The challenges
– and the
winning channels
Engaging the omni-shopper is vital
in a fragmented retail landscape
Although Thailand has more selling channels than in the past, which presents the opportunity to increase distribution, thorough planning is necessary to prevent channel cannibalisation and ensure that the brand can achieve further growth.
Every type of retailer – modern trade, semi-modern trade, traditional trade, and the online channel – must ensure it can win new buyers, and turn as many of those as they can into loyal customers. Currently, each consumer in Thailand purchases FMCG from an average of seven retailers. This means they will be more loyal to some than others. The challenge for retailers is to make sure they are one of the names considered by the shopper.
Currently, consumers in Thailand are omni shoppers – which means they buy FMCG from both physical stores and online stores.
E-commerce saw growth in both sales and # of buyers
Bricks and mortar stores are still relevant to shoppers, especially small formats such as supermarkets and convenience stores, and these still have the potential to grow their buyer base. Meanwhile specialty stores like drug stores and pet shops achieved double digit sales growth over the last year due to the rising healthy lifestyle trend and Thailand’s pet-friendly society.
It is not surprising that ecommerce is the channel everyone is keeping the closest eye on: not only have online stores increased their sales over the last year, but they have increased their penetration and shopping frequency as well. Nearly half of the households in Thailand (45%) now purchase FMCG products online, approximately three million more than two years ago.
The key players in Thailand’s online landscape include:
e-retailers – bricks and mortar retailers with an online presence or online store
social commerce – which involves the use of social media platforms to promote and sell products, and
online pure play – a company with products or services that are only digital.
All online channels are contributing to the overall growth in traffic or transactions, but especially e-retailers.
Manufacturers and brands should leverage the channels that are most suitable for their category. For example, omni-shoppers are most likely to purchase food and beverages from e-retailers, while personal care is most often bought via social commerce, which is also growing in popularity among buyers of home care products.
Having established which online channels are most appropriate, you need to understand if new customers and regular customers have different needs depending on the platform they are using – for example variety of products, delivery, pricing, and promotion.
Omni shopper choose to buy Food and Bev from e-retailer while social commerce are the key platform for personal care product.
It is essential to get to know omni-shoppers, because they are always ready to change the channels they buy from. Who are they? How do they buy products online and offline? Do they buy more online or offline? Which products do they prefer to buy online? And what do they still buy offline? Answering those questions will enable you to develop a more accurate and strategic marketing plan.
Families with teens are the key omni-shoppers contributing most to growth across online channels. On average, families with babies and young kids buy FMCG products online less than they did last year, but they are shopping more from online pure players. Older couples with no children are adopting all types of online platform, especially pure players and social commerce.
Omni-shoppers’ online basket size is larger than their offline basket (B407 vs B153), but online frequency and penetration is not as high as offline.
New online sales come from two sources:
repeat purchasers buying more, and
buyers switching in from other channels.
Over the past year, we have seen a change in the top three shopping channels that consumers are switching from. Whereas in 2021 the majority of people swapped from modern trade to buy FMCG products online, they are now also moving from mom and pop shops (provisional stores).
This is an indication of how Thai consumers’ behaviours are changing, and gives us a glimpse into the changing future of online channels.
