Rakuten of Japan, the world’s third-largest e-commerce marketplace, acquired a 67% stake in Tarad.com, a Thai online market in 2009. Second-ranked Living Social of the US took over Ensogo.com last year, and Groupon, the global market leader, set up a Thai representative office early this year.
Alibaba.com, China’s largest business-to-business e-commerce player, is also making inroads into the Thai market through a collaboration with the Department of International Trade Promotion (DITP).
Research conducted by JP Morgan forecast that global e-commerce transaction values will reach US$963 billion by 2013, up from $680 billion last year.
The compound growth rate of global e-commerce from 2010 to 2013 will be 19.4%, with Asia-Pacific showing the highest growth at 27.5%, compared with 13.2% in Europe and 12.4% in the US.
The anticipated intensified competition in the Thai market should provide a golden opportunity to two million small and medium-sized enterprises to export their products and services at a lower cost.
Jakkarin Permsin, secretary-general of the Thai eCommerce Association, said the entry of global e-commerce players and the higher number of internet users in Thailand from 30 million currently are expected to increase the country’s e-commerce market value by 30% this year, up from the average growth of 15-20% annually.
According to the National Statistical Office, Thailand’s e-commerce in 2010 was valued at 200 billion baht. Of the two million Thai SMEs, only 100,000 are doing business online.
Mr Jakkarin said Thailand needed to set up a dispute resolution centre, enabling people to file complaints and resolve disputes between consumer and merchants.
Even with the Consumer Protection law, no agency has been assigned to deal with the issue. “That’s why e-commerce could not grow faster. People lack trust and confidence.”
Brian Wong, vice-president for global supplier development of Alibaba.com, said since Thailand is an export-led economy, his company will set up the th.alibaba.com website for Thai suppliers to showcase their products to international buyers.
Alibaba recently signed a memorandum of understanding with the DITP to encourage Thai exporters to go online. The company is looking for a local bank partner to give its suppliers special interest rates.
Mr Wong said the company is using a sale partnership approach to expand business, with no plan to set up a local representative office here.
He said the formation of Asean Economic Community in 2015 is pushing SMEs to increase competitiveness by expanding their businesses online.
Alibaba’s model matches buyers and suppliers at a business-to-business level for free. But the company will charge $2,900 a year for gold membership.
As of Sept 30, 2011, Alibaba signed up 75 million buyers and suppliers, 50 million of whom came from China and 25 million international users. The company had 990,000 gold members.
The number of registered users in Thailand increased by 25% year-on-year since its inception in 2007. The top five best-selling products were: food and beverage, agriculture, apparel, automobiles and minerals. The US, India, China, Thailand and Malaysia were the top five buyers for Thai suppliers.
Pawoot Pongvitayapanu, the founder of Tarad.com, said the country’s e-commerce market this year will face fierce competition from global internet players. Competing on a global scale, the e-market operators have to expand their footprints through acquisitions, joint ventures or own investments.
As a key market in Asean with a growing number of internet users, Thailand is on the radar of these global players, he said.
Tarad.com leveraged Rakuten’s global network by helping Tarad.com merchants sell products to consumers in Japan. The company also co-operated with the DITP in selecting qualified suppliers to sell products at the tarad.com/export e-marketplace.
Mr Pawoot said Thai SMEs must prepare themselves to do business online to remain competitive.
Tom Srivorakul, a co-founder of Ensogo, said having Living Social as a partner provided a good opportunity for the company to expand into service businesses, particularly those in the hotel and travel sectors.
Google is another global internet player working with local partners to offer free websites and training, instead of providing an e-commerce platform.
The DITP of the Commerce Ministry is also promoting potential exporters to become members of its Thaitrade.com, a B2B marketplace.
Arada Fuangtong, head of the e-commerce group at the DITP which operates Thaitrade.com, said it spent 10 million baht to promote the online marketplace for export suppliers, especially of food, textile and garment, jewellery and lifestyle products.
The company aims to increase its membership base to 6,000 companies this year, plus 20,000 international buyers.
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