E-commerce players eye new income, profitability

E-commerce players eye new income, profitability

Mr Pawoot says e-commerce platform operators will put more effort into revenue gains this year after racking up losses for years.
Mr Pawoot says e-commerce platform operators will put more effort into revenue gains this year after racking up losses for years.

Major e-commerce operators plan to ratchet up efforts to explore more revenue sources in 2020, including lending services, following years of huge spending on promotion campaigns without turning a profit, said a former president of the Thai E-Commerce Association.

"This year, JSL [JD Central, Shopee, Lazada] aim to make more revenue, as they have spent a lot of money on marketing and promotions to draw customers and merchants to their platforms the last few years," said Pawoot Pongvitayapanu, who is also chief executive of Tarad.com, a Thai-based e-commerce website.

The three e-marketplace players suffered substantial losses in 2018, according to Creden.co.

Despite booking 8.1 billion baht in revenue, Lazada suffered a loss of 2.6 billion baht.

Shopee Thailand, which registered 165 million baht in revenue, recorded a loss of 4.1 billion baht, while Central JD booked 458 million baht in revenue and posted a loss of 944 million baht.

Mr Pawoot said the major players have begun collecting commission fees from online merchants running premium malls on their platforms and seeking other revenue sources.

They are also fetching data from the platforms that can be used to consider providing loans for online merchants, he said.

Banks are now seeking to partner with these e-commerce platforms, as well as ride-hailing service operators, to provide lending services.

In 2020, according to Mr Pawoot, more brands will work towards online retail and embrace an omni-channel strategy in which online and offline activities are integrated to boost customer experience.

He said the e-wallet market would become more competitive this year.

In the first quarter of 2019, there were 473 million e-money transactions with a total value of 67 billion baht.

Throughout 2018, 1.5 billion e-money transactions were recorded with a value of 209 billion baht, sharply rising from 1.2 million transactions with a value of 126 billion baht a year earlier.

Mr Pawoot said logistics business catering to e-commerce would be on the rise with the emergence of new players.

From January to Dec 17, 2019, Thailand Post saw the biggest revenue from delivery business at 24 billion baht, followed by Kerry Express Thailand (12 billion baht) and DHL Express International Thailand (7 billion baht).

Meanwhile, cross-border e-commerce trade will gather steam this year. A greater variety of Chinese products will stream into Thailand, partly driven by the establishment of a free-trade e-commerce zone in the Eastern Economic Corridor, shortened delivery times and the need for affordable products.

According to price-comparing website Priceza, 77% of sales across the three major e-marketplaces come from 81,000 cross-border merchants, with the rest from 1 million local sellers.

"The popularity of online sales, particularly Chinese products, will affect upcountry dealers and small and medium-sized enterprises," Mr Pawoot said.

Outbound trade will also pick up, driven by major global e-marketplace platforms such as Alibaba, Amazon, eBay, Wish and Rakuten, he said.

Social commerce will see exponential growth as Facebook, Instagram and Line move to draw merchants to their platforms. Merchants on such platforms can present their products via live chat.

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