Bangkok Business Supplement - March 2017

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THE AEC AND ITS ECOMMERCE
POTENTIAL, PART 3
In the last issue in this series
looking at the ecommerce potential
of the AEC member states we
touched on the fact that many
analysts are looking at that potential
from a Western-centric viewpoint.
In this issue we’ll look at
why that may be flawed.
As noted previously, much of the
material for this series is based
on a lengthy article by Shenji Ho,
published in November last year.
Ho believes existing projections
about ecommerce valuations
should be looking more at what’s
been happening in China rather
than searching for answers from
the US, European and even the
Japanese models.
Ho believes ‘we should be expecting
high double-digit hypergrowth
similar to the one China
experienced over the last decade
instead of the more gradual yearon-year
progress of more legacy
ecommerce markets.’
Jack Ma, the founder and chairman
of Alibaba, is quoted as saying the
reason the ecommerce market
grew so big and so quickly across
China was simply because the
retail infrastructure was so bad.
Unlike the United States where
there are physical shops everywhere,
China virtually had none,
so ecommerce had a perfect
marketplace to start up.
Of course, Thailand has some of
the most high-end malls and department
stores to be found anywhere,
with Bangkok hosting the
likes of Central World and Paragon.
Yet once you get outside of
Bangkok, and even Pattaya and
Phuket, there’s much left to be
desired. While a city such as Surin,
for example, has seen some
tremendous growth in terms of
name-brand outlets opening up,
it is still very much a poor cousin
when it comes to what is available
in Bangkok.
According to recent data, Retail
Gross Floor Area (GFA) per capita
is 2,200 square metres in the US
versus 500 square metres in Thailand
(which is the same as China).
As Ho notes, ‘As a result, the
majority of consumers in Thailand
have no choice but to shop online,
especially those outside the bigger
cities. Based on aCommerce
aggregate numbers, 70 percent of
orders are from outside Bangkok.
Like in China, all this is expected
to accelerate ecommerce growth
at a much higher pace than in
legacy markets.’
Cash-on-delivery (COD) remains
the dominant payment method,
and data suggests around 74
percent of transactions around
the AEC member states are paid
through cash.
Notably, this is starting to change,
with many readers no doubt familiar
with local ecommerce company
Lazada and its easy COD
options. Lazada was acquired by
Alibaba and the new parent ‘is
executing its master plan to bring
Alipay and Ant Financial services
into the region.’
In the fourth and final issue we will
look at other factors which suggest
the AEC ecommerce market is
going to be a lot larger than many
might have expected.
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