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As ecommerce in Thailand is aggressively propelling forward, even companies with a rich traditional heritage such as Somjai, one of Thailand’s oldest and most famous stationery store chains, are going online to grow their sales channels.

And there is good reason for that – the number of customers shopping online is steadily increasing. According to Statista, 12.1 million consumers in Thailand are expected to make purchases online this year. This number is projected to grow by 15% within the next five years reaching 13.9 million in 2021.

Online shoppers in Thailand

In Thailand, 4.4 million online shoppers are 25-34 year olds and are followed closely by 3.9 million online users aged 16-24 years.

These two age brackets together make up two thirds of all online shoppers and the ratio is projected to remain consistent in the medium term.

Overall, it is forecasted that within five years, every fourth Thai will shop online, up from around every fifth now.

online shoppers in Thailand

But ecommerce user growth in the Land of Smiles is not even the fastest in Southeast Asia. In Indonesia, ecommerce user penetration is expected to almost double from 2015 to 2021. However, the amount customers in Thailand are expected spend on average online is predicted to soar.

In 2021, an online Thai buyer will spend $382 per year, which is 57% more than the expected spending of $243 per user in 2017.

What to keep in mind?

More online shoppers means more potential customers for businesses with online channels. Understanding the trends of what, when and where these customers buy is essential to capturing more of them going online.

  • Thais have more money to spend on shopping as Thailand has the third highest GDP per capita in the region after Singapore and Malaysia.
  • More companies in Thailand are seeing the benefits of an omni-channel strategy such as Zara, Uniqlo, Adidas who have invested in their own brand.com in addition to offline stores.
  • The tech-savvy generation (16-34 year olds) is accustomed to online shopping both on social media, e-marketplaces/brand.com.
  • Spending power will continue to rise and two-thirds of consumption growth in the period to 2030 will come from increasing per capita spending.
  • Research reports, tools such as Google’s Consumer Barometer and eIQ articles provide useful insights on Thailand’s online shoppers’ behavior and trends.

 


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Apparel and tech gadgets are two things that are almost synonymous with online shopping. According to Statista, ecommerce sales in fashion and the electronics & media categories make up more than 50% of total online sales in Southeast Asia.

Statista estimates ecommerce sales in the electronics & media category will reach $5.26 billion this year across six Southeast Asian countries (find below), while the online fashion market will reach $4.464 billion.

websites where online shoppers buy fashion and mobile phones in SEA

Fashion online sales in the region are expected to double within the next five years and electronics & media are expected to increase 1.5 times. Where are customers going online to look for these products?

Google’s Consumer Barometer has some answers and based on the data, a couple of online channels in Southeast Asia stand out for buying clothing & footwear and mobile phones.

Where are shoppers buying clothing & footwear?

Consumers mostly buy apparel on general online marketplaces and e-shops that predominantly focus on selling fashion and footwear. Less people report buying on brand.com but until only recently did well known brands such as Adidas, Zara, Uniqlo, started to offer their products online in Southeast Asia.

Other popular online shopping destinations include social sites such as Instagram and Facebook and apps like Shopee and Carousell who are dominating C2C market sales in the region.

websites where online shoppers buy fashion and mobile phones in SEA

Where are shoppers buying mobile phones?

As for electronics, there is a larger variety of channels shoppers use to buy mobile phones. In Indonesia, classifieds sites and mobile phone brand stores are the most popular choice for shoppers.

In Vietnam, shoppers favor online shops of mobile retailers and big box retailers, while in Thailand people shop on general e-retailers. websites where online shoppers buy fashion and mobile phones in SEA


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Amazon’s rapid expansion into private label brands

Earlier today, TechCrunch published an article titled “Amazon to Expand Private-Label Offerings—From Food to Diapers” detailing Amazon’s successful push into private label brands covering lucrative categories ranging from batteries, mom & baby to even perishable food items. The concept of retailers selling their own private label brands has been around for ages, mainly adopted by grocery chains with the goal to increase margins for often low-profit consumer packaged goods (CPG) categories. It’s not so much players like Amazon are doing this but how and why they’re doing this that should ring some alarm bells with brands.

The ultimate bait and switch

Global ecommerce giants like Amazon and, increasingly, local Southeast Asian players like Lazada and MatahariMall are offering perks to entice brands to open stores and sell through their platforms. This strategy resembles Ladies Night at clubs, where women are offered free drinks to indirectly lure men, who, more often than not, end up with a headache, alone and having burnt a hole in their pocket at the end of the night.

With aggressive promotions and subsidies from their hosts, brands often see quick short-term gains in online sales. The extreme example here is 11.11, a man-made online shopping festival during which retailers compete in the Discount Olympics. Obviously, brands benefit from spikes in sales but little do they know that they’re actually selling their souls in the long-term. It’s like crack, it makes you feel great for a while but sooner or later it’s hollowing out your body.

With the massive amounts of data generated on a day-to-day basis, these ecommerce platforms can easily identify consumer trends, such as best selling products and categories beyond what brands are able to see themselves. This data is then leveraged by retailers to develop and introduce their own private label brands to compete with the brands they partnered with in the first place.

Once launched, these platforms could favor their own white-label brands by giving them more visibility through favorable product placements as well as top rankings on internal search result pages.

The bigger picture

Players like Amazon and Alibaba’s Tmall aren’t really traditional ecommerce retailers. Their main objective is to use competitive pricing, often subsidized, on retail products to acquire more and more users, which they then monetize through other means such as Amazon Prime subscription fees for Amazon and onsite advertising and Alipay transaction fees for Tmall.

Amazon’s new CPG brands like Happy Belly and Mama Bear are only available to Prime members in a move to incentivize joining its $99-a-year unlimited shipping program that’s fueling Amazon’s retail growth behind the scenes.

In a post-Alibaba acquisition world, ecommerce power-players like Lazada could potentially increase awareness of their own private label brands through better placements on their marketplace, eventually forcing other brands to pay more for advertising to rank higher and get traffic.

With private labels, Amazon and the likes of Lazada also have more “room” to play in terms of pricing, allowing them to maintain sustainable low prices, keep driving more users and spinning the flywheel.

Strategies for brands

Brands like P&G, Unilever and Nestle should look at ecommerce marketplaces as a relatively easy way to test selling online but in the long-term, brands are arguably better off selling direct-to-consumer where they have full control of the brand image, customer experience and, most importantly, user data.

A case in point is Coach. The luxury brand was one of the first brands to set up shop on Tmall in China but recently closed down its official flagship store, leaving the brand with only a brand.com and WeChat presence. Many luxury brands have expressed concerns about the mass-market image of some of the bigger marketplaces.

Brands don’t have to pick between marketplace and brand.com only. Some brands like L’Oreal have adopted a multi-channel approach where their marketplace presence generates sales for their more mass and lower price point items whereas their brand.com site sustains long-tail and higher average order value sales.

At the end of the day, marketplaces are a great way for brands to jump into ecommerce. However, brands should be aware of the pros and cons and especially long-term implications of such a decision.

BY SHEJI HO