E-COMMERCE
The pandemic has wreaked havoc on small and medium-sized enterprises and local food merchants, leading to higher unemployment, but it also accelerated adoption of e-commerce and online delivery services.
Alarge amount of money was invested by e-commerce giants to lure users, causing the e-commerce market to flourish. In 2021, the e-commerce market recorded rising cross-border trade and the use of live-stream and influencers to bolster sales.
Lazada and Shopee, both key players in e-commerce, are competing to become the market leader, ploughing a huge amount of money into advertising and marketing campaigns. JD Central is scaling up efforts to boost customer stickiness and support cross-border e-commerce.
In the online food delivery segment, Grab and Foodpanda both spend heavily on promotions and advertising.
Line Man Wongnai, operator of the Line Man food delivery service, is expanding its service coverage to new provinces. It recently faced a string of complaints from its drivers about its move to reduce the delivery base payment rate.
Gojek from Indonesia is scaling up efforts to boost its branding following its transition from the Get brand in Thailand. In May, Gojek and Indonesian e-commerce provider Tokopedia announced their merger into GoTo Group, creating a super-app for ride-hailing, food and financial services.
Robinhood food delivery service under Siam Commercial Bank, which entered the market in 2020, adds further competition to the segment. It has a new business model that charges zero commission fees from small food merchants.
FAIR BENEFITS REQUIRED
Anantaporn Lapsakkarn, senior researcher at Kasikorn Research Center, said online food delivery service is expected to record double-digit growth in 2021 in terms of transactions and market value, driven by a larger user base now estimated to be more than 10 million.
In 2020, the restaurant market saw a drop of 6% year-on-year in value, but online food delivery experienced double-digit growth to 40 billion baht.
“The government can play a role in ensuring fair benefits are shared between related parties in the ecosystem, particularly food merchants and drivers, as well as regulating fair market competition,” Mr Anantaporn said.
Food vendors, he said, should make themselves available on multiple channels, such as through their own websites, a Line official account, food delivery platforms and call centres, to provide customers with both online and offline services.
According to Mr Anantaporn, food delivery platforms are scaling up their operations to provide a broad range of services, such as grocery delivery, financial and e-payment services, and ride-hailing, aiming to become profitable as food delivery services still rack up losses.
In the future, food merchants are more likely to open pop-up kiosks or food trucks for mobility, expanding branches through cloud kitchens, he said.
As consumers adhered to social distancing measures and stayed home. They turned to online platforms not just for their daily needs, but also for entertainment and interaction.
ONLINE SHOPPING HABIT
According to the “e-Conomy SEA 2020” report by Google, Temasek and Bain & Company, Thailand’s e-commerce gross merchandise value stood at US$9 billion (280 billion baht) in 2020 and it is expected to reach $24 billion in 2025 with a compound annual growth rate (CAGR) of 21% during the period 2020-25.
A study by price comparison website Priceza shows the number of brands running official shops on Lazada’s LazMall and Shopee surged by 46% from 3,400 in 2019 to 5,000 in 2020.
The number of products put on e-marketplaces surged 32% year-on-year to 230 million items in 2020.
Foreign vendors, particularly Chinese, represent 63% of the sellers on the platforms, while 37% are Thais.
“Thailand’s e-commerce continues to grow even during the pandemic due to the rise of new digital consumers,” said Thanida Suiwatana, chief business officer of Lazada Thailand.
“Online shopping has become a new habit for consumers.”
Lazada is gearing up efforts to bring a seamless online and offline shopping experience to customers, through technology supported by its Chinese e-commerce parent Alibaba.
The company also offers data insights for merchants and new tools to support sellers and brands to increase sales.
Vincent Yang, chief executive of JD Central, said Thailand’s e-commerce still has plenty of room to grow as it made up only 2.3% of total retail sales in 2020, compared with 41.2% in China.
Thailand has about 48 million shoppers online, up from 28 million in 2017 — a CAGR of 20%.
“The local online retail market can double or even triple in the next few years as brands move towards digital with more customer touchpoints,” said Mr Yang.
Sales on JD Central surged 169% year-onyear in 2020 and the purchasing amount per bill grew 25%.
The company saw an average spend of 2,198 baht per order, while the repurchase rate among users was around 67%, he said.
Mr Yang said during this economic downturn, people now shop for “everything” online.
Thais are buying more daily use and essential products online, increasing purchasing frequency but decreasing the spending per order, he said.
BORDERLESS RETAIL
Thailand’s e-commerce market in the future will move towards borderless retail — a major shift already present in China, Mr Yang said.
Borderless retail and online-to-offline sales will enable customers to buy “whatever, whenever and wherever they want, either through online or offline”, he said.
Consumers will be exposed to products or services they were not aware of or never thought they needed before, said Mr Yang.
Terence Pang, chief operating officer of Shopee, said 2020 was a transformative year for e-commerce.
“As consumers adhered to social distancing measures and stayed home. They turned to online platforms not just for their daily needs, but also for entertainment and interaction,” he said.
“This led to online shopping evolving from a purely transactional experience to a more social experience, with e-commerce platforms integrating more interactive elements such as games and live-streaming to engage users.”
Looking ahead, Mr Pang expects e-commerce in Thailand to increase adoption of digital payments as the preferred transaction mode. As more people become accustomed to e-commerce, it should drive the cashless movement offline, he said.
According to Mr Pang, logistics will become even more important as consumers increasingly rely on e-commerce platforms and have greater expectations for efficient deliveries.
Brands and sellers need to make efficient use of technology to ensure parcels are delivered in a timely and cost-effective manner, he said. One way to achieve this is to tap into the extensive and integrated networks of e-commerce platforms.