-per-cent interest in Tarad.com from Mono Group, an associate company of local telecom giant Jasmine International.
From architecture student to dot com entrepreneur, Pawoot had to devote a lot of his energy to learning how to manage a business and how to use technology to run his company. He spent a lot of time in business and management classes at Software Park Thailand, as well as working for a telecom company - Hutchison Wireless - with the aim of gathering knowledge to use in running Tarad.com. The online marketplace has grown continuously for a decade under Pawoot's management, and his tireless efforts are now paying a return.
Early in the life of his company, Pawoot realised that running an e-commerce-service business was not going to be easy, because Thailand's IT infrastructure was not ready for it. Nor was there an awareness of e-commerce in the business community. But these days, when anyone talks about e-commerce Tarad.com always springs to mind; it has become iconic.
Last year, Pawoot, 34, achieved another goal. He attracted investment in Tarad.com from Japan's largest e-commerce service provider, Rakuten. Now, he is planning to use the Japanese e-commerce know-how to guide Thailand into the third era of e-commerce - total online transactions.
Under Pawoot's guidance, the impending revolution within Tarad.com is expected, once more, to set an example for the country's entire e-commerce industry.
Tarad.com has been trialing a new e-commerce platform called Premium Mall since early this year. It comes with a huge range of support and assistance for merchants. The concept is totally different from its existing platform, which offers only an online marketplace without e-commerce assistance.
Tarad.com is now offering total e-commerce solutions. It provides four main services: Tarad merchant system, Tarad payment system, Tarad delivery system and Tarad e-commerce consultant system. All are aimed at helping online merchants to conduct e-commerce business more efficiently, with all the necessary tools and systems.
"We offer the widest range of services necessary for doing e-commerce business. Apart from the online merchant system, we are the only one offering a six-channel system for online payments, through credit cards, debit cards, ATMs, Internet banking, Paypal, PaySbuy, or mobile payment, to facilitate e-commerce transactions," Pawoot said.
Tarad.com has also worked with Thailand Post to allow its online merchants access to the postal service's logistic tariffs, to help merchants complete their online transactions easier and faster.
Instead of allowing online merchants to run their e-commerce businesses on their own, without any assistance, Tarad.com's new service will have e-commerce assistants dedicated to helping its merchants to improve their online marketing as well as providing all kinds of additional support.
"To use our Premium Mall service, merchants have to pay a monthly fee and a fee per transaction, but we guarantee them better sales," Pawoot said.
Monthly fees range from Bt1,500 for 500 product items to Bt3,000 for 1,000 product items and Bt5,000 for an unlimited number of product items. This is a fixed cost that merchants have to pay even if they have no transactions. Then they must pay a fee of between 4 and 6 per cent of transaction value whenever they sell a product.
"The monthly fee is an extra cost that merchants have to pay when they come in to our new Premium Mall service. This money is to run and maintain the whole online system. We also guarantee them sales, if they commit to accepting assistance from our e-commerce consultants," he said.
Effectively, Tarad.com's business model has changed. Originally, it provided only "online space" for its merchants and charged them montly fee only. The new Tarad.com offers total e-commerce solutions, ranging from the technical system through payments, logistics and, importantly, marketing. The change aims to maximise revenue for its merchants.
"We care about our merchants, and are concerned that their revenue should be sustainable. Our mission is to grow along with our customers. In the past, we had 180,000 merchants on Tarad.com, but only half of them survived and are still actively doing online business. Under the new model, we aim for only 4,000 merchants to stay with us this year, but all of them will not only survive but will also grow and succeed," Pawoot said.
He said the time was right for the advance of e-commerce business in Thailand because major factors were now ready, including Internet accessibility, with both fixed and wireless Internet networks, online payment systems, logistics and awareness.
"We will focus on gross merchant sales, or the total value of sales of all merchants at Tarad.com, rather than monthly fees. Tarad.com aims to have Bt5 billion in gross merchant sales within five years," Pawoot said.
E-commerce can help local businesses, especially small- and medium-sized enterprises, to increase their revenue with hugely lower costs than traditional forms of commerce. Tarad.com aims to provide the facilities for them to achieve this, he said.