Thailand’s top e-commerce entrepreneur says “Don’t follow the market, create it!” from e27.sg
Pawoot Pongvitayapanu is Thailand’s leading entrepreneur in the e-commerce space. Having sold his startup, Tarad.com, to Japan’s leading e-commerce group Rakuten, he is currently continuing to grow the e-commerce industry in Thailand.
While travelling around the region to carry out a Southeast Asian e-commerce research tour, Minh Bui, an Internet entrepreneur from Vietnam attended the 2nd Asia eCommerce 2012 Conference in Kuala Lumpur. There he met Pawoot Pongvitayapanu , CEO of Tarad.com, a leading ecommerce site in Thailand. In 2009, Rakuten, the e-commerce giant from Japan invested 300 million Yen (about US$ 3.35 million) for a majority share of 67 percent in Tarad. Minh interviewed Pawoot to find out more about the Thai e-commerce landscape.
What does “TARAD” mean?
It means market. We intended to start an online place for people to buy and sale stuff there.
What is TARAD’s current traction?
Now in TARAD.com we have more than two million members, over 300,000 merchants and more than 200,000 unique visitors per day. And we keep growing every month.
Why did you start TARAD.com? Did you already have a plan in mind?
I started TARAD.com in 2001. Before that, I started my first online business in 1999 with ThaiSecondhand.com, an online classified service. I did it like my hobby with my two friends. During the 1999 Dotcom era, many big corporates and investment companies wanted to invest in Dotcom companies. My site was one of their targets. I talked with many investors and finally we received investments from an investment firm in 2001. After we received the funding, that’s when we started taking it seriously on how to run and grow the company for the long term.
14 years with a business is long. Besides TARAD, what did you do?
14 years is quite a long time for an Internet company. It is very hard to find an internet company that has operated for such long time like TARAD in Thailand. I can separate my time since I started my business into four periods.
- First move – Startup (1999-2001) It was startup time, we have only three founders (all are friends in high school and university) we did the web site as a hobby (no revenue) for fun.
- Second move – Seeding (2001-2002) We received seed funding from a big company in Thailand (Mono Group) of three million baht (around US$100,000) with 30 percent of share in the company. After we got the investment we expand from three people to 12 people and I felt it did not challenge me anymore. I decided to join Hutchison (Hutch Mobile operator) for two years while working in Tarad.com as part-time.
- Third move – Growth (2002-2009) I resigned from Hutchison and move back to Tarad.com full-time. This period, I put 1,200 percent of my effort into pushing the company to the next step. I used my knowledge from Hutchison to improve Tarad.com. We increased from 12 people to 70 people and expanded business to many business units at this stage. (e-commerce, e-payment, e-shopping, e-education, publishing). We also expanded our business with a branch in Chiangmai (Northern Thailand). We became number one e-commerce group in Thailand.
- Fourth move (2009-present) We joined Rakuten (the largest e-commerce group in Japan and third largest in the world), changed our business model from platform business to transaction business. We are growing very fast and have become the typical model for other e-commerce players in Thailand. We aim to revolutionise Thailand e-commerce space.
When did Tarad start to boom and why?
It began booming since our third move (2002-2009) because we were the first mover in Thailand market (since 1999). We moved very fast and we had the whole eco-system of e-commerce (shopping, store front, payment, education). We were not only working online but also expanded to the offline market. We held seminars and educated more than 100,000 small and medium enterprises around Thailand. We printed more than 30 books about e-cmmerce knowledge in Thailand market. We were not waiting for the market to be ready, we decided to create the market with our own hands. We aim to empower our merchant with our technology and knowledge.
Why did you decide to sell TARAD to Rakuten?
I did e-commerce for more than 12 years in Thailand. It was really hard to see “The Change”. Thai e-commerce is still stuck in the old model of using e-catalogues and offline payments. Not many service providers step into the ”Transaction model” or commission basis. After I had the chance to know Rakuten, I was very impressed with their business model and the way they support merchants. Their model is not like Amazon, Ebay or any e-commerce player in the world. It’s very unique. And their model was very similar to Tarad.com.
I believed that Thailand’s e-commerce needed change and Rakuten will be the good reason for us. Main reason that I sold Tarad.com to Rakuten was that I expected the benefit not only for myself or to my employees, but it will go to Thailand’s small and medium enterprises, our society and our country. I believe Thailand’s e-commerce industry will rise up to another level after we learn from Rakuten. And after three years, it’s true!
When small companies (SME) can grow their business with our e-commerce technology, they can increase their country-wide sales and generate more money to feed their families who may live far away from Bangkok. They will no longer need to come and work in Bangkok but live and work in their local area with our technology. This way, their society can be stronger. If we can do the same with more than 50 percent of small and medium enterprises in Thailand. Our country will continue to grow.
Anything different since the acquisition?
Two years after we joined with Rakuten, Our sale growing at over 1,500 percent. Many merchants can now sell more, generating sales of more than 1,000 percent. We have also developed many new services to support our merchants. Where before we focused only on technology, now we focus more on our merchants’ sales. That made other e-commerce players, our competitors, work harder. They do more marketing, and became more aggressive in following us. That made the whole Thai e-commerce industry change as expected.
What is the current business model of Tarad? How was it shaped?
Our business model is business-to-business-to-consumer (B2B2C)
- We provide total e-commerce solutions to businesses (B2B)
- Mission : Empower merchant
- We provide the best online shopping mall to user (B2C)
- Mission : Shopping is entertainment
- Variety of products and promotion campaigns
- Safe and secure shopping
- Super point collection and redeem
- the best place to shop online
- When both business come together, its B2B2C
How does TARAD monetize?
Our main revenue streams are:
- Platform fee – Merchant use our platform to manage their products
- Transaction fee – We charge merchants when they can sell
- Advertising fee – We sell advertising space and solutions to merchants.
- Others – education and other services
What are some payment methods that TARAD is using now?
In Thailand, bank transfer is the most popular payment channel (around 90 percent of payments made). But on Tarad.com after we implemented Rakuten’s model. Credit cards is the number one payment channel. We also have bank transfer, convenient store payment and PayPal as our other options.
What are the three most difficult things you have to face?
- User buying behaviour – we are in the process of changing Thai consumer’s behaviour of purchasing online
- Merchant readiness – we develop and grow merchants to move to online channels. Some of them not ready yet but we keep doing it and provide them full support
- Myself and my team – We have to keep on improving to be more efficient.
What are TARAD keys for success?
Our key success factors are:
- Merchants (our merchants’ successes means our success)
- Differentiation and being the first mover
- Speed, speed, speed
- KPI management – We know what we are doing
- Efficiency – everything must work efficiently
Is the e-commerce space very competitive in Thailand?
Before year 2011, no. But now, yes! It’s starting to be competitive even though we don’t have any big players like Amazon or eBay yet. (they do only international sales) But after e-commerce became more popular as a new channel for businesses and merchants, many service providers started boosting their speed. Existing offline shopping malls started expanding to online channel. That made e-commerce more competitive in Thailand.
What are some popular e-commerce models used in Thailand and the top players in each field?
e-commerce players in Thailand
- e-classifieds: ThaiSecondhand.com, Pantipmarket.com
- e-shopping malls: Tarad.com, shopping.co.th
- daily deals: ensogo.com, thaicitydeal.com
How big is the market now in Thailand in terms of buyers and revenue?
We don’t have exactly the number yet but according to PayPal’s 2012 research they said Thailand’s e-commerce market size is around 14.7 billion Thai baht (US$480 million). Domestic shopping 41 percent, international shopping 44 percent, and the others 15 percent.
What are the effective marketing approaches in Thailand?
The most popular marketing for people who do e-commerce in Thailand
- Search Engine Optimisation
- Search Engine Marketing
- Social Network Marketing
- E-mail marketing
- Influencer marketing – Blogger and product review sites
- Seeding product and information in online forums and communities
Some of the key factors that affects Thai customers’ buying decision?
Thai people, like other people all over the world, look at:
- Pricing – cheaper price have more potential to sell
- Trust and confidence in merchants
- Online payment
- Trust in delivery and shipping
Please share your experience for startups on how to succeed?
When you are in the startup phase, the most important things that can make you survive are:
- Love what you doing! Sleep with it and be ready to die with your business!
- Always differentiate, make something new
- Create the market, don’t follow the market!
- Know how to market your business to the world!
- Low cost management in the first phase
- Give back to society. The more you share, the more you will get!
About the author
Minh Bui is an Internet entrepreneur from Vietnam. He is an avid traveller of Southeast Asia and has gone to all ASEAN countries to research on e-commerce and online travel markets in these countries.
Full article from e27.sg