Smartphones + LINE Drive Online Sales In Thailand

Smartphones + LINE Drive Online Sales In Thailand

Susan Cunningham Contributor

Forbes Asia 7/28/2014 @ 7:54AM

Click on the link to get more news and video from original source: http://www.forbes.com/sites/susancunningham/2014/07/28/smartphones-line-drive-online-sales-in-thailand/

Korea’s newest billionaire: Naver Corp. founder Lee Hae-Jin. Korea’s newest billionaire: Naver Corp. founder Lee Hae-Jin

Mobile sales increased 300% on shopping site Tarad.com  in 2013 

Mobile  payments: That’s the fastest-growing trend in online shopping in Thailand and the wealthier states of Southeast Asia. In January 2013, only 11% of purchases on Thai shopping site Tarad.com were made with smartphones or tablets; by December, they accounted for 33%–a 300% leap. Pawoot (Pom) Pongvitayapanu, Rakuten  Tarad’s managing director, forecasts that within three years, the majority of purchases on the site will be made from  mobile devices.

The problems that Tarad encountered on the way to establishing a B2B marketplace in Thailand, described in an earlier post,  were aggravated by the way the majority of customers were paying for goods for most of Tarad’s existence. After finalizing the deal with the seller directly, buyers made a direct deposit into the seller’s bank account.

Many customers still pay by direct bank transfers, although 45% of Tarad purchases are now made via credit card. Customers can also pay with debit cards, PayPal or the stored wallets of their mobile phone service. Since mobile devices encourage more impulse buying, mobile buying will likely grow rapidly.

Smartphone face of messaging app Line

The face of smartphone messaging app LINE

Mobile payment was accelerated by the cheap made-in-China Android smartphones that flooded into Southeast Asia in 2013.  Android finally dislodged Blackberry as the country’s most popular smartphone operating system last year.  Apple’s iOS system is now in third place. Somewhere between one-quarter and one-half of Thai mobile phone owners–which means just about every adult–supposedly now owns a smartphone (more on that below).

Additional spurs  to the mobile buying spree in Thailand last year were the belated arrival of 3G and the popularity of  messaging app LINE. LINE was the smartphone app of  the year in Thailand and Japan. Korean-created but Tokyo-based, LINE is a free super-fast text and visual messaging app for smartphones and tablets. It offers one-to-one and group chats, free one-to-one VOIP phone calls and Facebook-like networking. The cute animal icons and virtual stickers have a lot to do with the app’s popularity too.  As of February, there were 22 million registered (if not active) LINE users in Thailand, the largest number after Japan. 22 million: that’s equivalent to almost half the adult Thai population.

Can Viber challenge LINE’s speed and security?

LINE won more publicity in the aftermath of the May military coup in Thailand. Many Thais reportedly shifted their chatting from Facebook to LINE as the military pledged to conduct more rigorous online snooping. It was said that LINE  might be more  secure than Facebook but Hong Kong democrats are finding that, even if the Chinese government can’t eavesdrop on LINE, it certainly can disrupt the service.

For e-commerce companies like Tarad, which adds its own security features, LINE  serves as a secure, speedy communication and payment channel. When Tarad announces a special sale, MD Pom told me, “We can send it instantly to 6.5 million accounts; you can buy immediately with one click, even if you are in the toilet. Within 30 minutes, we can have more than 1,000 sales. LINE is faster than email, faster than any other communication channel. That’s why mobile sales is growing so fast. Within three years, it will overtake PC commerce. Mobile will be the majority.”

LINE rivals  WhatsApp and WeChat are more popular in other Asian countries. Here’s a prediction, though: In the coming year, Japan’s Rakuten, Tarad’s principal owner, will try to persuade customers at its shopping sites in Thailand, Singapore and Indonesia to switch to yet another app, newcomer Viber. Rakuten spent $900 million in March to buy Viber from developers in Cyprus and is setting up an office in Singapore to promote it throughout the region.

Smartphone penetration?

Does Nielsen’s estimate that 49%  Thais own smartphones seem rather high? Even for Bangkok? After all,  only about 10% of  Bangkok’s 100,000 taxi drivers own smartphones and they are hardly at the bottom of the very steep economic pyramid.

Staff at the research companies Nielsen and Frost & Sullivan told me that  ”smartphone penetration” refers to the share of mobile phone owners who own a smartphone–not the share of total mobile phone subscriptions active at one time.  Especially in conspicuously consuming Bangkok, an individual might own a smartphone, tablet and a few less smart mobiles with active numbers.

The 93.8 million or so active mobile phone numbers in Thailand, as reported by the three mobile phone companies,  exceed the entire Thai population of 67 million. (That population figure doesn’t include the 1 million undocumented Burmese, Cambodian, Laotian and Vietnamese workers and millions of tourists in the country at any give time.  Many of them have an active Thai  mobile phone number.)

From that huge number, the  Frost & Sullivan study estimated there were 15.3 million owners of  at least one  smartphone in Thailand at the end of 2013 and these owners  accounted for about 25% of all mobile owners.

On the other hand, Nielsen in a January report put overall Thai penetration at 49%, with levels even higher in urban areas. The same Nielsen report put smartphone penetration at 80% in Malaysia  (sounds high to me),  23%  in Indonesia (probably mostly Blackberrys),  15% in Philippines and 87% in Singapore.

Smartphone play – 3 hours per day

Ericsson Consumerlab meanwhile estimated back in September that smartphone penetration in Thailand was 36%, though on closer inspection that was just among “urban” (Bangkok?) residents. It was based on interviews with respondents.

Given the momentum in smartphone shipments and sales, Frost & Sullivan has projected that there will be 20 million smartphone users in Thailand by the end of the year. They would then constitute about 38% of all mobile phone users. Nielsen’s estimate is 22 million.

Off-topic from the Nielsen report but chilling enough to be worthy of mention:

In Southeast Asia alone smartphone owners spent on average more than three hours per day on their smartphones in June 2013, with activities such as chat apps, social networking and entertainment activities like games and multimedia driving the highest levels of engagement.

Meanwhile, Thais on average spend more than five hours a day watching TV. Phone game-playing time can overlap with TV watching, of course, but still… how many leisure hours are left in a day?

Related:

Popular Free Messaging Service ‘Line’ Mints New Korean Billionaire

http://www.forbes.com/sites/kerryadolan/2013/12/09/popular-free-messaging-service-line-mints-new-korean-billionaire/

Lee Hae-jin, the 46-year-old founder and head of Korea’s No. 1 Internet portal operator, Naver Corp., has joined the billionaire’s club thanks to explosive growth in the number of the company’s free messaging service, which is called Line. More

 

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