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Alibaba Entry Stirs up Thai E-commerce

By on Apr 19, 2016 in Property News, Retail

Lazada acquisition spurs competition

News-bkkpost_19janThe recent acquisition of Lazada Group by Chinese e-commerce giant Alibaba Group poses a challenge to local online product manufacturers and retailers who anticipate a potential flood of Chinese-made products.

The move by Alibaba is expected to shake up Thailand’s e-commerce market. It’s also putting more pressure on other e-commerce companies.

“The number of business-to-consumer e-commerce companies is likely to fall to only two to three over the next three years, down from five, because of fierce competition,” said Punnamas Vichitkulwongsa, chief executive of Ascend Group, a subsidiary of CP Group that operates the iTruemart and weloveshopping websites.

“But the entry of Alibaba will spur competition in the local e-commerce market, which is likely to benefit Thai consumers and the industry,” he said.

There are usually two dominant e-commerce players in a country, said Mr Punnamas.

Pawoot Pongvitayapanu, president of the Thai E-Commerce Association and founder of Tarad.com, said if Alibaba continued using Lazada’s subsidised promotion strategy, the Chinese firm could become a dominant player in Thailand’s e-commerce ecosystem as it has its own payment and logistics systems for websites.

However, local online product manufacturers, especially those that make IT accessories, consumer electronics and fashion items, will face a greater challenge from cheap Chinese products.

Paul Srivorakul, group chief executive of aCommerce, believes Alibaba’s entry will create an innovative e-commerce market in Thailand, attracting more foreign investors.

He expects more mergers and acquisitions in the local e-commerce industry next year as a result.

Santit Jirawongkraisorn, co-founder of Lalamove Thailand, a Hong Kong-based on-demand delivery app provider, said existing e-commerce companies in Thailand would face intense competition from Alibaba’s presence. But the increased competition can drive consumer gains and promote the overall e-commerce market, he said.

Alessandro Piscini, chief executive of Lazada Thailand, said Alibaba’s investment reflected the huge potential it saw in e-commerce for the region and the role it expected Lazada to play in the local markets.

The partnership will bring significant synergies that enhance the online experience for both buyers and sellers in Thailand, he said.

In a related development, PwC Thailand released its latest report on Global Total Retail 2016: They say they want a revolution which polled some 23,000 online shoppers in 25 countries to track retail consumer trends, including mobile shopping and social media influence.

The report revealed that 51% of online shoppers in Thailand said they purchase goods directly via a social media channel, outpacing India (32%), Malaysia (31%), and China (27%).

Fifty-three percent of Thai online shoppers said that customer reviews influenced their buying behaviour.

The survey also showed that social media influenced 78% of shoppers globally, up from 68% in a similar study last year, with 92% of emerging market shoppers buying products based on social media recommendations.

Source: Bangkok Post – 19 April 2016

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