Tapping full potential of e-commerce in Thailand

“Currently, only [around 1 per cent] of total retail sales in Thailand happen online, compared [with] more than 7 per cent of all retail sales in Europe and China,” said Geir Olsen, head of AT Kearney’s consumer industries and retail practice in Asia-Pacific and co-author of the study. “So there is huge untapped potential for e-commerce in Thailand, but only if it overcomes five significant barriers that stand in its way.” 

The firm believes that there are distinct actions that Thailand can take to surmount each barrier and pave the way for sustained growth.

 

Increase broadband access

Only seven of every 100 Thais have access to fixed broadband, while just 51 per cent have a mobile broadband subscription. In addition, the average connection speed clearly lags behind other countries. 

Thailand has started to tackle the connectivity issue by introducing fourth-generation wireless broadband services, and several more steps can support e-commerce growth, according to Soon Ghee Chua, managing director of AT Kearney’s Southeast Asia unit and the study’s other co-author.

“Implementation of the government’s plans for a national broadband network that gives access to all Thais will help solve infrastructure issues,” he said. “Raising online awareness is another key challenge, because rural populations and older generations are reluctant to use the Internet and need additional guidance.” 

 

Support local offers 

Although a few local champions have emerged, consumers appear to be more attracted to offers from foreign players that do not necessarily have a local footprint. Large foreign players such as Amazon and eBay have already gained popularity in Thailand. “In order to encourage local companies to participate in the online trend, the awareness for e- commerce marketplaces should be promoted,” said Olivier Gergele, principal with AT Kearney’s consumer industries and retail practice. 

 

Reinforce online security 

Sixty-two per cent of online shoppers in Thailand are reluctant to give their credit-card information online. Despite efforts to coordinate e-commerce legislation across Asean, Thailand’s regulations concerning privacy, content, and domain names are insufficient. 

“Several steps can help Thailand going forward, including improved sharing of information and regulatory best practices among Asean countries, the harmonisation of legislative frameworks, and the creation of a regional online dispute resolution facility,” Gergele said. 

 

Promote e-payment 

In Thailand, as in most Asean 6 countries, a significant portion of payments for online retail is still made offline, with methods such as cash on delivery. The cumbersome “know your customer” processes that e-retailers contend with to comply with anti-money-laundering regulations for cross-border transactions hinder the growth of e-commerce. 

 

Boost logistics, trade efficiency 

Several factors create challenges between trade and logistics in Thailand. Only 25 per cent of digital buyers in the country received free delivery in 2013, and last-mile delivery has not been consistently reliable. Yet compared with other Asean countries, Thailand has a good transport infrastructure and has been increasing its warehousing capacity to sustain its overall economic growth.