Shopee mulls building logistics network
As Thailand's e-commerce market continues to face intense competition, e-commerce platform Shopee is considering building its own logistics network to compete head-on with Chinese internet giants like Lazada and JD Central.
Shopee is the e-commerce arm of Sea Group, a New York Stock Exchange-listed Singaporean firm, and offers free delivery to users and free commission to merchants.
The logistics move is expected to enable Shopee to attract new users.
"Thailand is one of the strategic markets for Shopee apart from Indonesia, thanks to the high online shopping penetration rate," said Terence Pang, chief operating officer of Shopee.
Mr Pang oversees Thailand, the Philippines and Taiwan. He spends half of his time looking after the Thai market.
Thailand's e-commerce is still in the early stages and has room to grow, particularly in mobile shopping.
Thailand has a 37% smartphone penetration and 27 million mobile internet users. By 2021, 13.9 million Thais are expected to be shopping online, up from 12.1 million in 2018. Average spending per user is forecast to increase from 8,000 baht in 2018 to 12,700 baht in 2021.
The company recently started earning money in Taiwan through advertising. In Thailand, the company still has not planned any paid advertising charges as it looks to gain users and new merchants.
Shopee plans to beef up its product assortment, in particular for sports and cars, from the current emphasis on electronics and mobile, beauty and supplements, and fashion, which are the best-selling categories.
The selection is in line with the overall e-commerce market, with electronics worth 41.8 billion baht and fashion and beauty worth 17.7 billion baht.
Mr Pang said he expects more senior users to shop online, as the majority of shoppers right now are youngsters. He also expects online shoppers to buy a greater variety of products, like daily-use items and fast-moving consumer goods (FMCG), rather than just fashion and electronics.
Earlier this year, Shopee started to bring in key leaders on Facebook Live to promote the brand's partners, given that Thais are very social and have high digital engagement.
In the past three years since Shopee began operating in Thailand, the app has been downloaded 23 million times. The platform has 1,000 brands and 700 employees.
As of the second quarter of 2018, Shopee had US$2.2 billion in gross merchandise value (GMV) in seven markets in Southeast Asia and Taiwan. The company has 120 million orders with 160 million users.
Shopee will focus on hyperlocalisation, from local language to ecosystem, to serve the local cultural mindset and strengthen its position.
A Shopee internal survey found that the top five factors for Thais shopping online were cheaper product prices, more product selection, good reputation, free delivery and payment options like cash on delivery.
Mobile devices are also a major access point for shoppers: 67.3% use a mobile phone, 22.2% a combination of PC and mobile, and 10.5% the website.
"We will continue focusing on increasing product assortment, price and user experience," Mr Pang said. "We will see about logistics infrastructure in the future."
To boost its online merchants' activities, Shoppe will hold a 12-day shopping event, called 9.9 Super Shopping Day, running from Aug 29 to Sept 9.
The company expects to boost sales by 3-4 times during the 12-day event.
From such shopping events during 2016-17, Shopee's sales surged by 7.5 times, orders rose 5.2 times, and the number of online shoppers increased 4.4 times.
Shopee aims to maintain its double-digit month-on-month growth in Thailand this year, Mr Pang said.
The e-commerce market in Southeast Asia is expected to reach $90 billion over the next 10 years. The region's online shopping penetration rate is forecast to increase by five times, Mr Pang said.