image
Blog

Thailand Spotlight: The Rise of the Marketplace Model

Alexis de Fontenay - June 21, 2022
image

Online commerce no longer belongs to the digital giants. In fact, more than 300 of the world’s most trusted brands have launched their own marketplaces with Mirakl, where they sell a wider selection of products sourced from and stocked by third-party sellers, including an increasing number of brands in Thailand.

As Thailand’s digital infrastructure continues to improve, so has the untapped potential of the eCommerce market in a nation of mobile-first internet users. Up 28% in 2021, revenues from the Thai eCommerce market are set to continue to grow. There are currently 36.6 million online shoppers in the country, who spend US$243.17 online annually. This number is expected to reach 43 million users and average revenue per user of US$283.33 by 2025. In this accelerating environment, online marketplaces offer a competitive advantage: two thirds of consumers prefer eCommerce sites with online marketplaces, and 70% say online marketplaces are the most convenient way to shop.

In partnership with the Thai Retail Association and the Trade Commission of the French Embassy in Thailand, Mirakl recently brought together some of Asia’s leading eCommerce stakeholders, including Platform Pioneers Siam Makro and Central Group, plus McKinsey & Company at an event in Bangkok to discuss how businesses are using the marketplace model to transform and remain competitive in today’s market.

In this regional spotlight, we take a look at the exclusive insights shared during the event:

The eCommerce opportunity for Thai businesses

The pandemic accelerated an already existing trend for consumers increasingly shopping online and a shift to eCommerce. The number of Thai households shopping online increased by 58% during the Covid-19 pandemic. Nowadays, retail is much more than just the simple selling of consumer goods.

He added, “Whether or not to launch their own curated marketplace is the retailers’ version of the Innovator’s Dilemma. Even if you don’t do it, perhaps someone else will. The marketplace should be created to solve something, instead of being created just for the sake of having it.”

Even so, not all marketplaces are created equally. The most successful marketplaces follow a series of best practices that differentiate them from the competition. Wintels notes that when building the vision for a marketplace, synergising with the unique selling point and direction of the business could be a key factor: “Vertical integration could be a consideration, but only if your solution meets an unmet need or pain point. Curation could help, as compared to simply listing stuff on the marketplace,” said Wintels.

Marketplace best practice: Integrate your marketplace wherever your buyers are

Enterprise marketplaces thrive when they are seamlessly integrated into a business’s existing channels, not siloed in a marketplace-only section. By partnering with trusted, high-quality marketplace sellers and aggregating all offers into a unified online experience, a marketplace will serve as a natural complement to the organization’s brand promise.

Buyers recognize a marketplace as an extension of first-party offers, rather than a derivative of the operator’s first-party catalog. By integrating the marketplace into existing channels, shoppers have a better experience, without the added friction that comes from a separate shopping or checkout flow.

In Thailand's unique market, with highly discerning consumers, the marketplace model enables retailers to offer the best possible customer experience - by offering a wider product offering and better shopping experience, the marketplace operator contribute to the Department Store promise of never saying “No” to their customer. “Why do customers come to the store? Because of the brands, the products, and more and more, because of the customer experience,” said Bron. “The different channels are actually reinforcing this relationship between customers and the stores. But now on, customers can t stand to be answered by a “no”. If you don’t have the product, find it. Ship on the next day. Increase your selection of offerings that are coherent with the brand. And finally, every component of the business, every channel, should be authentic, coherent and aligned with your brand identity.

The modern consumer expects to be able to find anything, anytime, anywhere. Rather than waiting for you to bring a sold-out product back in stock, they will gravitate to the businesses that can offer instant satisfaction – resulting in a lost sale if you aren’t able to offer a meaningful alternative. You have to find the right sellers to partner with, and to propose the best brand mix for customers.

Bron also cautions against jumping on the bandwagon without a clear purpose, advising businesses to thoroughly rationalize the role of the channel that they are considering. That’s something that successful marketplaces have in common: they are treated as a business-wide priority with executive sponsorship and strategy to match.

He underscored the importance of refreshing business objectives and measures of success to align with the marketplace model, and monitor them closely. "Don’t only base your KPIs simply on the number of transactions per channel. 90% of the customer experience is now omnichannel. Work on the full end-to-end customer journey and the customer experience", Bron added.

Siam Makro powers its transformation through marketplace

Siam Makro, the leading B2B food wholesaler in Southeast Asia, was seeing success in their offline retail channels, which at first gave them no reason to deviate from the status quo. However, their big wake-up call came in April 2020 when sales dropped significantly due to the first Covid lockdowns. Under pressure to digitally transform, they turned to the marketplace model and launched Maknet, their own marketplace, aiming to become the number one B2B wholesale marketplace in Thailand.

Makro decided to disrupt instead of being disrupted, aiming to increase the customer lifetime value (CLV) rather than competing based on price. “Customers expect more, not just in products, but also in services. Our online marketplace gives online exposure to small and medium-sized enterprises, which they might never be able to get offline,” said Boarotto.

Boarotto also focused on the importance of planning well: being clear of the customer segment being served with each channel, delegating the right tasks to the right people, and never underestimating any part of the entire supply chain. “Can you fulfill what you promise? For example, if you focus too much on the selling and can’t deliver in time, then you’re inviting backlash,” said Boarotto.

Access an on-demand recording of the webinar to hear directly from these Platform Pioneers.

Siam Makro and Central Group are visionary Mirakl Platform Pioneers, using their marketplace to stay ahead of the competition and reap the benefits of an increasingly digital customer base in Thailand. Is your organization ready to do the same?

If your business is interested in meeting and exceeding customer demand by launching a marketplace, contact the Mirakl Team today.

image
Alexis de Fontenay,
VP Business Development Asia

Related content

image

Three Things Successful Platforms Have In Common

image

Get the Most Out of Your Marketplace Data with Mirakl Insights

image

How your dropship platform impacts eCommerce revenue and profitability