Central steps up e-commerce drive

Published May 18, 2016 by SoClaimon

ศาสตร์เกษตรดินปุ๋ย : ขอบคุณแหล่งข้อมูล : หนังสือพิมพ์ The Nation

http://www.nationmultimedia.com/business/Central-steps-up-e-commerce-drive-30284761.html

E-COMMERCE

Shoppers enter CentralWorld. Central Group is revving up efforts to boost online sale./Reuters

Shoppers enter CentralWorld. Central Group is revving up efforts to boost online sale./Reuters

AT CENTRAL GROUP, online shopping contributed only 0.5 per cent of total sales last year. In a country where mobile-phone penetration is more than 100 per cent, with smartphones accounting for 70 per cent of phones in use, it is more than obvious that the retail giant must step up its e-commerce to be ahead of rival retailers and small tech companies.

This makes a convincing argument for Central’s acquisition of Zalora’s e-commerce businesses in Thailand and Vietnam. An executive of Central confirmed the reported acquisition, saying more details should be released next week pending the wrapping-up of legal documents.

Zalora is Asia’s leading online fashion destination and is the largest fashion-focused e-commerce site in Southeast Asia, with presence in Singapore, Indonesia, Malaysia, the Philippines, Thailand, Vietnam, Hong Kong and Brunei.

The service has been available in Thailand for three years, offering choices of shoes, clothes and beauty products from local, regional, and international brands. It is now No 1 in the fashion category for online shoppers, who make more than 2 million visits to the site per month. More than 45 per cent of Zalora’s sales in Thailand come through mobile devices.

Such an active environment is something that traditional retailers like Central want to experience. Expanding into online business is also in line with Central Group’s vision set by its chief executive officer Tos Chirathivat, who realised that the emergence of online shopping would significantly affect the group’s retailing business.

At a recent media conference, he said the Internet would be the future of the group’s retail business.

Central established COL, its online shopping unit, in March last year after a one-year trial period. Last year, while Central Group reported overall retail sales of about Bt160 billion, COL generated Bt800 million in sales. That was equivalent to only 0.5 per cent of the total.

In a recent interview, COL chief Worawut Ounjai unveiled an ambitious plan to boost at proportion to 10 per cent of Central’s sales by 2020. He also unveiled a plan to allocate more than Bt1 billion to improve the business infrastructure as well as acquire local and international firms involved in website and logistics developments.

Mergers and acquisitions (M&As) as well as joint ventures were also options to grow the online business, both within and beyond Thailand. The group was yearning for any partnership that would result in better penetration into the overseas markets as well as product sourcing.

“In Thailand and other countries in Southeast Asia, online shopping activity accounts for only 0.5 per cent of total retail sales today. The worldwide average value of online shopping accounts for about 5.6 per cent of total retail sales, with China the highest, where online shopping is about 12 per cent of total retail sales,” Worawut said.

Zalora would fit well as a piece in the big e-commerce jigsaw.

Punnamas Vichitkulwongsa, CEO of Ascend Group, another e-commerce site, said this acquisition would be positive for the online shopping market as a whole. What matters is how the large retail brand would leverage Zalora’s strengths. COL can be a key player in fashion e-commerce if this acquisition enables stable online and offline relations with customers, he said.

Shannon Kalayanamitr, chief executive officer and founder of Moxy’s, an online shopping site for women, saw this as a sign of market consolidation.

She noted that M&As also took place in other parts of Southeast Asia, particularly Indonesia. Technology brings down borders and barriers to entry, she said. For this reason, Lazada is doing better in drawing online shoppers even though Central has been around in the retail business for decades.

“Acquiring Zalora [would] not only help its fashion category but also bring it into Vietnam with much e-commerce expertise as Zalora [Rocket people] are in the first class in Asia,” she said. M&As are good for the online ecosystem in Asean, as a sizeable number of potential buyers are out there, she added.

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