Thailand consumer trends: E-commerce ‘unstoppable’ as 4G rollout goes rural

Apart from King Bhumibol Adulyadej, there is another unifying force in Thailand: mobile.

Thailand is the world’s leader in mobile internet usage, ahead of Saudi Arabia and Malaysia, with four hours of web time per day, about 44 percent of a Thai’s total internet time. “Thailand is a mobile-led society, as is most of Southeast Asia except Singapore,” said Grant Bertoli, CEO of Marketbuzzz.

Thailand did not see internet adoption kick in until the end of the Web 2.0 wave in 2007, and most of the access to the internet was through mobile. “Thailand leapfrogged straight to mobile as the primary device, and as people dwell longer on it, the mobile is increasingly becoming the device,” indicated Pathamawan Sathaporn, managing director of Mindshare Thailand.

Smartphone ownership, largely driven by lower costs, has accelerated to a point where current We Are Social numbers show that 69 percent of Thais own at least one smartphone. Mobile connections, thanks to budget packages in the competitive telco market, stand at 122 percent as a percentage of the total population.

With the realisation of 4G service in Thailand (more of which in tomorrow’s On The Ground feature), mobile will be the catalyst for digital-focused communications and rich-media content in 2016, said Rattakorn Potharam, general manager and executive creative director of MRM Thailand.

“This is noteworthy as rural areas are now given a better chance at mobile ubiquity.” Potharam already observes content in three prominent categories: tear-jerking dramas, Thai-humour comedies and gossipy 'insights' transcending above-the-line formats to digital.

Above average social use

This article is part of the On The Ground: Thailand series

As the pool of mobile internet users in Thai provinces expands, social-media users will follow suit accordingly. Thai urbanites already spend more time on social networking than the global average, with Facebook being the most popular platform. In fact, Bangkok is the number one city of Facebook users in the world with over 104 percent penetration, according to Social Bakers. And 65 percent of all locals use Facebook to search for brand information according to eMarketer—the fourth highest in APAC.

According to TNS, 74 percent of Thais also use instant messaging daily, well above the 55 percent worldwide figure. Line is the leading app in Thailand with more than 33 million users—that is half the Thai population using Line. 

These social platforms are playgrounds of expression for Thai consumers, but they are open only in their digital lives while more conservative in person. “Whatever we are expressing on Facebook, when it comes to reality we may not do so, as rooted in the Thai culture of being accommodating,” said Yupin Muntzing, chief executive officer of McCann Thailand. This dynamic can be inspiring for future developments in brand communications.

E-commerce opportunities abound

Coupled with that, there are numerous implications for marketing without the burden of a PC-internet legacy. Thailand being a mobile-first market allows businesses a unique position to capitalise.

On the commerce side, Lazada began operations only a few years ago and made a bold statement to become the Amazon of Southeast Asia. And they were one of the first e-commerce players in the region to launch both iOS and Android apps. Now, the brand claims that more than half of its traffic comes from mobile. 

New faces in the e-commerce sector include Shopee, a mobile-only discounted marketplace, Eatigo offering daily lifestyle deals, and GrabBike (rebranded to Grab) delivering urban commuting services.

In 2015, overall internet retail recorded healthy value growth of 30 percent to stand at THB47 billion (US$1.33 billion), according to Euromonitor, with fashion and consumer electronics significant contributors.

The Thai e-commerce market is expected to more than triple in size to THB138.86 billion (US$3.94 billion) between now and 2020, according to DHL that introduced a next-day logistics addition to its delivery infrastructure in January for this reason. At present, Thailand’s share of the market is still relatively low compared to other high-growth economies, according to DHL E-commerce Asia Pacific CEO Malcolm Monteiro. Only 1.7 percent of DHL’s total sales in Thailand are from e-commerce, compared to more than 10 percent in China.

Anisa Ngandee, research analyst at Euromonitor, is of the view that pure internet retailers such as Lazada, WeLoveShopping and iTrueMart perform much better than multi-channel players due to the shift in buying behaviour. The provision of mobile payments, especially when facilitated offline, will be a differentiator, Marketbuzzz’s Bertoli advised.

“Although Thai people like shopping online, they find it more convenient to pay upon delivery, especially consumers within provincial areas. Sales are still limited to younger generations,” added Ngandee.

In the meantime, MRM’s Potharam feels e-commerce will be “unstoppable and borderless”, at least among younger buyers on social media. “Thai consumers are born social. They are yearning for relationships, rapport and chemistry. In this sense, social commerce is undergoing a makeover to match this demand for socialising, while Line, Instagram and Facebook are becoming storefronts for interaction and conversation.”

Social and content collide

As a result, smaller Thai brands have embraced their entrepreneurial spirit in these mobile times, selling their products and services in as many ways as possible, whether Luuk Thep dolls or clothes. Preetanjali Kukreja, strategy director at Brand New Day, has noticed local businesses “getting a lot more aggressive” on Instagram, prioritising these accounts over official websites or Facebook pages. “Somehow it feels less intrusive on Instagram compared to Facebook,” she said. “It’s simple, quick, visual, and cheap as a sales tool. People just scroll through pictures of products, click to see the price, then ‘line’ the vendor and you’re done.”

It is of little wonder that Line is one of the go-to channels for SMEs to reach consumers, not simply for shopping, but for lifestyle solutions as well, like content. The Feb 2015 launch of Line TV, competing with digital television, provided exclusive content to customers via mobile.

Thailand now has a “huge appetite” for content across all forms—a push factor for advertising, media and even telecoms operators, said Sunee Paripunna, CEO of Omnicom Media Group Thailand. True Digital Plus, a Thai telco, has increased its budget from US$1 million to US$3 million to buy digital content in 2016, for example.

In the past, Thai advertisers have focused their attention on content creation in the pursuit of digital marketing, but have missed opportune moments of context now made possible by mobile technology, said MRM’s Potharam. To reap the benefits of mobile, the key is gearing towards “contextual content” that is targeted and personalised. “The context will matter a lot and unveil new spot-on insights into creativity,” he said.

Data driving integrated marketing

Also, mobile development will open more doors for brands to collect real-time data generated by consumers who are connected online. Big data, though in its infancy stage, will transform communications, particularly for retail, telecoms, finance and lifestyle services, said Potharam.

For starters, Julien Chalté, co-founder and co-CEO of WearYouWant, has gathered data to identify the bulk of the online retailer’s classic customers. “In December 2015, the profile that emerged was a 36 year old woman, living in Bangkok who likes to shop on Wednesdays between 11 am and 2 pm,” he said. Half of WearYouWant purchases were made during this shopping peak of the year. Outside of Bangkok, 20 percent of customers filled shopping carts from Chiang Mai, with white shoes being the favourite purchase during December. In Nonthaburi, home to a fifth (19 percent) of shoppers, skincare and makeup products were the top category. A tenth of customers placed orders in Chonburi and was mainly looking for black outfits (79 percent of all orders).

With more data like the above, real integrated communication—“something marketers have dreamed of”, said Potharam—has potential to blossom in 2016. In the past, marketers have “tried to be visible everywhere in the digital world but were seldom standouts”. To steal a march on their rivals, brands need a “unified ecosystem of experiences under one enriching brand story”, he said.

That represents a new canvas for shoppable content, stated Mindshare's Sathaporn. “People will move more quickly from seeing to shopping”.

As Thai advertisers compete to reach multi-tasking, ad-avoidant consumers, the type of content that will stick are reality shows, singing contests and other international content formats adapted for Thailand, said Sathaporn, who expects the domestic advertising industry to grow by only three to six percent in 2016—a lower growth forecast than 2015 amid economic uncertainties.

So, even as Thailand's king ails and its economy slithers, advertisers may be able to rely on mobile and content for continued joy.