Three key community members in Thailand share their thoughts on the local e-commerce space.
Even though Thailand e-commerce space has some similarities to Indonesia and Vietnam, there are still some significant differences due to language and Internet users’ behaviours. I decided to explore more about the online business environment in the Land of Smiles through interviewing three key people in the community. Here are their profiles:
Pawoot Pom Pongvitayapanu, Managing Director and Founder at TARAD.com, President of Thailand e-Commerce Association
An online entrepreneur, Pawoot founded TARAD.com, now Thailand’s biggest e-commerce C2C website. Tarad joined with Rakuten Group, the top e-commerce site in Japan, in 2009. He is also President of the Thai e-Commerce Association. Pawoot is a teacher, guest speaker and columnist for Bangkok Biz Newspaper, a top business news paper in Thailand. Recently, he founded a new startup, Zocial Inc. Many people call him “Thailand’s Internet Icon and Pioneer”.
Oranuch Lerdsuwankij (@mimee)
Mimee is the co-founder and editor of thumbsup.in.th, a leading tech blog from Bangkok,Thailand. The blog has been reporting on local technology, social media, tech startups and e-commerce since early 2011. The blog has also had their content syndicated by some of the top publications in Thailand.
Mimee has had 11 years of direct experience in the telecommunications industry. She has been frequently invited as special speaker by various institutions and organizations, as well as has written many articles for the topics of telecommunication, IT , social network and others. She is also the co-author of the marketing books such as Marketing 2.0 and Marketing 2.1.
Natsakon Kiatsuranon, CEO and co-founder of ShopSpotApp.com, a mobile commerce startup which provides mobile platform so that business owners can sell their products or services here to ShopSpot customers community.
ShopSpot was part of the inaugural JFDI-Innov8 Bootcamp 2012. They were able to raise a seed investment round from many prominent investors in this region such as SingTel and Jungle Ventures.
What are some of the top e-commerce websites in Thailand?
Pawoot: TARAD.com, Weloveshopping.com, Sabuy.com
Mimee Mentioning about the main websites of e-commerce in Thailand, duly opened platforms for selling and buying products online, there are Tarad.com which is backed up by the Japanese giant Rakuten, and another one supported by a Telecom giant, weloveshopping.com.
Natsakon These are the top players on top of my mind – tarad.com, sabuy.com, sanook.com, dealfish.co.th, ensogo.com, pantipmarket.com, zalora.co.th, lazada.co.th, and etc. Just to name a few…
In your opinion, what are some of the most important factors that makes Thai customers decide to buy products online?
Pawoot: Top factors that makes Thai people purchase online are:
- Price – cheaper than offline channel
- Trust – merchant have high trust
- Easy – they can buy it easy through online channel
Mimee: One of the reasons, similar to other countries, is the lifestyle of people nowadays that is short on time, therefore whatever can save time and bring convenience are preferred. Another related factor is that there are many products offered online that consumers sometimes cannot buy from the general stores in Thailand because they are not imported or are sold at higher prices.
Natsakon: the top 3 reasons would be:
- More convenient
- Cheaper price
- Product variet
What would encourage return purchases from consumers on these websites?
Pawoot: Because they already have experience with that site and trust it. After people make the first purchase order, they will do more and more.
Mimee: This depends absolutely on the product’s quality and service after sales. If the service is good and trust is formed, the chance of repeat orders from the same source by many customers is secured.
Natsakon: Because they trust that they’ll get what they’ve ordered from those sites. Also, the better relationship management is the key.
Bank transfer is still the most popular online payment method in Thailand, why? What will be the online payment trend in next few years?
Pawoot: More than 80% of Thai people still like and trust to pay money via bank transfer although some of them already move to online banking instead. in 2013, many banks will start pushing online debit card payments that allows over 35 million card holders to pay via online compare to 14 million credit card holders in Thailand. The reason that Thai people are still not familiar with credit cards because they still not fully trust in this kind of payment. But the trend getting better and better. Now on TARAD.com, credit cards have become the top payment channel, it makes up more than 48% of total payment share.
Mimee: In fact the credit card is another channel that is becoming more popular now. Why bank transfer is still the popular method? Partly because of the reason that not everybody has credit cards and besides it is the less complicated channel for most people who are accustomed to it. However, in the near future the online payment trend is growing in the portion of mobile payment, namely enabling smartphones to accept payments by credit cards too, similarly as popular in other countries.
Natsakon: Because credit card penetration is still low in comparison with the more matured markets. However, it’s getting more popular since ensogo.com pick it up. In the next few years, credit cards will be more popular and I think the service like http://www.123.co.th/ could be the trend for those who don’t have credit card.
Foreign companies such as Rakuten (acquired Tarad.com), or Lazada and Zalora from Rocket Internet are entering the Thai market. What do you think about their roles in the current landscape?
Pawoot: Many big e-commerce providers will come to Thailand and Southeast Asia. Most of them will target horizontal markets and try to expand to the whole regional. They will try to create global e-commerce networks that link all countries together. To create more value to the business, getting into to Southeast Asia is mandatory for their expansion.
Mimee: In fact foreign companies entering this market is a catalytic tool to make e-commerce in Thailand grow. However, what we expect and would like to see, especially from the companies like Rakuten, is innovation or new things from their available know how to be applied suitably for Thailand, as the best approach on experience to most customers.
Natsakon: They’ll bring in more organized structure and practised of how to run the successful business. However, they still need market insights from local expertise. So I think the industry in general will be more competitive and that’s better for the customers.
Fashion and baby product e-commerce are quite hot now in Indonesia and Vietnam. How are these sectors performing in Thailand?
Pawoot: Not yet starting boom. We are still hot in horizontal market and the niche market e-commerce businesses are just starting to grow. Soon we will see them growing faster and bigger.
Mimee: In Thailand it is also the same because they are catching the market for females who normally have ready demand or need to buy easily. Therefore, the growth direction has no difference from the other two countries you mentioned.
Natsakon: Yes, there are many e-commerce players that are focus on the niche verticals like fashion, beauty, cosmetics, baby products, and many others.
Thailand is a tourism country, it’s one of the travel hub of Southeast Asia and Asia. However, I don’t find many travel startups here while online travel now is the trend now in Singapore and Indonesia. Why is that so?
Pawoot: In Thailand we have many travel startups. Many of them target the domestic market and some of them focus on the international market but are still not doing enough publicity to promote their company to the world. And the most important reason is that In Thailand existing players, such as Agoda, are very strong.
Mimee: This industry does not emphasize on technology, but the business model and strong connection instead. In fact there are also several Thai startups in this sector but are not very prominent yet. Partly because there are big player and make the new ones find standing out not so easy.
Natsakon: Yes, It’s also surprising to me that we hardly find travel startups in Thailand. However, I think the startup scene in Thailand in 2012 was just getting started and there’s a long way to go.
About social media, Thai people are a little bit different from other countries in Southeast Asia. They are crazy about LINE app from Japan’s Naver and many of them are Instagram ‘s savvy fans. What are your opinions about these user behaviours?
Pawoot: Thai people love communication and sharing their experiences and moments with their friends. We usually grow up in a big family and always communicate with each other. Now, we have the technology that can help us reach other people easier through social media technology. That’s from my perspective.
Mimee: Regarding LINE, communication via messaging apps among Thai people who have smartphones is common now because it is not only convenient but also speedy. One more factor making LINE strike the hearts of so many Thai users, similar to other fancy users elsewhere, is the stickers that whoever see it will admire as being attractive. This matches the Asian behaviour, including Thais too.
While for Instagram, before this app became popular, Thai users were already sharing various photos with friends via Facebook. It already reflected their minds of showing things to others at the same time interested to learn what the others will comment on what have been shared too. Besides, Instagram is a well designed app and a pioneer in facilitating users to add various filters they like. Therefore, it is not strange to gain popularity same as in other countries.
Natsakon: Thai people love entertainment, so the app like Instagram is the perfect fit to them to follow celebrities they love. Moreover, they’re quite fond of the sticker from LINE where they can express their emotional feeling via sticker (a lot better than just texting).
Do people utilize these social channels together with Facebook as well to promote their online businesses?
Pawoot: Yes many of business use social media like Facebook to promote their business. You can check it at http://zocialrank.com/brandranking. But most of them use it to create brand awareness and attract more members. However, not many of the them using for increase their sales or e-commerce. There are opportunities and challenges for businesses to expand to this area.
Mimee: Certainly nowadays both LINE and Instagram have already become marketing tools. For instance, many enterprises use LINE as official accounts and distribute stickers to create engagement with users. On the other hand there are groups of celebrities creating campaigns via Instagram to be frequently watched by audience. An example would be the very famous launch last year of Magnum ice cream, utilising various celebrities to promote and regain its popularity again.
Natsakon: Yes, I’d say they utilize all channels that’ve many people on board i.e. Facebook, Twitter, Pinterest, Instagram, LINE, and etc. They always go where the puck is going!
Besides social commerce, do you think mobile commerce will grow quickly in the near future, and why?
Pawoot: Absolutely mobile commerce will see tremendous growth. Currently many web site’s mobile traffic is increasing a lot. Like TARAD.com, more than 30 percent of our traffic comes from mobile devices and generate sales of more than 11 percent. And it is growing very fast. The main reasons are people using mobile devices more and more, mobile internet is growing very fast and becoming more affordable, mobile devices are becoming faster and cheaper.
Mimee: In fact mobile commerce has been steadily growing step by step, not only from the creation of e-wallets by utilising mobile as virtual wallets but also enabling smartphone to be applied as point-of-sales in accepting credit cards and eventually providing the small shop owners with additional channel to receive payments. The increasing growth may not be clear in Thailand but it is growing step-by-step.
Natsakon: Definitely, mobile strategy is very critical for Asia, where mobile users outnumber fixed line Internet users by 3-to-1! And there’s a lot of room to grow!
What is the most critical problem of an e-commerce firm here have to solve in order to grow?
Pawoot: We have to make people believe in online payments and buy things online. The way is to to increase the number for merchants and products available online so that customers can find what they want. Also, companies have to improve quality of service such as payment and shipping (make it more faster and cheaper).
Mimee: First, in fact it is not the problem of any particular enterprise but actually the overall picture of the entire market with trust, namely most people still do not trust the online payments. These do require adequate knowledge and understanding to be sufficiently created. Second, so far e-commerce is still focused in the main cities only. As long as there are difficulties in accessing the Internet in certain areas due to lack of infrastructure, it is another main obstacle.
Natsakon: I do believe the e-commerce space is very fragmented. In order to grow, I don’t think you need the best technology, but the key is how well do you understand your customers and their problems that are worth solving.
Finally, what are the keys to growing the e-commerce in next three years in Thailand? And are there any new e-commerce trends?
Pawoot: 2013 will become the year of e-commerce expansions to all over Thailand. the keys are:
- Internet population will increase with (real) 3G service cover all over Thailand and cost of service will reduce.
- Many businesses will look to e-commerce in order to increase their sale channel through this technology (after they have waited and observed it for years).
- Online payments and logistics will improve more and more. It will make it easier to use this kind of services.
- Mobile commerce will come for sure.
- Debit card online payment will starting growing, allowing more than 50 percent of Thais people to purchase products online.
- Social commerce will be the additional channel for businesses to reach their customers and increase their sales.
Mimee: Accelerating the construction of a complete ecosystem is beyond the capabilities of the owners of the web and the small startups themselves. Only big players in telecom and certain payment gateways with the existing capacity and connectivity with banking system will enter with essential implications that they can move and push changes in the community of e-commerce and m-commerce. Nevertheless, in order to see any change or anything new, we might have to wait for the official announcements.
Natsakon: The key is to keep listening to your customers, and solve their problems. The trend is mobile where people can interact anywhere any time.
Image Credits: PostEurop, tourismthailand blog, The Nation
* This post appeared first on e27.co