By ASINA PORNWASIN
THAILAND'S e-commerce will continue to actively grow next year, becoming increasingly competitive and benefiting from trends in consumer-to-consumer sales and omnichannel e-commerce. But while industry watchers are rosy about the prospects, they warn of the need for government support and astute business decisions.
Siwat Chawareewong, chief executive officer at GroupM said that large local brands have had an e-commerce presence for years. All are interested to know their customers through data and to understand consumer behaviour as Thais go online in their daily lives.
The e-commerce trend for 2018 will be consumer-to-consumer (C2C) e-commerce, driven by the mobile penetration rate and mobile payment.
Siwat said technology gives people the opportunity for more than one career, with participation in an online commerce venture being one of the most popular second careers. E-commerce in 2018 is expected to explode with growth reaching 2.5 times that of this year.
Another trend is online to offline (O2O). Siwat said department stores need to be "omni-channel". The starting point of shopping is no longer the department store, but rather the search engine, and so businesses must be present online.
Online and offline shopping will co-exist, with the challenge being how to make seamless the customer's online and offline experience.
"In 2018, it will be the year of business adjusting to online behaviour. [Access to] customer data is a 'must-have' for businesses. Data is a big need," said Siwat.
Paul Srivorakul, the CEO for aCom-merce Group, said that retail is changing, and in the process is changing distributors and wholesalers. New retail is digital-first, omnichannel, direct-to-customer".
"We want to help brands manage content, channels and the entire customer experience to capture data end-to-end," said Paul.
It is important for brands to adapt to the omnichannel model, the next step since those brands realised they needed to be where their customers are.
Even though social media and technology have enabled consumers to gain information or place an order online, 85 per cent of retail sales will still come from offline channels in the next five years. This is why foreign players like Alibaba and Amazon are investing in offline channels to ensure that their consumers are experiencing a connected, seamless shopping process wherever they are.
Pichet Durongkaveroj, Thailand's minister of Digital Economy and Society (MDES) said that the country's economic policymakers fully support business exploring opportunities via digital technology. Business circumstances in the global market are currently undergoing rapid change, he said.
"This venue is designed to support Thais at every level of life to transform [into players] in the global e-commerce market from the general domestic e-commerce or physical trade. So our challenges are to educate and provide knowledge about digital technology in order to encourage them to optimise in everyday life activities and doing business," said Pichet.
More competitive Thai e-commerce
Pawoot Pongvitayapanu, president of Thai E-Commerce Association, said that local e-commerce businesses have to differentiate themselves in the vertical sector or become specialists.
In the short-term, the country's larger businesses could benefit from moving more into e-commerce and compete against giant global e-commerce players, he said.
"But in the long term, it might affect all local business since e-commerce might dominate the market, not only online business and retail, but also impacting all sectors of business including payment, banking, and logistics. So the government should consider how to prevent market domination and encourage the fair game for all," said Pawoot.
Paul from aCommerce Group said that there will be a lot of new big players in the market. It is rumoured that Amazon is coming to Thailand and JD.com is also setting up a joint venture with Central here.
"We will be seeing a growth in cross-border e-commerce and goods are expected to be cheaper. The government sector needs to play a leading role to make e-commerce a bigger success in Thailand. This is especially so in the case of tax and cross-border regulations," said Paul.
In Thailand, 95 per cent of e-commerce sales go to the top five largest players and the rest is distributed to smaller players. They will survive, but the products they are selling must be very niche, said Paul.
He added that online is not only changing retail but the entire landscape made up of advertising, media and entertainment.
"Digital is going to drive a lot of retail habits and our entire business model is about supporting a brand and a company so they succeed. We are going to funnel our new investment into building the retail ecosystem not only in Thailand but in all of Southeast Asia, in particular Malaysia and Vietnam next year," said Paul.
According to the Google & Temasek Report "eMarketer", online retail in 2016 in Thailand was $2.9 billion (almost Bt94.9 billion), which is only 2.5 per cent of total retail spending worth $116 billion. It expects that online retail in Thailand will increase to $11.1 billion or a 5.5 per cent of total retail of $200 billion in 2025.
For 2017, B2B e-commerce has already accounted for a 30 per cent portion, and is predicted to reach a 50 per cent proportion in 2018. B2B players have observed disruption in B2B and C2C e-commerce sectors and they want the speed and efficiency for their own businesses.
'Unified commerce' model
Paul said aCommerce had closed a US$65 million Series B funding round led by Emerald Media, a pan-Asian platform established by global investment firm KKR to fund growth investment opportunities across Asia. Participants to the round also include existing backers Blue Sky, MDI Ventures and DKSH, with North Ridge Partners advising.
Paul said that the investment would be channelled into further augmenting the company's brand-centric tech platform that allows clients to "plug in" and distribute through an integrated network of B2C and B2B channels, with real-time data analytics; scaling strategic partnerships within the retail ecosystem in current markets Singapore, Indonesia, Thailand and the Philippines; and enabling client expansion into new markets like Malaysia and Vietnam.
With the Series B investment, the company will expand and become the market leader in six countries in Asean and continue leading as an e-commerce enabler and e-distributor for brands in the region, said Paul. Thailand holds up to 50 per cent of the company's revenue.
"We expect revenue to grow 5 times. We will expand to Malaysia in the second quarter and Vietnam in the fourth quarter next year. Ultimately, we want to launch an IPO," said Paul.
The aCommerce business model is unified commerce, which is a one-platform, one-stop shop service, any e-commerce model, and every channel.
Tom Srivorakul, aCommerce Thailand co-CEO, said that the local revenue has grown 250 per cent year on year. The company has opened a new 21,000-square-metre fulfilment centre to increase the speed and efficiency of both B2C and B2B operations.
High-priced purchases through PCs
Meanwhile, Priceza estimated that its users would grow by 50 per cent or reach 125 million sessions this year and will continue at a consistent pace of 50 per cent (188 million sessions) next year.
The growth is in line with the country's solid foundation of infrastructure, legislation and technology that improved a better online shopping environment, according to the company.
Projections are for around 18 million monthly users on average through its platform within next year.
"Although 70 per cent of our users access our Priceza platform through their smartphones, we found that the average basket size from smartphones was Bt1,177 per order, while the average basket size from a PC was around Bt2,008 per order," said Thanawat Malabuppha, chief executive officer and co-founder of Priceza. "This result showed that Thai shoppers are likely to purchase high-price products through their PC."
Thanawat said statistics gathered from 125 million sessions on Priceza this year found the most popular category was clothing and fashion, followed by computer/IT and mobile devices, electronic devices, and automobiles and accessories.