C2C mobile push
Firms are focusing on consumer-to-consumer shopping on smartphones, the next e-commerce battleground, writes Suchit Leesa-nguansuk
Consumer-to-consumer (C2C) shopping on mobile phones is becoming the next big battleground in Thailand's e-commerce market this year as home-based businesses increasingly focus on online sales.
Mobile commerce will continue to see strong growth in coming years, especially among millennials who are comfortable using their smartphones to shop.
Some 50% of all online purchases are done via mobile devices in Thailand, thanks to the proliferation of smartphone users and high-speed mobile connections.
As of December 2015, Thailand had 39 million mobile internet users. The country's mobile penetration was 86.9% of the population, according to the National Broadcasting and Telecommunications Commission.
IDC Thailand, the local operating unit of global IT research firm IDC, says smartphone penetration here stood at 50% in 2015. The number of Facebook users is 37 million, Line 33 million and Instagram 2 million.
Social commerce is highly influential among digital consumers, with more than 80% of digital consumers using social media options to search for products or connect with sellers.
"The growth of C2C mobile commerce will push social commerce along," says Pawoot Pongvitayapanu, president of the Thai E-commerce Association.
As of 2015, there were 500,000 online merchants in Thailand, with 10,515 using online stores on Facebook and another 11,213 on Instagram.
These figures portend a healthy future for mobile application developers, says Mr Pawoot.
Japan's e-commerce giant Rakuten is tapping into C2C mobile commerce to capitalise on rising smartphone use.
Rakuten has closed its business-to-business-to-consumer (B2B2C) online marketplace to focus on C2C mobile commerce.
"The exponential growth of C2C mobile commerce has substantially contributed to the rapid increase in mobile devices," says Terence Pang, regional managing director of Singapore-based Garena.
The company created Shopee, a C2C marketplace focused on social commerce, in Thailand, Indonesia, Malaysia, the Philippines, Taiwan, Vietnam and Singapore.
Mr Pang says Thailand is a priority market for Garena. The company has poured resources into the market in a drive to capitalise on strong growth potential, he says.
"We see the future of social commerce in Thailand, and fostering more person-to-person interaction is the heart of C2C marketing services."
A C2C commerce platform allows everyone to be a seller and set up e-commerce stores, selling goods or services to other customers.
He cites a report conducted by the Thailand Marketing Research Society that found 71% of smartphone users in the country shop online an average of twice a month, while 90% intend to shop online in the future.
"These figures mean an even brighter future for C2C mobile commerce," says Mr Pang.
Even though e-commerce has yet to replace traditional brick and mortar shops in Thailand, online shopping is gaining in popularity because of its convenience and lower prices, he says.
Sheji Ho, chief marketing officer of Thailand-based aCommerce Group, which offers end-to-end services for e-commerce clients, says C2C space in Thailand is moving towards mobile.
Some 33% of Thailand's e-commerce sales value comes from Facebook and Instagram, he says.
"Naturally, companies like Shopee and Line see this opportunity and are trying to get in there early with their mobile C2C marketplaces," says Mr Ho.
Natsakon Kiatsuranon, chief executive of ShopSpot Mobility, a Thai mobile shopping platform developer, says mobile C2C commerce in Southeast Asia including Thailand still does not have dominant players, unlike in the US with eBay and China with Taobao.
ShopSpot has 20,000 online merchants on its platform with 400,000 active users and 1.5 million visitors a month last year. The company aims to raise between US$3-5 million in 2016 to expand its footprint in Asean.
InVent, the venture capital arm of InTouch Holdings, together with SingTel Innov8, a wholly owned subsidiary of SingTel Group, have invested in ShopSpot Mobility. The investment was made through a convertible loan in a pre-series A funding round for an undisclosed seven-figure sum in US dollars.
Sebastien Lamy, a partner of Bain & Company and co-author of "Southeast Asia Digital Report 2016", says Thailand was the second-largest online retail market in Asean last year after Indonesia thanks to social media.
Thailand's online retail market is expected to reach $10-15 billion by 2020, up from less than $2 billion in 2015.
"Thailand's online retail sales are expected to account for 8% of the total retail market by 2020, up from 1.3-1.4% of 2 trillion baht last year," says Seubsakol Sakolsatayadorn, chief product officer of Ascend Commerce, which operates Weloveshopping.com and iTruemart.com.
In comparison, online sales in China accounted for 6-8% of the total retail market in 2014, 8% in the US and 13% in Britain.
Mr Seubsakol says Thailand's online shoppers are expected to account for half of the 40 million mobile internet users this year.
Competition in the local e-commerce market this year will be intense, encouraging vendors to improve the quality of their products and services, he says.
Tiwa York, chief executive of Kaidee.com, Thailand's leading online classified ad market for second-hand goods, says the local e-commerce market was fiercely competitive.
Mobile C2C marketplaces have been gaining popularity because of their convenience and high mobile phone penetration rates in the country, he says.
Mr Tiwa says Kaidee.com expects mobile traffic on its online store to account for 80% of total traffic this year. Amulets, property, gadgets and vehicles are among its best-selling products.
Last year Kaidee.com saw an increase of 1 million new sellers with 7 million visitors a month.