Page 36 - FoodFocusThailand No.145_April 2018

SPECIAL FOCUS

base via offline channels, have expanded to online venues, such as Brand.com or Therefore, the best solution for small
e-marketplace, to reach out to more customers. Producers and brand owners have also retailers is to leave a good impression among
entered the market to directly sell their merchandise online. It is thus expected that Thailand’s clientele by creating a ‘Customized Experience’
overall online shopping market will rapidly expand, resulting in tougher competition. to make customers aware of their brands and
KResearch expects that in 2018, the market of Business-to-Consumer (B2C)-online- want to repeat their patronage regularly.
shopping (merchandise only) will amount to approximately THB 256 billion, and may rise further Clientele may also feel the urge to talk about
to surpass THB 470 billion in 2022, with average annual growth of 16%. Online shopping will their good impressions with their friends or
likely gain market share, from 5.0% in 2017 to 8.2% in 2022, of all retail business activity in others by sharing their online shopping
3
the system . E-marketplace online platforms are expected to play a more prominent role. experiences on various social media platforms.
At any rate, marketers via both online and offline platforms have continuously adjusted For example, retailers in the fashion
their marketing strategy to respond to the evolving consumer behavior. For example, they segment (apparel, bags and footwear) or
have repositioned their brands or changed buying channels to woo customers to repeatedly
use their services and thus maintain their market share. Ultimately, the customers will decide traders may also have to assume the roles of
which platform they want to use in buying the products, either via online or physical store, designers and distributors by applying what
by considering which one is more convenient and more satisfying for them in carrying out they have observed from the behavior of each
their transaction at that time. customer group to craft products that create
According to KResearch’s assessment, one important issue is that on one hand, the a new personalized experience, namely
movements of big operators, particularly in e-marketplaces, may enable small retailers to apparel exclusively designed to fit the character
facilitate their online shopping transactions conveniently on user-friendly online platforms, or body of each client, footwear molded to fit
with diverse and secure payment services, and multiple modes of prompt delivery. On the individual foot shapes, or a package with a
other hand, retailers may face stiff competition from other operators in e-marketplaces. It is thank-you note identifying individual customers
noteworthy that if e-marketplace operators become the distributors of merchandise by by name. Such unique experiences can delight
capitalizing on the existing database of customer information obtained from their online customers and leave them with good
spending records, they will be able to gain in-depth information about customer behavior to impression.
find out what products are popular online. If such is the case, these e-marketplace operators However, there is a group of products that
could become business rivals competing neck-and-neck with incumbent retailers. Although small retailers may not be able to manufacture
such a trend is not yet clearly evident, it is likely to happen in the future if e-marketplace by themselves, such as electrical appliances
operators see an opportunity to increase their revenues from this channel. and IT equipment. As small retailers are likely
Superficially, online platforms may appear to provide a ready opportunity for small retailers to serve merely as distributors and, yet, they
to venture into the online shopping business, as it should be easy for them to enter the web- don’t want customers to make buying decisions
based market; however, they will face a big challenge to stay competitive or enjoy business based solely on price, small retailers thus have
success. Small retailers’ current advantages may not be sufficient for them to stay competitive to bump up the service proposition. For
in the near future. For instance, small entrepreneurs may be able to offer a cheaper price example, they may show their sincere
(production cost) compared to storefront prices in the mid-size market, with the small number
of players at present. But they may soon lose such an advantage because the online shopping hospitality and caring towards their customers
market is set to quickly expand, as it is flooded with newcomers, namely large-scale operators through pre- and after-sales service, offering
and select merchandise producers. Moreover, consumer behavior has constantly changed useful advice that allows customers to buy
as the buyers have less loyalty to specific brands or products. In short, the conventional products that best suit their preferences, or
mode of doing business is no longer enough to retain customers, because they have more advice on how to use and maintain good
online shopping options. condition of products. Retailers may also offer
free delivery service, regardless of how much
Large-scale Operators Small Retailers a customer has spent on an item, to enhance
their cordial relationship.
Strengths Strengths Finally, KResearch views that as the online
• Power to bargain with business partners such as • More flexibility in providing service and taking care shopping market heats up, small retailers must
suppliers/financial institutions/delivery service of individual customers constantly rethink their business strategy and
providers to offer promotions or special privileges to • Able to launch marketing campaigns that are better adjust to the evolving behavior of individual
customers tailored to customers’ individual needs
• Brands/products that have gained more credibility consumers. Such adjustment may start from
among customers, who can also verify the presence minor changes (requiring little or no budget),
of their business identity
or building up from their forte. Adjustments are
essential to leave consumers with delightful
Challenges Challenges impressions of their products or brands,
making them stand out from rivals. Once their
• Less flexibility in providing after-sales services • Confidence in products’ quality/ presence of their business gets stronger, retailers can expand
such as redemption/product claims than smaller stores, their delivery service (especially for first-
operators, due to their massive customer base timers), or transactions of expensive goods. Small to other areas of related services on a larger
• High expectations from customers in terms of retailers need time to build consumer confidence via scale.
production quality and pre- and after-sales service various means, such as reviews from existing
customers

Small retailers now face the question of how to be competitive amid stiffer competition,
having no other option but to reconfigure their strategies. Additional Information
1
KResearch views that the survivors will be those who “think and do differently” and go the Electronic Transactions Development Agency
extra mile to stand out. Retailers might have previously focused on the distinct quality of their (ETDA)
2
Calculation of B2C-Commerce in consumer
merchandise, as well as pricing. They also used to focus on functionality, packaging or stories product group in 2017 (excluding services)
of their products. However, such distinctions are no longer enough, because the customers based on data from ETDA
now yearn for new personal experiences such as being the first to lay hands on a new product, 3 Calculation of consumer products only
or to own merchandise that they are emotionally connected to or identify with.
34 FOOD FOCUS THAILAND APR 2018

30-34_Special Focus_Online Shoping.indd 34 19/3/2561 BE 15:30