From retailers to telecoms, more businesses getting in on e-game
Thailand’s e-commerce sector is expected to see continued strong growth, of 30-35 per cent this year.
More and more players are getting into the e-commerce game, such as online merchants, payment-service providers, order-fulfilment providers, tech start-ups and telecoms, and foreign interests as well, encouraged by the government’s “digital economy” initiative.
Thai E-Commerce Association president Pawoot Pongvitayapanu said e-commerce was a very tough and competitive sector.
“This year there is tough competition for e-commerce in Thailand. Large players will spend a lot of money to gain a share [of the market]. We recommend that small and medium-sized e-commerce businesses should focus on segmented marketing targeted at their [particular market],” he said.
He said the rapid increase in mobile Internet users had been helping e-commerce to grow actively this year.
As of the first quarter of this year, True Mobile had 20.7 million users of its fourth- and third-generation wireless broadband services, Total Access Communication (DTAC) had 14.8 million data subscribers, and Advanced Info Service (AIS) had 20.6 million data subscribers.
According to research by eMarketer, by 2018, Thailand is projected to have nearly 27 million smartphone users, with mobile-phone penetration reaching 71 per cent, giving the Kingdom the 19th-largest smartphone-user population worldwide, ahead of Australia and Vietnam.
This rapid increase of smartphone penetration and mobile Internet users is the key factor driving rapid growth of online shopping in Thailand.
This has obliged all stakeholders included retailers, e-commerce businesses, e-marketplaces, e-payment providers, and logistics companies to focus more on this sector. If they do not, they will lose customers to the other online shopping sites or miss business opportunities.
Pawoot, who is also managing director of Rakuten Tarad.com, said the company would launch a new e-commerce service next quarter as part of its strategy to grow by 40-50 per cent this year. “This year, our growth comes from an increase in merchant numbers, adjusted internal processes, focusing on the mobile channel, and conducting marketing and promotion. We have a marketing budget of more than Bt10 million.”
Telecom online stores
Pratthana Leelapanang, executive vice president for marketing at AIS, said sales through AIS Online Store were growing by more than 200 per cent when compared with last year. All products are telecom-related including devices, accessories, SIM cards, and premium packages and content.
The sales goal of AIS Online Store this year is to sell 600,000 mobile phones, while the marketing goal is to be a “top of mind” store.
Convenient payment is one of the factors in the online shop’s success. Customers can pay cash on delivery or via credit or debit cards, automated teller machines, Internet banking, or over the counter at more than 400,000 outlets nationwide such as at Tesco Lotus, FamilyMart, mPay Station and Thai Post.
“Online business in Thailand is rapidly increasing. According to the latest research by Google in June, a lot of people do online shopping via smartphone. Thailand has the highest ratio with 31 per cent of smartphone users doing mobile shopping. Therefore, there are huge opportunities for online business in Thailand,” Pratthana said.
However, one of the disadvantages faced by online businesses in Thailand right now is price wars. Many players have absorbed losses after offering big discounts to attract customers to their online shops. Meanwhile, logistics costs in Thailand are still high.
“Online shopping cannot [allow] customers to try and touch products before purchase. Credit-card use is still limited as people are concerned about security,” Pratthana said.
Tim Verouden, senior vice president and head of digital services at DTAC, said online business was growing. DTAC’s e-commerce is not confined to its dtac.co.th online store, but is a whole ecosystem of digital commerce-related activities and platforms based on its customers’ understanding that it can make personalised and relevant offers.
“We see our digital-channel footprint from a holistic perspective where all channels can benefit from each other. In terms of portfolio, we used to have the same portfolio of handsets, packages and offers as the other channels, but especially due to advanced customer understanding we can now offer more and more personalised products and services. And this portfolio will only continue to grow in the big-data age,” Verouden said.
Revenue from DTAC’s online store alone grew rapidly in the first half of 2015, by more than 30 per cent year on year.
“When you look at growth rates for e-commerce transactions we have just started, I think overall revenue through digital channels will double in the coming year, for the reasons mentioned earlier,” he said.
“We also see that channel convergence and digital being just part of a customer journey is an important factor, and having this omni-channel mindset is essential to better understand and accommodate customer needs. We are in the top five [among] e-retailers in Thailand, which is quite remarkable for a telco company.”
Last week, Line Pay, a payment platform using the Line chat application, made its Thailand debut. Chase Chang, vice president for global business development at Line Pay, said the service would become a mobile payment platform for both online and offline with the aim to drive growth of online commerce in Thailand.
Currently there are more than 205 million monthly active Line users worldwide. As of January, Thailand was Line’s second-largest country, following Japan’s 58 million, with more than 33 million users.
“Line is very big and growing very fast. Line is set to be a ‘life platform’. We started from a communication [chat] platform, then we introduced vertical services such as Line TV, Line Music and others. Line Pay is the fundamental for supporting all of Line’s services as well as to support our partners,” Chang said.
Line users can apply for Line Pay with ties to their credit or debit card for seamless payment for digital goods and services from Line Shop and other online markets.
Next quarter, Line Thailand will launch the Line e-wallet, which is a Line Pay account that people can tie to their ATM or bank account. When they make a payment, they can choose between their credit/debit card or Line Pay e-wallet.
Currently more than 100 merchants accept Line Pay. By the end of this year, Line Thailand aims to get that number above 300.
Retailers go e-commerce
E-commerce in Thailand is growing by 30-40 per cent per year, said Worawut Ounjai, chief executive officer of COL.
Recently, COL redesigned its shopping site www.Central.co.th, which is set to be Central Group’s flagship online store. The group’s online sales account for a very small proportion of its overall annual sales of more than Bt150 billion but are expected to grow strongly, because a lot more people are turning to online shopping.
E-commerce in Thailand currently accounts for about 0.5 per cent of the retail industry, while globally, it is more like 5.6 per cent. By 2020, it should pass 20 per cent.
Central’s strategy is to harness its strengths, both online and offline, to increase the competitiveness of Central.co.th such as next-day delivery, flash deals, and click and collect. The company has prepared a 40,000-square-metre warehouse that can support online sales of up to Bt5 billion. For now, it offers online shopping via websites and mobile sites only.
Recently, Central Group also announced it was opening distribution channels for small and medium-sized enterprises through Central.co.th, This is in line with the group’s policy of supporting SMEs to ensure strong and sustainable growth of the Thai economy.
Central has partnered with Line Pay.
“With consumers going online for shopping, merchants who are not part of the e-commerce trend will be out of the era and unable to reach a large number of customers,” Worawoot said. “At Central.co.th, customers can pay for shopping with Line Pay. By the end of this year, there will be 100,000 product items available.”
Global e-commerce platforms
Recently, the giant Taiwanese e-commerce company PC Home Online arrived in Thailand. It entered a joint venture with Cal-Comp Electronics (Thailand) to set up PC Home (Thailand) to provide an e-commerce platform for Thais.
The company will launch a consumer-to-consumer (C2C) e-commerce platform in September and aims to have more than 5 million product listings within one year of operation.
For the first three years, it will offer its service to sellers free of charge, and after that they will have to pay a fee of 1.5 per cent of a transaction value.
Hung-Tze Jan, founder and CEO of PC Home Online and the chairman of the Taiwan Internet and E-Commerce Association, said Thailand was the best place to land in Southeast Asia because of its well-established infrastructure.
Meanwhile Ekachai Rukachantarakul, eBay’s Southeast Asia head, said eBay was strongly committed to the evolution of commerce in Thailand, and continued to work with local SMEs. It aims to provide them with a platform through which they can deliver goods and services on an unparalleled global scale.
Thailand, as the nation with the highest number of eBay retail exporters in Southeast Asia, with annual sales in excess of US$1 million (Bt34 million), is seeing an increasing number of success stories on eBay’s US, Australia, UK and other global marketplaces.
An example of a successful Thai entrepreneur benefiting from eBay’s platform is Tuff. Wuttinum Sangon, owner of Tuff, uses eBay as an online marketplace to sell his Muay Thai products such as shorts, gloves and protective gear. He said eBay enabled SMEs to compete with larger companies in the global market.
Similarly, the giant Chinese e-commerce Alibaba.com has focused on Thailand’s e-commerce market. Thailand is a really important and high-potential market for Alibaba.com, said Thomas Ho, Thailand country manager.
Alibaba.com provides an e-commerce platform for businesses. As of March, the number of registered users in Thailand had increased by 42 per cent year on year. This was natural growth without having a local reseller, so it is possible to expect more growth in Thailand this year.
Currently, Alibaba.com has around 570,000 registered users in Thailand, mostly buyers.
Apart from Alibaba.com’s B2B e-commerce platform, Ho said, the company’s other businesses such as AliExpress and AliPay are under consideration for bringing to the Thai market in the future.
The local e-marketplace Weloveshopping.com has adjusted its business with the aim of capturing the rapid growth of e-commerce in Thailand and in Southeast Asia and to become leader in e-marketplace segment.
Sunsern Samaisut, chief commercial officer for the e-business group at Weloveshopping, said no one had yet dominated the e-commerce markets in Thailand and Southeast Asia, while the markets were growing rapidly. The company is confident of becoming the e-marketplace leader.
This year, it aims to have 10,000 merchants on Weloveshopping.com, with a combined transaction value of Bt2 billion.
The company refreshed its brand and changed its business model from earning revenue from rentals of online stores to earning commissions from transaction fees ranging from 2.9 to 13 per cent.
“This year, we strengthened our position in Thailand with the new business model. Early next year, we plan to expand [into Southeast Asia] through two possible models, including to cooperation with local partners and takeovers of local companies,” Sunsern said.
Order fulfilment is crucial to the success of e-commerce businesses. Currently, there are many such services. The newest one is Thailand Post Distribution. It is a subsidiary of Thailand Post recently established to provide a total logistics solution in Thailand and Indochina with the aim to be the hub of logistics in the Indochina region by 2019.
The service fulfils orders for medicines and medical supplies, banks and financial institutions, multinational companies, and border traders, said Warakan Srinualnad, CEO of Thailand Post Distribution.
The company offers a total logistics solution including packing, warehousing, delivery, and payment services for both private
companies and government organisations. It also utilises 10 of Thailand Post’s 16 warehouses and distribution centres throughout the country to enhance its logistical efficiency.