Direct-to-consumer format poised for growth next year
The direct-to-consumer model is expected to gather steam next year as a new approach for brands to reach customers directly without relying on retailers or the e-marketplace, says Songpol Shanmatkit, chief executive of SET-listed TV Direct, a home shopping operator.
Mr Songpol said retail shops are burdened by rental space fees amid the sluggish economy. Overdependence on e-commerce platforms means brands lack the opportunity to obtain necessary data from customers using their products and services.
Nike, the American footwear maker, recently stopped selling products through giant e-commerce platform Amazon, Mr Songpol said. The company is switching its approach to enhance customer engagement via a direct approach and brand relationships.
Although Nike said it would continue to invest in distinctive partnerships with some other retailers and platforms, this marks a new step for the firm and an end to its partnership with Amazon, which began in 2017.
"I believe the direct-to-consumer trend will be increasingly adopted in the country from 2020 to 2025," Mr Songpol said.
Omni-channel or offline-online mixed channels will become a core strategy adopted by brands, he said.
A "harmonised" strategy, driven by tech solutions, especially artificial intelligence and data analytics, will help brands personalise messages and content to suit individual consumers, Mr Songpol said. "The harmonised channel will be more evident in the Thai market from 2021."
For example, brands can promote a mobile phone to individuals via different channels and content that suit customers' background, behaviour and demand.
"We may see Siam Cement Group and Thai Beverage stepping into the direct-to-consumer approach in the near future," Mr Songpol said.
In his view, both direct sales and e-commerce merchants need to take into account three core factors for running businesses: consumer data, demand and market competition.
Mr Songpol said 55% of Thais still shop offline and prefer traditional media.
Some 15% of the population engage in both online and offline shopping channels and have the most purchasing power. They serve as omni-channel customers.
The remaining 30% engage in online shopping with more internet literacy. They research everything before they buy.
For TV direct, target customers are aged 35 to 54, numbering 18.5 million or 27.2% of the total population. This group has the most purchasing power.
Mr Songpol said TV Direct operates as an omni-channel through platforms such as digital TV, satellite TV, call centres, direct mail and catalogues, TVD shops, websites, social media, retailers and pop-up spaces.