E-commerce firms in plea for state help

E-commerce firms in plea for state help

Pawoot Pongvitayapanu, founder and managing director of the former Rakuten Tarad.com, felt good in 2014 - until the Japanese partner pulled out and became a strong competitor. He now fears Thai e-shopping firms will be drowned by subsidised foreign giants. (Photo courtesy Tarad.com)
Pawoot Pongvitayapanu, founder and managing director of the former Rakuten Tarad.com, felt good in 2014 - until the Japanese partner pulled out and became a strong competitor. He now fears Thai e-shopping firms will be drowned by subsidised foreign giants. (Photo courtesy Tarad.com)

Local e-commerce companies say they are in dire need of government support to help them survive stiff competition from powerful foreign players.

E-commerce regulations, including various acts and directives, should facilitate the survival of local operators' businesses, says the Thai E-Commerce Association.

"The government should facilitate access to financing sources and terms in order to enhance competitiveness of local e-commerce operators," said Pawoot Pongvitayapanu, president of the Thai E-Commerce Association.

More than half of Thailand's online stores and e-commerce turnover is dominated by foreign e-commerce operators such as Lazada and newer players like Singapore's Shopee and South Korea's 11street, said Mr Pawoot, who is also one of Tarad.com's founders.

Global e-commerce giants have rolled out strategic entrances across the world.

"It has created a general sense of fear, and global e-commerce players may take over the market entirely," Mr Pawoot said.

Governments in other countries, such as Japan and South Korea, have implemented financial measures and tax incentives to enhance the competitiveness of their e-commerce companies, he added.

Mr Pawoot acknowledged that consumers derive several key benefits from competitiveness, including better choices and more comprehensive customer support.

In the long term, he pointed out that foreign players with deep pockets and worldwide networks to draw on could put heavy pressure on the domestic e-commerce market.

Nuttawit Polwattanasuk, managing director of LNW Co, a Bangkok-based e-commerce hosting provider, said local e-commerce firms need to find new ways keep afloat during these difficult times, with global players using subsidised promotion strategies.

Competition in the Thai e-commerce market will intensify over at least the next year, as existing global players, such as Lazada, launch strategies to compete directly with newcomers Shopee and 11 Street.

Mr Nuttawit said LNW saw only 10% growth of online retail sales, compared with 50% in 2015, mainly due to heavy discount promotions from big players.

Currently, there are 70,000 active sellers out of 400,000 online merchants in LNW shops.

Darunporn Jirakitanusorn, general manager of Ascend Commerce, the operator of WeLoveShopping.com and WeMall websites, urged local e-commerce companies to refrain from engaging in unsustainable price competitions.


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