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As more Thai people shift online to conduct their shopping – 14 million by 2021 – there is little doubt that the country will reach its projected ecommerce potential of over $11 billion.

The government’s roadmap for Thailand 4.0 is another boost for the digital habitat as investors often see bureaucracy in the region as a hinder to business.

So now the path is smooth to promote growth and money is coming in from the Chinese, how has the ecommerce landscape in Thailand changed over the last year?

1. Strong players emerge in fashion ecommerce  

After acquiring Zalora in Thailand and Vietnam last year, Central Group finally shed the old image to relaunch as LOOKSI earlier in June this year in attempts to revive the brand.

The change wasn’t only in the name, fashion labels housed by Zalora were cut by half to about 1,000 brands. The company also moved away from discounted products and began offering seasonal products instead.

But it was Thai-bred fashion startup Pomelo that created buzz after raising a $19 million Series B led by Chinese retail giant JD.com and participation from ally, Central Group.

Pomelo currently operates local ecommerce websites in Thailand and Indonesia but with new funds, the company is eyeing further expansion in Southeast Asia and even Europe. It’s also a firm believer in a multi-channel retail strategy, launching a offline store in Bangkok’s fashion hub Siam to offer click & collect

2. Global fashion and beauty brands get local

This year, more notable global brands launched local ecommerce websites to penetrate the Thai market.

Global fashion retailer Zara officially unveiled its ecommerce website and mobile application earlier this year, and integrates online and offline shopping by providing a pick-up service and return in-store for online purchases.

Thailand ecommerce landscape 2017

Thailand ECOMScape in 2017 (right) see more beauty brands launch their own ecommerce website than in 2016 (left).

Global beauty brands such as Lancome, Biotherm, and YSL have also launched local ecommerce websites in hopes of capturing the growing online segment.

3. The long-standing battle for logistics dominance continues

To talk about the rise of online shopping in the country isn’t complete without mentioning the vital and often forgotten pieces of the ecommerce value chain such as logistics.

The red ocean sector still draws new players despite the handful of names already dominating the space i.e. lalamove, Kerry Express, etc. One of the new additions includes Singapore-headquartered online food and grocery on-demand provider honestbee.

honestbee launched its logistics service called Goodship earlier this year to capture the growing demand, focusing on last-mile and same-day delivery services.

Thailand Ecommerce landscape 2017

General Manager of honestbee Thailand Bounthay Khammanivong at the Goodship launch.

Singapore-based NinjaVan also entered the Thai market in August and hopes to raise a $60 million Series C round. Who can bleed the longest?

4. JD gets its grips on Thailand

Chinese companies have certainly made some aggressive moves in Southeast Asia, and JD.com has chosen to make waves in Thailand this year.

The company announced a $500 million joint-venture with Thai conglomerate Central Group earlier this year that will be spent on ecommerce and fintech development, as well as promising the latest technologies to woo the country as its hub for Southeast Asia.

The ecommerce lovechild of the joint-venture, called JD Central, is expected to launch by April next year.

Thailand is JD’s second major investment outside of China after plans to win Indonesia hit a roadblock. The company lost the bid for leading C2C player Tokopedia to Alibaba and its own ecommerce site JD.id has yet to push top five in the country in terms of web traffic.

Thailand Ecommerce landscape 2017

Are we missing any key players or do you have an opinion on the 2017 Thailand ECOMScape? Let us know via Linkedin | Facebook | Twitter

Download the high-resolution of ECOMScape Thailand 2017 here.

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Criteo Exec Connect 2017 in Bangkok

“The question that needs to be asked is not for more channels but have we maximized our efforts in the current ones?”

This comment comes from Scott Minteer, VP of Online Marketing at LOOKSI (previously Zalora Thailand), during an executive roundtable held by Criteo Exec Connect last week.

The once popular question, “should I go online?” has long passed.

In a room filled with the region’s top ecommerce players, enablers and forward thinking global brands – LINE, Lazada, Agoda, Beiersdorf, Meiji, aCommerce, Orami, Konvy, etc. – the question has now become, “how do I maximize the returns on my existing ecommerce assets?”

How can I drive a higher number of quality users to my app, my webstore, my marketplace shop-in-shop to increase conversions?”

When the majority of retail’s biggest names are trying to reach customers through a desktop/mobile website, marketplace official shop, and/or dedicated app, it’s easy to get lost in the digital space.

This is where quality commerce marketing technology comes into play.

Companies with vast ad networks mixed with new age machine learning such as Criteo, one of the world’s largest commerce marketing ecosystems, exist to help growing businesses like fashion retailer ZALORA and booking giant Expedia capture the attention of Southeast Asia’s most relevant 200+ million digital consumers.

Commerce Marketing

Alban Villani (Criteo), Julien Chalté (LINE), Thanawat Malabuppa (Priceza)

ecommerceIQ chats with Alban Villani, General Manager of Criteo Southeast Asia, Hong Kong and Taiwan, to understand where the region stands in terms of marketing maturity, how brands can optimize online performance and how businesses can adapt to gain more from marketing tech.

But First, Education.  

There are multiple ways that a business can drive traffic to its ecommerce store – banner ads, search keywords, SEO-optimized content, etc. – but marketers need to first understand if they are utilizing the right channels for their market.

Is the business driving traffic to the best channels?

Alban believes there are a few changes that need to happen before retail can really take off in the region.

  1.     Ditching a conservative approach

“Smaller brands need scale and personalization to compete on equal footing with larger retailers. Sometimes all marketing effort is still placed only on desktop,” says Alban.

The desktop started as the main device favored by consumers to shop on but in order to reach the new generation of shoppers using various devices to browse through multiple platforms, companies need to capture much more information than the conventional statistics reveal such as age, gender, geographic location, etc.

MatahariMall.com, one of Indonesia’s largest retailers, used a Criteo specialized retargeting tool to discover an online visitor’s readiness to purchase by assessing factors such as consumers’ online navigation patterns and what they add to ‘shopping carts’. This increased the e-retailer’s advertising ROI by 900%.

Once a customer has been segmented, simple dynamic retargeting tools can then display the most relevant ads in real-time to them later in the purchasing funnel and local brands can leverage targeted marketing to capture relevant shoppers outside the walls of their own assets on third-party apps like Facebook.

Take for example, Joan is browsing on the Lazada app for a Maybelline lipstick on the brand’s official SIS (shop-in-shop) during her morning commute to work. In the evening, she accesses her desktop computer at home to look at vacation photos on Facebook when she notices an ad that shows her the same lipstick she didn’t purchase earlier in the day. She decides to buy.

https://www.youtube.com/watch?v=1vgAQvWZMzk

Businesses of all sizes are slowly beginning to realize that channels are all connected and marketing efforts should reflect the same by tracking cross-device and cross-platform performance.

  1.     Investing into a mobile application

“They [brands] are already making money on web, so they don’t spend too many resources on app,” says Alban.

Southeast Asia’s affinity for smartphones has caused companies such as Shopee and LOOKSI to adopt a mobile-first strategy to reach a wider audience. By building an app with strong UX and ads targeted at encouraging installs, they can directly send alerts and deals with loyal customers.

Central Group’s Scott commented that majority of the LOOKSI’s revenue came from its app.

Commerce Marketing

LOOKSI app advertising

“We build brand awareness through desktop so it’s still needed but the conversion rate is higher on the app,” says Scott.

The popularity of mobile apps in the region and performance marketing tactics like in-app retargeting by Criteo increased Zalora’s app traffic and sales transactions by 9X from September 2015 to 2016.

More than 4 in 5 Thai respondents find it more enjoyable and convenient to use a retail and shopping app over a brand’s mobile website – Criteo APAC Research

“The key to mobile success is keeping the retention rate high because even a 5% increase could grow the value of purchase from anywhere between 20 to 90%,” shared Ronen Mense, VP Asia of Appsflyer, during the roundtable.

“You can talk about the future and what’s going to happen based on future technologies like progressive web apps, AR, VR,” he continues. “But the most important thing to focus on is where your consumer is engaging with your brand and service today. If you wait until a new technology reaches critical mass, it will be too late.”

“The focus isn’t only on installs anymore, the key challenge for brands is encouraging repeat usage and improving conversions,” says Alban. “Very simply, it costs more to acquire a new user than it is to retain an existing one.”

A Real Marriage Between Online and Offline Data

“Thailand started to slow down in [retail] progress a year and a half ago. What we have seen is mostly consolidation, meaning there are fewer ecommerce sites and fluctuating churn.”

Less opportunity has led to an emerging hybrid model where brands and ecommerce sites must work together.”

What Alban is referring to is a symbiotic relationship where ecommerce platforms like Lazada, Konvy, etc., build tools to enable sellers to gain more visibility on its platform and sellers in turn, share consumer behavior data – what do they like to buy? Which products do they purchase together, what time do they like to purchase?, etc.

“Lazada wants brands to be more involved, we empower them through our platform and technology, while brands bring in their deep consumer knowledge,” commented Aurélien Pallain, EVP of Marketing at Lazada Group, at Criteo Exec Connect.

Although marketplaces are slowly developing in-house solutions to help its sellers drive traffic to their shop-in-shops, majority are still heavily dependent on off site re-targeting agencies to acquire high volumes of traffic by tapping into a large publisher network.

“Data sharing is necessary to help companies maximize their online performance, it benefits all parties and ultimately the consumers by allowing brands to reach them with relevant offers,” added Julien Chalté, Head of Ecommerce at LINE Thailand.

To optimize existing ecommerce assets is to optimize available marketing tools through data.

But in order to capture valuable data, structured systems need to be in place internally in a business and this is where Thailand’s traditional retailers and brands lack maturity.

Criteo has the capacity to utilize a brand’s offline database to reach a custom audience online, but very few players in Thailand’s retail industry have tech-powered brick and mortar stores or “clean, usable data” from offline purchases.

“Criteo uses first-party data, never the third party, to build quality product recommendation so clients use us as a discovery tool as well as a conversion tool.”

“We can take data from the brand that they have collected from their CRM, loyalty cards, and offline transactions and match it with our recommendation engines for O2O [offline-to-online] marketing but not many businesses have this type of information readily available,” says Alban.

How can this be fixed?

By holding more brainstorming sessions like Criteo Exec Connect and building more partnerships within the ecommerce ecosystem between enablers, platforms and brands, Alban feels positive about the region’s development and piquing interest from brands looking to improve existing marketing efforts.

Commerce Marketing

Criteo Exec Connect 2017 in Bangkok

“Smaller brands must tap into an open commerce marketing ecosystem and use machine learning to connect shoppers to the products they need and love. Criteo’s technology allows them to engage shoppers with relevant experiences on both retail apps and third-party platforms directly driving sales and profits.”

“There’s actually a quicker speed of adoption in Thailand than Singapore between brands and agencies. The big difference is in the average revenue per user (spend) but most brands are more interested in looking at market potential.”

And where else has a brighter potential than Southeast Asia’s online future?

Download the Report2017 Criteo APAC Research: App Commerce Goes Big in Thailand

THIS POST IS SPONSORED BY CRITEO