One of the most notable features of eCommerce in Thailand is the rise of social commerce. With 46 million registered Facebook users in the country, it is no wonder that one third to half of total eCommerce GMV is taking place on social media. With increasing smart phone penetration and prevalence of 3G and 4G internet network, the use of social media is likely to grow in future.
Keeping in mind these figures, retailers (big and small alike) in almost every category have started focusing on social media platforms such as Facebook and Instagram. With competition in the social platforms getting steeper, is has become essential for retailers to completely understand the nature and characteristics of social commerce in Thailand.
So, what are the main characteristics of social commerce in Thailand?
In Thailand, the social commerce scene is dominated by three major characteristics.
Direct Communication Between Buyers and Sellers
Although, Thailand has 12.1 million online shoppers today, eCommerce is a relatively new concept in the country.
Thus, having one-on-one communication with the seller works wonders to build trust. Social commerce presents ample opportunity for the same. In a typical social commerce transaction, the seller set up a ‘shop’ on Facebook or Instagram. Any buyer who would like to purchase the product can get in touch with the seller through personal messages, mostly through Facebook Messenger or Line. Once the payment method and price of the product is agreed upon, the buyer makes the payment and the seller ships the product.
This, ‘real-life’ like direct communication is often valued by a populace who are still getting accustomed to buying things online. Moreover, this direct communication will the seller, facilitates pre-purchase product consultation, much like an in-store sales consultation.
Real Market Place Like Bargaining Opportunity
Well, Southeast Asian market is highly price sensitive. Moreover, most of the buyers are used to bargaining practices in brick and mortar market places.
While online stores do not offer this bargaining opportunity, the direct nature of social commerce facilitates the same.
For example, if a customer is trying to purchase a cute handbag from a Facebook Store, she may bargain with the seller to give some discounts on the mentioned price or may request for a free goodies. This creates a more personalized shopping experience and foster more intimate relation between the customer and seller.
Keeping in mind the popularity of personalized offers in the region, it is no wonder that social commerce is highly popular in Southeast Asia.
Online Sales, Offline Payments
Credit card ownership in Southeast Asia is still pretty low. A study conducted in 2016 reveals, Thailand has a credit card transaction rate of 3.70%, while the figure for Indonesia is 1%.
This low rate of credit card ownership displays the buyers’ concern for online payments.
In a scenario where most customers are wary of making an online payment (or may not even have a debit or credit card), direct money transfer through ATMs has become the most popular payment mode for social commerce. This way, the customer does not have to submit their banking details in order to make the payment, while still being able to shop from the comfort of her home.
Let’s Take a Look at the Factors Responsible for the Growth of Social Commerce in Thailand!
Social Commerce in Southeast Asia is growth at unprecedented rate! And there are sound reasons behind the phenomenon.
Offline Payment Option
Although online payment is slowly getting popular in Thailand, a large segment of consumers (especially first time online buyers) are still suspicious of online transactions. Here, social commerce and the one-on-one communication opportunity it offers ensures the chance of opting for a payment mode that is preferable to both, the buyer as well as the seller.
In most cases, offline bank transfer or direct deposit is preferred by customers.
The freedom to shop online but pay offline is one of the main factors for wide popularity of social commerce in Thailand.
Wide Use of Facebook & Instagram
In West Facebook and Instagram are just two social media platforms among many. But not in Southeast Asia!
In Southeast Asia, Facebook and Instagram are the most popular social media platforms and guess what, they are acquiring more and more users with every passing day.
As per Statista report, Indonesia alone have 106 million Facebook users in January’17. The figure is 46 million in Thailand, 60 million in Philippines and 22 million in Malaysia.
Add to this the Bangkokpost report of Thailand being one of the top 10 countries in Social media usages, and it is not at all hard to understand the popularity of social commerce in the country. The same report also revealed that Instagram usage in the country has increased a whopping 41% compared to the previous year.
The increased use of social media especially Facebook and Instagram has creating the ‘go where your customers are’ mentality among most brands, online retailers as well as C2C sellers.
Low Cost, Less Price
Setting up a shop on Facebook or selling products through Instagram is literally cost-free. The sellers don’t have to build and maintain an eCommerce website or in many cases don’t even have to register a business to sell through social media.
Thus, they can easily offer the products at a lesser cost.
In a market as cost sensitive as Thailand, low cost equals to more sales!
So, Is Social Commerce Hindering the Growth of eCommerce in Thailand?
With 51% of online shoppers purchasing good through social media, Thailand is one of the largest social commerce markets in the world today. And why not? Buying and selling both are a lot easier and cost effective in social commerce, compared to that of eCommerce.
So, the big question is, will social commerce become mainstream and snuff out eCommerce in the country?
As per experts, the situation is highly unlikely!
While it may seem all rosy in social commerce, there are grey areas in it too.
Trust is one important factor here. In a social commerce transaction, a buyer typically makes the payment first and then the seller ships the product. Incidents where a buyer had made the payment and then never heard from the seller are not very uncommon.
Another shady area is the return policy. While most reputed eCommerce stores follow a standard and transparent return and refund policy, social sellers hardly offer anything sort of that.
As per experts, social commerce effectively makes customers comfortable with online purchases and thus eventually encourages them to participate in eCommerce experience in general.
What’s Next in Social Commerce in Thailand?
With large number of consumers using social media and the ease of setting up a shop on Facebook or Instagram, social commerce definitely going have a long run in Thailand.
The future of social commerce definitely seems bright with rumors of Facebook rolling out their social commerce payment gateway in Thailand.
While social commerce does come with an issue or two of its own, with more and more genuine buyers setting up the shop, social commerce scene is getting more transparent with time.
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