9 fundamentals for e-commerce in thailand

1. 9 Fundamentals
For eCommerce In Thailand
Thailand's rising smartphone penetration levels are providing opportunities for innovative eCommerce solutions
as high speed internet, increased payment options and new sales channels broaden the market. Government
initiatives aim to boost foreign investment alongside developments in broadband internet connectivity. While
concerns on fraud, online security and final-mile logistics hinder the development of the online marketplace,
positive outlooks on growing online sales highlight the potential of Thailand's eCommerce market.
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60%
52%
51%
9 Fundamentals For eCommerce In Thailand
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POPULAR ONLINE SHOPPING
CATEGORIES
Travel, Hotels and Resorts
24%
Fashion Accessories
23.3%
Computers and Electronic Appliances
19.2%
Others
17.5%
Service Business
7%
Office Equipment
4.9%
Automotive Industry and Products
4.1%
Percentage of eCommerce Business by Types of Business
100%
Foreign Ownership
ECOMMERCE MARKET SIZE
& GROWTH
The eCommerce market in Thailand in 2014 is
estimated to be USD $1 billion, with a strong predicted
growth to USD $6 billion between 2020 and 2025.
GROWING INTERNET PENETRATION
Thailand has a population of roughly 67 million
people with an estimated online community of 18
million. The internet penetration of 26% is expected
to double by the end of 2015, supported by the
government's USD $2.6 billion commitment in 2012
to extend the national fiber optic broadband network.
The government's goal is to make high speed internet
available to 80% of the population by 2015 and 95%
by 2020.
HIGH MOBILE PENETRATION DRIVES
MOBILE COMMERCE
Mobile contracts in Thailand exceeded the total
population in Q2, 2013 with 90 million subscriptions
penetrating the market at 131.8%. Smartphone
subscribers grew 25% in Q1 2014 year-on-year and
60% of total internet users used a mobile device to
access the web. Between February to April 2014, 51%
of mobile internet users made an online purchase,
demonstrating the real potential value of Thailand's
mobile commerce market.
INFRASTRUCTURE CHALLENGES IN
THE ECOMMERCE ECOSYSTEM
A key challenge for eCommerce in Thailand is
infrastructure. Traffic congestion and a limited
number of logistics providers to handle fulfilment
create delays and drive up individual costs of
final-mile delivery, which are negatively impacting
online shopping adoption rates and customer
experience.
SOCIAL COMMERCE SHOWS GREAT
POTENTIAL
Social commerce is a promising trend in Thailand,
with 1.7 million, 4.5 million and 28 million users on
Instagram, Twitter and Facebook respectively.
Thais are highly plugged in to the social space, with a
great overlap of social and shopping activities.
Facebook alone boasts over 10,000 local pages
dedicated to commerce while Instagram has reported
its most snapped location as Siam Paragon, a popular
mall in Bangkok.
Social messaging apps are also a key social commerce
platform with major e-tailers like Tarad.com
leveraging on Line to promote sales to its 24 million
local users.
KEY ECOMMERCE PLAYERS
Thailand’s mix of international and local eCommerce
stores is indicative that Thai consumers want variety
when it comes to online shopping. Global players such
as Amazon, ebay and Agoda continue to remain
popular while WeLoveShopping and Pantipmarket,
local C2C marketplaces and online communities, prove
strong contenders that cater to local tastes. Chinese
and Japanese e-tailers Alibaba and Rakuten also
recognise the importance of localisation - AliExpress is
a key site in Thailand and RakutenTarad, a local B2B2C
marketplace and online community, is popular with
locals.
LACK OF TRUST IN ONLINE
PAYMENTS
Fraud concerns and a lack of trust in online payments
for Thai consumers mean bank transfers remain the
most popular eCommerce payment method. With
under 8 million credit card holders in Thailand,
innovative payment options have been gaining
traction. Cash on delivery was first launched by Zalora
and now accounts for 60% of their transactions.
Following this payment method’s success, an
additional over-the-counter payment system was
created for consumers to make payment at
participating locations via QR codes.
SOURCES:
e27, Ecomeye, eConsultancy, eMarketer, Mediacake,
Nationalmultimedia, NSO Thailand, Syndacast,
Techinasia, Venturevillage, Yozo, Ystats.
2014
USD $1 Billion
Between 2020 & 2025
USD $6 Billion
90 Million
Subscriptions
GOVERNMENT SUPPORT FOR
FOREIGN ECOMMERCE BUSINESSES
Thailand's Board of Investment (BOI) is promoting
foreign investment, allowing 100% foreign ownership
for eCommerce businesses, with tax incentives and
reduced restrictions for foreigners working in
Thailand. Since July 8, 121 projects worth THB 318.8
billion have been approved across all BOI categories.
Rocket Internet’s Local
Version Of Amazon
Local C2C Marketplace
Local C2C Marketplace &
Online Community
Local B2B2C Marketplace
& Online Community
Alibaba’s B2C Marketplace
For Chinese Exporters
2
3
4 7
5
8
6
9
Used A Mobile Device
To Access The Web
Million 1.7 Million 28
Million 4.5
10,000
local Facebook pages
selling products
Point
To
26% Point
Today 2015
Made an Online
Purchase