Philippines ecommerce landscape

The Philippines, although part of Southeast Asia’s growing ecommerce family, is quite the odd cousin. It’s the only market in the region where Lazada totally dominates the competition, getting around 35 million visits per month with no second player in sight. In addition, with over 10 million overseas Filipino workers and 3 million of them in the United States, Philippines’ online shopping behavior has been heavily influenced by the US, paving the way for innovative cross-border logistics businesses.

As the second most populated country in Southeast Asia with around 100 million residents, the Philippines currently has the second smallest ecommerce market. But that’s not surprising when 46% of the population are connected to and browsing the second slowest internet connection in Asia Pacific region. On top of that, the country ranks lowest among its Southeast Asian neighbors in terms of ease of doing business, which doesn’t help to boost its online trade either.

However, there’s a bright side. Ecommerce in the Philippines is on a runway and expected to lift off to reach nearly $10 billion by 2025 outsizing Singapore and Malaysia. How developed is the market now? ecommerceIQ shares ECOMScape: Philippines to provide a quick snapshot.

1. Lazada dominates over local and regional B2C marketplaces

Lazada, Southeast Asia’s heavyweight of marketplaces controlled by the Chinese ecommerce giant Alibaba, is leading online shopping in the Philippines. It currently ranks as the 7th most popular website in the Philippines. More than 60% of Lazada’s sales in the country come from mobile devices. The marketplace has also doubled the number of merchants selling goods on its platform to 4,000 compared to a year ago.

Philippines ecommerce landscape

Other local marketplaces in the Philippines don’t come close to Lazada in terms of visitors so have found other revenue streams offering affiliate marketing or cashback through their platforms. Takatack, calling itself one the biggest discovery platforms in the Philippines, is one such example. It is both an online marketplace offering products and services from local ecommerce shops and at the same time features products from different ecommerce sites such as Zalora and Galleon.

Marketplace verticals also show potential for growth. The usually competitive Fashion & Apparel category is rather thin in the Philippines. Zalora, online fashion shopping destination focused on Southeast Asia, operates in the country. A small number of global brands have local online stores and only a handful of local merchants sell online meaning the space is wide open for new players.

Philippines ecommerce landscape

Other verticals, such as Electronics & Gadgets, Home & Living, Others, also aren’t too crowded indicating there is room for more sellers.

Yet, Phillipines’ online scene might not be too easy for foreigners to conquer as learned by Thailand’s online retailer iTrueMart. At the end of 2015 it opened online store in Philippines as their first point of expansion out of Thailand but eventually closed the shop in September 2016 after less than a year in the country.

2. Retailers test ecommerce waters through Lazada

The Philippines’ ecommerce market in 2015 was estimated at $0.5 billion or 0.5% of retail in the country as many brands and merchants were not yet committed to making the big investment of opening a full-fledged online store.

However, to test market potential, some traditional brick-and-mortar retailers are opening their shop-in-shops on Lazada. For example, popular local department store chain SM Store initially went online through a shop-in-shop on Lazada where it offers more than 4,000 items. It now has also its brand.com store, powered by Lazada.

Consumer electronics retailer Robinsons Appliances also partnered with Lazada in mid-2015 by opening an official shop on the popular marketplace. Even global brands like Samsung are adopting this strategy.

More brands and sellers will likely follow in these steps to tap online shopping opportunity and add to Lazada’s popularity.

3. C2C ecommerce thrives

Similar to other Southeast Asian countries, a consumer-to-consumer (C2C) market makes up a significant part of online shopping in the Philippines, likely at around one third of the ecommerce market as it is Indonesia.  

OLX is the largest platform for classifieds and peer-to-peer sales. Ranking as 17th most popular website in the country it started as Sulit.ph 10 years ago. Currently, it claims to attract 100,000 to 200,000 new sellers every month.

Philippines ecommerce landscape

In 2016, two other well known C2C marketplaces in the region – Shopee, supported by Southeast Asia’s largest gaming company Garena, and Singapore-based Carousell – entered the Philippines to fight for Filipinos’ hearts and wallets. Shopee’s strategy to lure sellers from Instagram and other marketplaces to its platform by offering merchants free shipping and cash on delivery in the Philippines increased the number of sellers by 40% and the number of listings sold on the app – by 60% within three months.

Philippines ecommerce landscape

As 55% Filipinos own a smartphone and 18% have made a purchase online via mobile, it comes as no surprise that Shopee and Carousell are betting on the Philippines as their next stop for growth.

Another driver of the C2C market is the Filipino preference of Western brands combined with limited options to buy them as international brands have started entering the country just recently and there still remains a significant number of underserved market segments. This fuels selling of popular brands on C2C marketplaces, where products usually don’t come directly from manufacturers but are obtained elsewhere.

4. Digital payments pick up

Around 70% of the Philippines’ population are unbanked and less than 3% of Filipinos use a credit card to make payments. Thus, opening an online store without a cash-on-delivery payment is not really an option in Philippines.

In the recent years, several new mobile wallet apps have been introduced first by local telecommunication companies. For example, PayMaya mobile wallet app and GCash app offer a virtual card for shopping online that can be topped up at various offline points throughout the country. Local banks are also launching mobile banking apps.

Philippines ecommerce landscape

Many of country’s fintech startups are attaining to the needs of the unbanked while also serving overseas Filipino workers who send remittances to their relatives. In 2014, two Silicon Valley entrepreneurs Ron Hose and Runar Petursson founded Coins.ph – a mobile blockchain-enabled platform aimed at the unbanked for easy access to financial services. This start-up raised $5 million series A funding just at the end of October, 2016.

Philippines ecomscape landscape

ePeso app allows to create a digital account with an email address, top it up through scratch cards, over the counter facilities and merchants to send and request funds, pay bills. Paylance allows users to pay and transfer money to Philippines through Bitcoin for free. While Payswitch through its web platform allows small enterprises to offer services such as electronic loading, remittances and bill payments.

5. Innovative cross-border solutions and competition among logistics service providers

While ecommerce is not yet in full swing in the Philippines the logistics landscape is dominated by local players like 2GO and LBC while in other Asian countries international players like Kerry Logistics and DHL lead. Several regional players like Thailand-based aCommerce, Singapore-based SP ecommerce and Quantium solutions provide fulfillment services to online sellers.

Philippines ecommerce landscape

Poor infrastructure, difficult geography and high rates of cash-on-delivery make the shipping of online purchased goods complex. While there seem to be plenty of third-party delivery providers, only two companies – 2GO and LBC – offer countrywide shipping. The rest ensure delivery within metro area of Manila. This limits ecommerce growth and leaves many of country’s potential shoppers underserved.

At the same time, overseas Filipino workers have facilitated the development of innovative cross-border shipping solutions for goods purchased overseas. Beyond family members carrying their Amazon orders back in one big “balikbayan” box, several unique cross-border package forwarding services like LBC’s ShippingCart, Johnny Air Plus and POBox.ph have sprung up to take advantage of this phenomenon.

Philippines ecommerce landscape

Click here to download the full, high resolution version of ECOMScape: Philippines and join the ecommerceIQ network for the first look at the next ECOMScape in our series.

For more insights on the region’s ecommerce landscape take a look at:

ECOMScape: Indonesia

ECOMScape: Thailand

ECOMScape: Singapore

Are we missing any key players? Let us know on FacebookTwitterLinkedIn

Customer support plays an integral role in delivering an enjoyable online shopping experience. Your online store could be optimized with tips from beautyIQ series, but a poor customer experience will drive 89% of consumers to go to a competitor. The last article of the beautyIQ series will provide guidance on how to best support your Southeast Asian customers online and keep them loyal to your brand.

The importance of customer service seems obvious in traditional brick-and-mortar shops – your salesmen on the floor represent your brand’s image and values through interactions with customers. This is especially true in Thailand and China where shoppers rate customer service as one of the most important factors driving their favorite retailer perception.

For ecommerce, customer care is more integral to the experience as shoppers lack the touch and feel of a product and convenience of a friendly salesperson ready to address any questions. Customer support is also important to containing the damage of a negative review spreading on social media, where more than 50% of consumers in Southeast Asia turn to read product reviews.

Providing excellent customer support can be the make or break of a company as demonstrated by Zappos.com, an online shoes, clothing and accessories store owned by Amazon. Just this July, the company set a new internal record with a customer-service call that lasted 10 hours and 43 minutes. It is stories like these that keep Zappos in the online shopping spotlight and customers coming back.

To be as accessible as possible for online shoppers, brands and merchants should ensure the following:

1. Make Customer Service Contacts Visible

45% of respondents to PwC retail study say reviews, comments and feedback found on social media influence their shopping behavior. This means it is extremely important to quickly diffuse a frustrated customer as they are more likely to turn to social media and post a negative comment regarding your brand.

Mitigate this situation by making your phone number or other contacts highly visible to increase trust in your online store and give browsers a ‘shopping safety net’.

Bobbi Brown’s online store in Thailand lists a live chat button at the top of its webstore and uses large icons for email, chat and phone communication at the bottom of the page, leaving no questions where customers should turn for answers.

customer support

customer support

 

Clinique also lists customer service contacts at the top of its webstore under ‘Help’, which is easy to see and comprehend.

customer support

2. Support Customers on Channels They Use

As internet users spend from 1.6 hours in Singapore to 3.7 hours in Philippines on social media every day, consumers in Southeast Asia show a stronger desire to communicate with brands through social media than consumers elsewhere in the world.

Facebook is the most popular social media network and a quick look at local pages of popular beauty brands show that customers don’t hesitate to express their positive and negative experience online. Developing a capability to respond to customer reviews online will help brands improve their relationship with customers.

In Thailand, global beauty brands state on their local brand.com webstores (Bobbi Brown, Kiehl’s, Estee Lauder, MAC Cosmetics, Clinique, L’Occitane and Laura Mercier) that they mostly provide customer support either by phone on weekdays from 9 AM to 6 PM or email.

Bobbi Brown is the only brand that offers a live chat on weekdays, while Laura Mercier has official account in LINE, one of the most popular chat apps in Southeast Asia. All brands mentioned engage with customers and their inquiries on social media channels like Facebook and Instagram, but the response time varies.

3. Train Customer Service Agents to Listen, Reply and Execute

“I want it all, I want it all, I want it all, and I want it now,” sings rockband Queen, and it sums up quite well the expectations of customers nowadays. Every third customer who has attempted to contact a brand for customer support through social media expected a response within 30 minutes. Research shows that customers even value a quick response over a more informative one.

To track your customer inquiries, use software like Zendesk, as used by Lazada, one of the biggest marketplaces in the region. Keeping track of customer inquiries is important to calculate customer response time and ensure customers who have turned for support have actually received it.

Having knowledgeable customer service agents who are familiar with product properties, brand policies and other issues will speed up time taken to reply to customers and positively impact the chance of a returning shopper. ecommerceIQ sent inquiries to the above mentioned global beauty brands and they all responded within 24 hours.

Customer complaints may not be the most pleasant thing to handle, but it is the best feedback a business can receive as it highlights holes in its business model. Internal data from aCommerce, service provider for ecommerce fulfillment in Southeast Asia, shows that concern about expiry date of skincare or cosmetics products are among the most common complaints in Thailand. Shoppers may ask for a refund or return the product if, for example, two years have passed since the manufacturing date.

It is the responsibility of customer service agents to communicate these problems to the right departments and ensure the same issues do not arise again.

Customer care is the key factor impacting consumer trust – not surprisingly a good customer experience will bring shoppers back for more, while bad support will drive them away. With the widespread usage of social networks in Southeast Asia and across the world, word of mouth has never traveled faster. 47% of digital consumers in Southeast Asia inevitably go online to share their experience, which will impact decisions of other potential customers for buying online.

With this article beautyIQ series finishes. We hope you found the tips useful in creating an enjoyable online shopping experience for your customers. You can read all articles on ecommerceIQ.  

For more insights about ecommerce trends in Southeast Asia, visit the report section on  ecommerceIQ.

 

BY AIJA KRUTAINE AND ANUTRA CHATIKAVANIJ

 

We’d love to hear your feedback,

find us on Facebook, LinkedIn or Twitter.

 

singapore ecommerce landscape

With 83% of its population connected to the internet, Singapore holds the title as the most mature ecommerce market in Southeast Asia. Despite its small population, Singapore accounted for 25% of Southeast Asia’s 2013 online retail value, larger than the region’s largest market, Indonesia that contributed 20%.

Singapore’s ecommerce market is valued to reach $5 billion in 2025, making up 6.7% of retail sales in the country. What else can we see from the Lion City’s ecommerce scene? ECOMScape: Singapore will provide a quick overview.

1. Cross-border ecommerce is (still) preferred by the population

Around 55% of ecommerce in Singapore consists of cross-border transactions. Their developed infrastructure, liberal regulations on customs and tax, and large population of expats in the country opens the gate for foreign companies to flourish without having to establish local ecommerce operations in the country.

Singapore ecommerce landscape

The US and China are the top two destinations for shoppers from Singapore, putting Amazon and Alibaba’s Taobao on the top five most visited ecommerce websites in the country.singapore ecommerce landscape
As a result, there aren’t many home-grown players opting for a marketplace business model. Lazada and Qoo10 are the only mainstream B2C marketplaces in Singapore, unlike in Indonesia and Thailand where the space is a battlefield for deep-pocketed companies.

Its strategic location also attracts global companies to use Singapore as an ecommerce hub for their Brand.com presence to serve online customers in nearby markets such as Indonesia and Malaysia. Adidas used to fulfill regional orders from Singapore before opening an online store in Indonesia this October while Charles & Keith, a brand native to Singapore, offers free shipping to most countries with minimum purchase conditions.

2. Grocery shopping becomes more convenient

As the popularity of online shopping in Singapore increases, more Singaporean are turning online to fulfill their basic needs, including groceries. According to Ipsos and Paypal, online grocery shopping in Singapore is predicted to increase 21% in 2016.

This space seems to be very attractive for investors as seen by funding news of pure-play online grocers like Redmart and honestbee and transition of Singapore’s traditional grocers like Giants and Fairprice jumping on the online bandwagon. In fact, the majority of the etailer in Singapore are traditional grocers.

singapore ecommerce landscape

Food delivery services like Foodpanda and Deliveroo are also thriving in Singapore, the latter boasting 25% week on week growth, while Foodpanda claims Singapore to be one of its key markets in Southeast Asia after closing down operations in Indonesia and Vietnam.

singapore ecommerce landscape

3. Daily deals sites are still popular among Singaporeans

As news of daily deals companies shutting down across Southeast Asia grows, the business model may have overstayed its visit in the region but seems to be stable in Singapore. Groupon, which closed operations in Philippines and Thailand last year and sold its Indonesia operations, remains in Singapore’s top 5 most downloaded shopping apps and top 15 most visited website in Similar Web’s ‘shopping category’. Although Ensogo shut down earlier this year, many more deals sites still continue to operate.

singapore ecommerce landscape

4. Payments opportunity in Singapore attracting global players

Singapore’s established infrastructure and internet maturity makes an appealing testing ground for global players wanting to expand their reach in Asia, especially online payments players. The country’s credit card penetration is 38%, while most of the Southeast Asian countries are still below 5%, and the amount of cards circulating in the country averages 3.9 cards per person.

As a result, the Cards and Payments market in Singapore has become one of the most attractive and competitive markets in Asia Pacific. Adyen, a payment platform unicorn from Europe, recently opened its office in Singapore following the company’s plan to focus in Asia Pacific.

singapore-ecommerce-landscape-mobile-wallet

Singapore’s cashless habit has also made Singapore the perfect place for NFC payments solutions like Apple Pay, Android Pay and Samsung Pay to launch in Asia and the heavy traffic to Alibaba’s ecommerce platforms ensure the adoption of Alipay is well on its way.

5. C2C is driven through mobile apps

singapore ecommerce landscape

According to PwC, 38% of online shoppers in Singapore are making purchases on their smartphone, this number is higher than the global average of 28%. 57% of the shoppers in the republic also turn to social media to read product reviews. As an early adopter of internet culture in the region, Singaporeans are apt at using their mobile to access the internet.

Home-grown C2C platforms like ImSold, Shopee and Duriana have focused on their mobile platforms in order to appeal to customers who want the convenience of buying and selling their things on the go. More mobile-only players are expected to emerge.

Click here to download the full, high resolution version of ECOMScape: Singapore version and join the ecommerceIQ network for the first look at the next ECOMScape in our series.

You can also find ECOMScape: Indonesia and ECOMScape: Thailand.

Asia’s mobile phone penetration matched with the high popularity of social networks has paved the way for social commerce to flourish in Southeast Asia. More and more online shoppers are using social media channels like Facebook and Instagram to browse and to negotiate a purchase of beauty products, apparel and other goods instead of buying it on typical ecommerce websites.

Thailand is the world’s biggest social commerce market where 51% of online shoppers have purchased goods directly via a social media channel.

Social commerce has been practiced by every third online shopper in Malaysia and Indonesia, while globally around 16% of online buyers have shopped directly via social media.

Across the region, Facebook and Instagram are among the most popular networks and on average, internet users spend from 1.6 hours in Singapore to 3.7 hours in Philippines on social media every day. This, the fact that Southeast Asians are reluctant to share their financial information online and less than 20% of population (except Singapore) use either debit or credit card to make payments drive social commerce in Southeast Asia.

How Social Commerce Works in Thailand

Usually merchants set up ‘shops’ on Facebook or Instagram, or both, and post images and details of goods for sale. Potential shoppers can browse and inquire about product availability and arrange a method of payment, typically a bank transfer, through a popular chat app such as LINE.

In social commerce, the order is usually made online while the payment – offline.

Social media ‘shops’ offer nearly anything from food, beauty and health products of various brands to apparel and accessories, sometimes secondhand or with minor defects. 

How Big is Social Commerce in Thailand?

The consumer-to-consumer (C2C) market size in Thailand is significant. Page365, a startup that helps small retailers sell products via social media, estimated that social commerce is worth more than $500 million per year in the Land of Smiles alone. However, it is difficult to accurately measure the market size as majority of sales from social media are conducted via bank transfer and merchants refrain from disclosing their real revenues.

ecommerceIQ decided to test one of several popular forums where shoppers frequently discuss favored and reliable Instagram/Facebook stores for makeup. The team chose an Instagram makeup shop by user @lachompshop due to popular word of mouth and recommendations on Pantip forum.

Case Study: The Social Commerce Journey

The search for products takes place by scrolling through @lachompshop picture gallery on Instagram. ecommerceIQ decided to purchase a MAC lipstick, which surprisingly was selling for 550 Thai baht, 300 Thai baht cheaper than in MAC’s official online store.

social commerce

social commerce

On social commerce shops products usually are browsed by simply scrolling through the seller’s Instagram picture gallery.

social commerce

A lipstick on MAC’s official online store costs 850 Thai baht while @lachompshop offered to sell it for 550 Thai baht.

The seller indicated her LINE account in the Instagram ‘About Me’ section so she could be easily reached for further product inquiries. The seller replied on LINE within one minute of the team’s question and confirmed product availability with a screenshot of the product from her Instagram page. The exchange was short – the seller noted delivery would take 3 days and after the team negotiated for express delivery in 2 days at no additional charge, she outlined more details – payment had to be made before shipping of product.

The seller sent her bank details so that 600 Thai baht (included 50 baht delivery cost) could be transferred to her account. The entire purchase process was simple – a short exchange on the chat app with a following bank transfer compared to filling online forms, payment card details, when buying online.

social commerce

The exchange with the seller took place on March 29, 2016.

social commerce

MAC lipstick that was ordered by ecommerceIQ team

Once the transfer was made, the transaction could not be cancelled. After the payment was done, the seller followed up in LINE with a tracking number from Thai Post so delivery could be followed online.

The MAC lipstick arrived in a brown package, sealed with a protective clear tape, and actually even a day earlier than expected. The delivery time in the end was just 1 day compared to 2-5 days waiting for products bought online from brand.com store or marketplace.  The product was in perfect condition in terms of exterior, in the original MAC packaging and was the right color. However, the lipstick texture was slightly smudged, possibly due to the heat during delivery. There was no pre-delivery text or call as would be in a typical ecommerce purchase.

social commerce

The new lipstick was delivered before expected for a nice surprise after agreeing on the purchase via Instagram shop.

Once the seller was notified of the product arrival, she responded politely within 5 minutes adding an element of personalized contact to make the experience more positive.

The Good and the Bad of Social Commerce

Facebook and Instagram provides an inexpensive opportunity for upcoming, small brands to sell online at a lower cost compared to creating a full-fledged webstore. The direct communication with sellers also adds a personal touch, which Southeast Asian shoppers find important to gain trust in the seller, the brand or product.

However, the same trust with regards to product authenticity and payment is also a concern when buying from sellers who stock various products on C2C platforms. Data from Page365 shows that 74% of consumers are reluctant to shop online because they fear fraud and 33% of consumers have complained about product imperfections when ordering from Facebook stores. There have been cases reported when the customer transfers money to a seller via bank transfer prior to a product delivery just to find out later that the seller took their payment and cut off contact.

There is also risk of receiving fake products and C2C shops are usually less willing to accept returns, as in the case with @lachompshop who explicitly stated that unless the product was damaged or delivered in the wrong color, returns nor refunds would be accepted.

Yet, for many, especially in provinces where malls are not easily accessible, social commerce is an easier way to get products they want without having to shop online and without having a credit card. Although it does takeaway from ecommerce websites, the wave of social commerce allows consumers to adopt online shopping habits and eventually encourage them to trust e-transactions. 

What to Expect Next

Seeing the popularity of social commerce, other businesses are looking for ways to enter the market. This June, Facebook started testing social commerce payments in Thailand and later decided to launch the world’s first Facebook Shop in August. LINE, which is widely used to communicate with buyers of social media shops, launched its own ecommerce app LINE Shop already in July 2014.

C2C marketplace Shopee, which is among the most popular apps in Thailand, is trying to attract merchants currently selling on social networks, to its online marketplace by offering easy integration of their Instagram shops and reimbursing shipping, cash on delivery fees to sellers.

The positive experience ecommerceIQ had testing social commerce shows why for many it may be more convenient to shop via social networks than overcome concerns about the security of digital payments to shop online even if it means a few added small risks. 

As the ecommerce market size in Southeast Asia is expected to increase nearly 15 times to $88 billion by 2025, social commerce will likely grow as well thanks to a relatively low online presence of Western brands

 

BY AIJA KRUTAINE AND ANUTRA CHATIKAVANIJ

 

We’d love to hear your feedback,

find us on Facebook, LinkedIn or Twitter.

Up until this point, we’ve covered driving traffic to your online store, where to best sell your products and the type of content that increases conversions. Now we will be sharing a few tricks to make it easy for store visitors to complete their purchase, something commonly overlooked. From the checkout process to receiving the package, in this article we discuss how to decrease cart abandon rates and last mile best practices.

55% of consumers surveyed by PwC in Southeast Asia report they are shopping online monthly or more frequently, and returning customers are one of the easiest ways to grow ecommerce business. Creating a stress-free checkout process and delivering pretty package on time are vital factors to gain customer loyalty.

Once the shopper is happy with their product selection and ready to checkout, ensure the final steps in their online journey, the last mile, are hassle free. Businesses can do this by:

  • Providing easy checkout process and being transparent about any extra costs
  • Offering a ‘cash on delivery’ payment method
  • Creating the best image of your brand with smooth delivery of the product

 

Optimize your store’s checkout process

Abandoned shopping carts are the worst nightmare of online sellers as they present lost revenue. And it’s usually because every fourth customer is frustrated when there is too much information to fill upon checking out.

An overly complicated checkout form can scare off over 60% of potential buyers therefore the shorter the checkout form and the less clicks your customer has to make, the more likely that she or he will finish the purchase.

For example, Estée Lauder’s checkout form of its Thailand webstore is rather long. It requires, first, user registration and, second, to fill in a separate line each item of the address, eg. house number, alley, road, district, county, instead of using a text field for the user to enter everything at one go. This probably makes it easier for the brand to process data in the backend, but doesn’t make for a great user experience.

last mile delivery

last mile delivery

Checkout form of the Estée Lauder online store in Thailand is quite lengthy.

To checkout from Kiehl’s Indonesia webstore customer first has the pleasant task to choose free samples. But after that she or he is directed to sign in or register an account, then has to look again for the shopping cart and gets to fill the checkout form only after a few more clicks.

In both cases, customer at some point may feel impatient or confused and such experience may reduce conversion rates.

To best capture your shopper’s purchase, offer a guest checkout option and create a simple, one-page checkout form asking the buyer to fill only the necessary information – name, address, phone number and payment details. Do you really need to know your customer’s birthday adding one more line to fill during the checkout?

Be sure to offer various payment options based on the preferences of your target audience and show that you are serious about the security of the payment displaying secure payment gateway branding such as SSL (Secure Sockets Layer) certificates.

With a total of 5 clicks from landing to checkout to submitting your order, Maybelline Thailand is a good example of how to simplify the checkout process. While it requires a registration, it is very simple and quick, and the checkout form is just one-page.

last mile delivery

Maybelline Thailand store has created simple one-page checkout.

To avoid abandoned carts, brands should be transparent about the costs that the buyer might incur in addition to the product price. Around every fourth customer drops the purchase because of unexpected shipping costs and 45% of customers tend to add products to their cart without intent to buy in order to check the final price.

Show all the additional costs that the customer might have to pay or highlight free shipping with minimum purchase value – around 24% are more likely to spend more to be eligible for free delivery.

Prioritize cash on delivery as payment method

In Southeast Asia, cash is the preferred payment method for the majority of customers – in Thailand 83% of them would prefer to pay with cash on delivery, in Malaysia – 82%, in Singapore – 72%. Less than 10% of the population in Thailand, Indonesia and Vietnam and less than 20% in Philippines and Malaysia use banking cards to pay for their purchases.

Offering cash as a payment method will increase the number of customers who want to purchase goods online as the conversion rate on cash on delivery is higher than bank transfer and bank service combined. This is due to low credit card penetration rates and high mistrust issues with entering payment information online across the Southeast Asian markets.

In Thailand, other payment methods which customers without bank accounts can use include payments over the counter in convenience stores 7-Eleven and other shops or cash deposit in a bank or ATM. However, by offering these payment methods, a merchant pushes the customer to decide twice on buying the product – first time on the webstore and second time when the person has to go to either the counter or the bank to actually make the payment. Thus, giving customers another opportunity to reconsider and cancel the purchase.

Make the delivery of the product stress-free

Delivery times, customer service, the aesthetic appeal of the packaging and even the etiquette of the messenger is a business’s final chance to leave its consumers satisfied. Yet, some brands fail to align their global image with the “last mile” delivery.

When a customer makes a purchase, she or he, of course, is interested in the particular product and will presumably make a purchase if your site is optimized but that doesn’t mean the box in which the product is sent should be neglected. The goal is to make the shopper feel like their online purchase was worth it.

In a recent study, Dotcom Distribution found that 40% of consumers are likely to make repeat purchases from an online merchant that delivers products in gift-like or premium packaging. If the delivery came in a unique package, consumers are also more likely to share it via social media. Instant free marketing!

Here are a few things to consider for special packaging:

  • Use a branded box, not just the standard brown box from the logistics provider
  • Use branded or coloured tissue paper, not hard paper to wrap product
  • Consider branded or coloured tape instead of clear tape
  • Include small gift samples to increase cross-selling
  • Protect the branded box by putting it in a standard brown box

It is extremely vital to premium brands like Bobbi Brown, Kiehl’s, Estée Lauder and MAC to provide proper packaging to protect their brand image and justify higher product costs. In Thailand, they are trailblazers as to how their products are represented when delivered.

last mile delivery

last mile delivery

Premium brands Bobbi Brown, Kiehl’s and MAC have invested in a gift-like packaging. Source: ecommerceIQ

Yet, the arrival of French brand’s L’Occitane package provided somewhat disappointment.

last mile delivery

Franch brand L’Occitane delivers products bought on its online store in standard packaging.

There comes a high cost to providing this special packaging in the right size. As it can be seen in the table below, just having a brand’s logo on the box and using a branded tissue paper can increase the packaging costs 3 to 5 times, while having the full premium branded packaging means even bigger expense.

last mile delivery

“If you have an average basket size of over 1000 THB, it makes sense to have a branded box. Even if not the case, brands should see the packaging as an extension of its marketing and pick a style that aligns with the brand’s global image, as it is the customer’s final touchpoint,” says  Phensiri Sathianvongnusar, aCommerce Thailand COO.

Take into account that shipping costs are calculated by volume metrics, not by weight. This is why it’s important to have a couple box options that are efficient for the physical average basket size of your product.

When you’ve invested your time and resources to get potential customers to visit your online store, don’t sabotage your efforts by complicating the checkout process and ignoring careless fulfillment. Provide an enjoyable purchase process experience, surprise them in a positive way with gift-like packaging, and you will win their hearts.

Southeast Asia’s ecommerce boom in the recent years has fostered the establishment of fulfillment companies who can advise your brand on the best practices. See who they are for Thailand and Indonesia.

Stay tuned for next week’s beautyIQ piece in the series!

BY AIJA KRUTAINE AND ANUTRA CHATIKAVANIJ



We’d love to hear your feedback,

find us on Facebook, LinkedIn or Twitter.

Thailand Ecommerce Landscape

Thailand, while not the most populous nor richest of the Southeast Asian nations, is currently the fourth largest ecommerce market in the region, valued at $900 million and is expected to increase its ecommerce business 12-fold to a value of $11.1 billion by 2025.

What does the attractive Thai ecommerce market looks like now and what can be expected in the coming years? ecommerceIQ shares ECOMScape: Thailand to provide a quick snapshot.

1. Lazada is the dominating marketplace, while others compete in niches

What differentiates Thailand from other markets in Southeast Asia is that one online marketplace – Lazada – has significantly advanced over its local ecommerce rivals. The traffic of Lazada’s two closest competitors WeLoveShopping.com and Wemall.com combined makes only around a quarter of Lazada’s monthly traffic.

Yet, that and the fact Lazada now has the support of Chinese ecommerce giant Alibaba, is not scaring off competitors. Korean ecommerce marketplace 11street is expected to launch in Thailand in time for campaign season, 11/11, in hopes to replicate its success in Indonesia and Malaysia. The group’s claimed annual gross merchandise value of $7 billion is 7 times bigger than that of Lazada Group, but will it manage to challenge Lazada in Thailand?

Deep pocketed conglomerates are also moving in to steal market share, such as Thai CP Group, which belongs to the richest family in Thailand – brothers Chearavanont, owns Tesco Lotus, Shopat24 and 24Catalog. The second richest man in the country, Charoen Sirivadhanabhakdi, this year bought BigC and Cmart (formerly Cdiscount). While Central Group, the operator of Central department stores and distributor of several tens of foreign brands in Thailand behind which stands the third richest – Chirathivat – family, owns online marketplaces Central.co.th, Robinson and Tops. All of the above mentioned retailers have both – offline and online stores.

Thailand Ecommerce Landscape

Despite Lazada’s dominance, competitors are not easily scared off, especially deep pocketed Thai conglomerates who want their share of etailer online market.

Fashion & Apparel is one of the most competitive online market segments. In Thailand, this category represents a healthy mix of local players like Pomelo and WearYouWant, regional players like Zalora, Reebonz and global brands such as Adidas and Uniqlo.

Thailand Ecommerce Landscape

The competitive Fashion & Apparel online market in Thailand represents a healthy mix of local, regional and global players.

Brand.com webstores are also gaining traction in Thailand, which is best observed in the beauty category. Brands such as Maybelline, L’OccitaneEstée Lauder and Kiehl’s in Southeast Asia embrace the ecommerce market boom and use the opportunity to sell on their brand web stores, marketplaces or through distributors to capture the widest possible audience.

Thailand Ecommerce Landscape

Beauty brands go all-in in Thailand selling their products online on their own webstores, marketplaces or through distributors.

2. Old school vs new kids on the block compete in C2C

Classifieds and consumer-to-consumer (C2C) marketplaces were the first ‘ecommerce’ businesses to operate and remain an important part of the online journey in Thailand. Three of the most popular C2C marketplaces – WeLoveShopping, Tarad, Pramool – were created around the millennium and are run by local companies. However, newer market entrants like Shopee, supported by Southeast Asia’s largest gaming company Garena, are on their heels.

Tarad and Pramool ecommerce sites can be accessed on desktops, while the newest competitors – Shopee, Blisby, as well as WeloveShopping – all have mobile apps, which rank among the top 10 most popular C2C ecommerce apps in Thailand. Since approximately 85% of online shopping outside the major metro areas in Thailand takes place through mobile, it is easy to see that the new kids on the block are disrupting traditional, desktop-first marketplaces.

3. Social commerce is driven by Facebook, Instagram and LINE

An ecommerce business model specific to Thailand is social commerce – merchants set up ‘shops’ on Facebook and Instagram where they post images and details of their products so online browsers can inquire about the product and other details to further facilitate the deal.

Thailand Ecommerce Landscape

Thailand is the leading country where half of online shoppers buy directly from merchants through social networks.

According to a PwC report, Thailand is the biggest social commerce market and around 50% of online shoppers purchase products through social networks. Therefore it was no surprise when this June, Facebook started testing social commerce payments in Thailand and later in August launched Facebook Shop, the first in the world.

Companies like Shopee are looking to lure merchants selling on social networks to its online marketplace with aggressive marketing by offering easy integration of their Instagram shops and reimbursing shipping, cash on delivery fees to sellers. Other players like LINE also have eyed this market segment. LINE Shop was created to utilize the wide audience of LINE messaging app and tap the social commerce market. Yet technical issues such as a requirement to upload merchant product catalogues on the app through mobile phones, as well as limited payment options through LINE Pay, has hindered the success of LINE Shop.

4. Cash is still king

Thailand is still a cash driven society and cash on delivery (COD) is the preferred payment method for 70% of ecommerce shoppers, making payments a bottleneck for faster ecommerce growth as many sellers cannot offer COD. There are various mobile wallets offered by telecom companies, banks as well as independent players but so far, none of them have quite caught on.

Thailand Ecommerce Landscape

Despite various mobile wallet providers, cash is still the most preferred payment method.

The large unbanked population and low trust in the security of personal financial details does not make the task of Thais adopting digital payments any easier. And though there has been a surge in fintech players, none really address the core issue. For example, LINE Pay accounts can only be linked with a credit card in Thailand, where just  3.7% use one to make payments. Mobile wallets and banks offering a top-up through either ATMs or special kiosks, defeats the purpose of an mwallet. Good news is that there is an opportunity for a player to provide a convenient and easy digital payment solution for those without a bank account and/or credit and debit cards.

5. Fierce competition in logistics leads to price war

The ecommerce gold rush across all Southeast Asia has facilitated growth of startups who hope to solve logistics problems like next-day delivery and live tracking, and Thailand is no exception. The success of ride-hailing apps Uber and Grab has encouraged several startups to offer on-demand delivery services.

Thailand Ecommerce Landscape

The success of ride-hailing apps has driven several start-ups to offer on-demand delivery.

There are numerous companies who provide 3PL services and ensure a smooth last mile delivery. This means companies engage in price wars and suffer lower margins, if any at all.  

The packed logistics market is beneficial for marketplaces and merchants as they have plenty of delivery service providers with whom to negotiate a lower price.

Thailand Ecommerce Landscape

Numerous companies offer 3PL services and ensure last mile delivery driving down delivery costs for the benefit of marketplaces.

Click here to download the full, high-resolution version of ECOMScape: Thailand and join the ecommerceIQ network for first look at the next ECOMScape in our series.

Check out also ECOMScape: Indonesia

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