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ELECTRONIC COMMERCE

Uptake remains relatively slow

CHAROEN KITTIKANYA

Thailand is moving quickly to grasp the Internet as a new tool for commerce but uptake is still relatively low when measured by international standards.

The power of the Internet is transforming the way business is being done in Thailand, but compared with the first half of 2000, the online buying frenzy started to ebb in the second half of the year.

AD Venture, the Internet investment arm of Shin Corporations, the countryûs largest telecom firm, halted its investment in web portals after spending over 200 million baht on 20 local web sites. It then shifted into the Internet applications business.

In 2000, the biggest purchase price for a dot.com business was the US$23 million that Singapore Telecommunications (SingTel) paid for a 31% stake in Thailand's Point Asia Dot.Com, the parent of Loxley Information Service (Loxinfo), a leading local Internet service provider.

Business-to-Consumer

This e-commerce segment is still in its infancy, with gems and jewellery, books, flowers and the souvenir industry outperforming all other products and services.

Most Thais are still unwilling to make online purchases, largely because of the lack of consumer protection laws in place.

According to a survey by the National Electronics and Computer Technology Centre (Nectec), only 18.4% of Thai Net users have ever made a purchase of goods or services via the Internet.

The main reason for buyer resistance, the survey said, was that users complained of being unable to touch or closely examine a product when they are online. The second reason was reluctance to provide a credit-card number. Trust is a key factor.

Other respondents had not shopped online because they did not have credit cards, saw ''nothing of interest to buy online''; ''Net-based shopping is too complicated''; concern that products might be lost or damaged during delivery; and the high cost of goods and services online.

Consequently, the major revenue stream of most B2C e-commerce operators still comes from banner advertising, which now accounts for just 1% of the estimated 44 billion baht spent nationwide on all advertising media.

Stores and c-commerce

Most modern stores have yet to fully embrace e-commerce, although most have a Web presence. It will take three to five years for modern trade stores to get fully online in business, including online payment and delivery services.

The concept of online business doesnût match the thinking of big modern trade stores, which by nature keep large inventories. In fact, the basis of online business is to keep a minimal inventory so that reduced operating costs can be passed on to consumers in terms of price cuts, an industry analyst said.

B2B E-Commerce

Reliable data on the value of B2B e-commerce in Thailand is very scarce. According to available information, Thailand currently operates Electronic Data Interchange (EDI) through authorised VAN (value-added network) system operators to some 1,200 companies, most of them linked to the PC network of the Customs Department.

In addition, there are about 150 companies linked with their trade partners through private electronic networks.

Investment in B2B e-commerce has experienced significant growth in Thailand since the beginning of 2000.

Oracle, for example, has tied up with several Thai heavyweights including Berli Jucker and Saha Patthanapubul, to set up Thailand Horizontal Exchange, a B2B e-marketplace.

The Charoen Pokphand Group, the country's largest agribusiness conglomerate, has set up Asia Freewill Co to provide a similar platform to cater to both its suppliers and new clients.

PointAsia also has a joint venture with BeX.com Pte Ltd, and Singapore Technologies Telemedia Pte for a horizontal B2B exchange for multi-industry buyers and sellers in Thailand, linked to other BeXcom trading hubs throughout the world.

Biz Dimension, an affiliate of Thai Union Frozen Products (TUF), one of the country's largest seafood processors, has also set up FoodMarketExchange.com, a digital marketplace where buyers and sellers in the food industry can make deals in real time.

As well, PointAsia has set up PointAsiaOil.com, a petroleum industry marketplace offering supply chain management, with electronic transaction services for pricing, procurement, invoices and payments.

PointAsia is also hatching a number of vertical digital marketplaces in Thailand including PointAsiaChemical.com, PointAsiaAuto.com, PointAsiaMedical .com, and PointAsiaHomeSupply.com.

Another type of B2B e-commerce is supply chain management, linking large corporations and their suppliers. For instance, Siam Cement has implemented an e-commerce system linking 40 factories under its umbrella and 500 suppliers.

The Petroleum Authority of Thailand (PTT) is also preparing to offer its 100 major clients B2B e-commerce to promote more efficient transactions, with help from PointAsiaOil.com.

Electronic banking

The Boston Consulting Group ranks Thailand as ''under-developed'' in e-commerce banking activities and content. This assessment has been based on a lack of infrastructure and banking initiatives, although some banks in Thailand are becoming increasingly dependent on electronic banking. The Bank of Asia and Siam Commercial Bank are among the most active in electronic banking.

Bank of Asia, in particular, has developed several projects in electronic banking through strategic alliances with BeX.com, Winstore, PointAsia and other, claiming more B2B clients than any other financial institutions in Thailand that offer electronic banking.

Some analysts argue their participation in electronic banking is for defensive, rather than offensive purposes, but most services now offered by Thailand's electronic banking system involve online account queries, bill payments and money transfers among the banks themselves.

Mobile Internet

Significant growth in wireless penetration and mobile commerce is forecast by industry analysts, surpassing the existing PCs and fixed-line phones in Thailand over the next few years.

New models of mobile phones to be released in 2001 are all embedded with technology to link to the Internet using WAP (wireless application protocol).

The two largest mobile operators, Advanced Info Service (AIS) and Total Access Communication (TAC), recently began offering Internet services for users of WAP-equipped handsets.

MobileLife Internet from AIS allows users to send and receive e-mail and visit some 7,000 sites, while TAC has joined with 29 local content providers including Bank of Asia, Central Department Stores and the Bangkok Post, to provide mobile Internet services.

However, local analysts warn that slow speeds for WAP could inhibit growth: WAP handsets can access data at a maximum speed of only 9.6 kilobits per second, compared with the required speed of 56 kbps.

The speed problem should be fixed, however, in the second half of 2001, after AIS and TAC develop a high-speed general packet radio service (GPRS), which allows networks to send data at a speed of up to 115 megabits per second.

E-commerce values

E-commerce is expected to post an upsurge in growth in Thailand in 2001, but the level of growth is in dispute among analysts.

According to a study by TDRI research specialist Dr Somkiat Tangkitvanich, there is a dearth of reliable data to measure the size of the market. He said the availability of data would enable the government sector to come up with a clear-cut policy on online taxation and an Internet business promotion plan.

Nectec projects that e-commerce in Thailand would grow from 1.22 billion baht in 1999 to 50 billion baht in 2003. Thammasat University said Thailand's e-commerce was worth 22 billion baht a year and would grow on average by 4.5-5.0% in subsequent years.

Dr Somkiat disputed the findings of the two studies, arguing that e-commerce values in both were over-estimated, since the sampling was based on the responses of only large businesses, most of which were ready for e-commerce.

''In the year to come, we are likely to witness both good and bad news. The bad news is that certain big e-commerce operators and a great number of small dot.com firms will collapse. The good news is that a few of the better companies will be profitable,'' he said.

+ More in Waiting for the laws to pass

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