Thai SMEs favour social media over e-marketplace for online sales: Study

Thai small and medium-sized enterprises (SMEs) see social media as the most crucial e-commerce platform, while surprisingly ranking e-marketplaces at the bottom of the list, according to a study published by ISEAS - Yusof Ishak Institute.

The study, based on a survey of 310 Thai SMEs in the food and beverage and retail industries, found that social media has the greatest impact on e-commerce utilisation levels, followed by food delivery platform and websites.

E-marketplaces like Lazada and Shopee ended up last on the list.

This comes as a surprise, since e-marketplaces have enabled Thai firms to advertise to a large number of online customers, reduced their operation costs, and increased trust and transparency between companies and customers as well as opportunities for oversea sales.

The reason boils down to costs, as online sellers have to pay for sales commission for the platform provider in e-marketplaces, said the study.

On the other hand, social media is a cost-effective marketing tool which can reach a massive number of online customers without incurring too much advertising costs, noted the study, which was conducted by Yot Amornkitvikai from Chulalongkorn University and Cassey Lee from ISEAS - Yusof Ishak Institute.

Overall, the study found that the prevalence of smartphones helps to promote e-commerce utilisation levels among Thai SMEs, as companies can use smartphones together with social media to update their products' information.

That said, of the two industries surveyed, SMEs in the retail sector are more likely to have higher ecommerce utilisation levels than those in the food and beverage industry.

"Retailers have shifted their preference to more online sales due to changes in customers' preferences," said the study. "(But) unlike the retail industry, it is more challenging to sell food and beverage products because these products must be delivered on time in order to maintain the highest quality."

Even as SMEs from both industries turn to e-commerce to boost sales, there is still some hesitation from some quarters, as sellers worry that their consumers are unable to navigate the e-commerce platform.

Another major concern is the "insufficient security to prevent hacking and malware", noted the study.

According to a survey by the Electronic Transaction Development Agency of Thailand, SMEs have urged the government to "seriously solve" the issues from trading via social media, such as deceitful online trading, credit or debit card fraud, and identify theft.

The study said: "The government should enforce strict laws related to e-commerce businesses to increase the security and trust in e-commerce so that e-commerce transactions will be more efficient."