9 Fundamentals For eCommerce In Thailand © 2014 Singapore Post Limited. All Rights Reserved.For more information, visit www.specommerce.com/knowledge-centre

9 FundamentalsFor eCommerce In Thailand

POPULAR ONLINE SHOPPING CATEGORIES

Percentage of eCommerce Business by Types of Business

Thailand's rising smartphone penetration levels are providing opportunities for innovative eCommerce solutions as high speed internet, increased payment options and new sales channels broaden the market. Government initiatives aim to boost foreign investment alongside developments in broadband internet connectivity. While concerns on fraud, online security and final-mile logistics hinder the development of the online marketplace, positive outlooks on growing online sales highlight the potential of Thailand's eCommerce market.

Computers and Electronic Appliances

19.2%

Fashion Accessories

23.3%

Travel, Hotels and Resorts

24%

Service Business

7%

Others

17.5%

Office Equipment

4.9%

Automotive Industry and Products

4.1%

100%Foreign Ownership

ECOMMERCE MARKET SIZE& GROWTH

The eCommerce market in Thailand in 2014 is estimated to be USD $1 billion, with a strong predicted growth to USD $6 billion between 2020 and 2025.

1

GROWING INTERNET PENETRATION

Thailand has a population of roughly 67 million people with an estimated online community of 18 million. The internet penetration of 26% is expected to double by the end of 2015, supported by the government's USD $2.6 billion commitment in 2012 to extend the national fiber optic broadband network. The government's goal is to make high speed internet available to 80% of the population by 2015 and 95% by 2020.

HIGH MOBILE PENETRATION DRIVES MOBILE COMMERCE

Mobile contracts in Thailand exceeded the total population in Q2, 2013 with 90 million subscriptions penetrating the market at 131.8%. Smartphone subscribers grew 25% in Q1 2014 year-on-year and 60% of total internet users used a mobile device to access the web. Between February to April 2014, 51% of mobile internet users made an online purchase, demonstrating the real potential value of Thailand's mobile commerce market.

INFRASTRUCTURE CHALLENGES IN THE ECOMMERCE ECOSYSTEM

A key challenge for eCommerce in Thailand is infrastructure. Traffic congestion and a limited number of logistics providers to handle fulfilment create delays and drive up individual costs of final-mile delivery, which are negatively impacting online shopping adoption rates and customer experience.

SOCIAL COMMERCE SHOWS GREAT POTENTIAL Social commerce is a promising trend in Thailand, with 1.7 million, 4.5 million and 28 million users on Instagram, Twitter and Facebook respectively. Thais are highly plugged in to the social space, with a great overlap of social and shopping activities. Facebook alone boasts over 10,000 local pages dedicated to commerce while Instagram has reported its most snapped location as Siam Paragon, a popular mall in Bangkok. Social messaging apps are also a key social commerce platform with major e-tailers like Tarad.com leveraging on Line to promote sales to its 24 million local users.

KEY ECOMMERCE PLAYERS

Thailand’s mix of international and local eCommerce stores is indicative that Thai consumers want variety when it comes to online shopping. Global players such as Amazon, ebay and Agoda continue to remain popular while WeLoveShopping and Pantipmarket, local C2C marketplaces and online communities, prove strong contenders that cater to local tastes. Chinese and Japanese e-tailers Alibaba and Rakuten also recognise the importance of localisation - AliExpress is a key site in Thailand and RakutenTarad, a local B2B2C marketplace and online community, is popular with locals.

LACK OF TRUST IN ONLINE PAYMENTS

Fraud concerns and a lack of trust in online payments for Thai consumers mean bank transfers remain the most popular eCommerce payment method. With under 8 million credit card holders in Thailand, innovative payment options have been gaining traction. Cash on delivery was first launched by Zalora and now accounts for 60% of their transactions. Following this payment method’s success, an additional over-the-counter payment system was created for consumers to make payment at participating locations via QR codes.

e27, Ecomeye, eConsultancy, eMarketer, Mediacake, Nationalmultimedia, NSO Thailand, Syndacast, Techinasia, Venturevillage, Yozo, Ystats.

SOURCES:

2014USD $1 Billion

Between 2020 & 2025USD $6 Billion

90 Million Subscriptions

GOVERNMENT SUPPORT FOR FOREIGN ECOMMERCE BUSINESSES

Thailand's Board of Investment (BOI) is promoting foreign investment, allowing 100% foreign ownership for eCommerce businesses, with tax incentives and reduced restrictions for foreigners working in Thailand. Since July 8, 121 projects worth THB 318.8 billion have been approved across all BOI categories.

Rocket Internet’s Local Version Of Amazon

Local C2C Marketplace

Local C2C Marketplace &Online Community

Local B2B2C Marketplace& Online Community

Alibaba’s B2C MarketplaceFor Chinese Exporters

2

3

4 7

5

8

6 9

Used A Mobile Device To Access The Web

60%

Million1.7

Million28

Million4.5

10,000local Facebook pages

selling products

PointTo

Point26%

52%

Today 2015

Made an Online Purchase

51%