Thanawat (Wai) Malabuppha has a lot to say about Thai consumers. As the Co-Founder and Chief Executive of PriceZa, the leading shopping search engine and price comparison tool in Southeast Asia, Wai has grown his company into a business with operations in 6 countries: Thailand, Indonesia, Malaysia, Singapore, Philippines and Vietnam, and over 5 million shoppers every month. While discussing the state of startups in Thailand, he stressed to me that it’s impossible to talk about the Thai startup ecosystem, or any startup ecosystem, without first understanding local consumer behaviors.
One of the reasons PriceZa has been able to succeed on a cross-border scale and attract 14 million visitors per month is because every major company decision, from which markets to operate in to the look and feel of the website within each market, is rooted is local customer behavioral insights. Wai and his team carefully consider the competitiveness of any potential market and the shopping habits of its consumers before entering (after all, the core PriceZa price comparison product can only be effective in highly competitive markets with price sensitive shoppers in which there are a multitude of price options to compare). Wai also makes sure to prioritize the recruitment and training of local teams in all of the PriceZa markets.
In the case of the Thai market, the population skews older and is rapidly aging, but the Thai people are exceptionally receptive and adaptive to new technology and are incredibly social media-minded. Thailand consistently ranks in the top 10 countries worldwide for social media statistics on network usage and consumer adoption growth. From May 2016 to May 2017, active social media users in Thailand on Facebook, Instagram and Twitter were up an average of 20% year-on-year, rising to 47 million, 11 million and 9 million respectively. Bangkok alone has 27 million Facebook users, making it the world’s biggest city for Facebook based on number of users.
Given the quantity and quality of Thai social media usage and engagement, it’s no surprise that businesses have jumped on the social bandwagon to cater to consumer needs and to make use of social media as a tool in marketing their products or services. In many ways, social platforms in Thailand have become synonymous with the internet. Although this is nothing new or unique to Thailand, the scale of usage and the variety of ways in which users make use of social channels is noteworthy.
Users primarily turn to Facebook to fulfill their online needs, including everything from Search to ecommerce. One pattern I constantly encountered while in Thailand is that many local businesses do not have websites, and many restaurants to not have physical menus on display. Company information can be found exclusively on the company’s Facebook page, while menu information is reserved for a restaurant’s Instagram account. Traveler’s tip: don’t forget to bring your phone charger to Thailand.
Aside from (or perhaps because of) their propensity for social media, Thai consumers are also hard to sell to and convert. Given the amount of online information they are exposed to and the high level of competition, a new product or service must address a real and unmet pain point for them to take notice. Thai consumers are also incredibly deal or savings oriented, and they value saving money or finding the best possible deal over saving time or effort. As venture capitalist and journalist Christopher Quek, quoting a local startup founder, wrote in a post surrounding Thai consumers:
“The concept of spending money to save time does not exist among Thai digital consumers. They would rather wait, put a lot of effort, and do whatever it takes to be able to boast to their friends or colleagues that they got the best deal on the planet. We are so used to pirated music or movies that paying for digital content, especially in non-gaming category, sounds like a foreign concept. Unlike other more developed countries where online payment and in-app purchase is a universally accepted transaction, Thai consumers still think twice before making the decision to pay. This can be tough if the only source of revenue relies mainly on selling digital content.”
This is not to say that ecommerce has not taken hold in Thailand. Through the late 2000s, retail in the country followed an online catalogue model where consumers researched product information online before calling or visiting the store to purchase. However, in recent years online retail sales have exploded as ecommerce marketplaces have taken over. Rather, Thai consumers are thoughtful about what they choose to spend on, but will spend money on these chosen items. As Wai Malabuppha noted based on PriceZa data, the average basket size for Thai users on PriceZa is almost double the average basket size for Indonesian users to PriceZa’s Indonesia site, and the average order value is also substantially greater in Thailand than in Indonesia. It’s important to also factor in socio-economic differences between the two countries in comparing online shopping behaviors, but the Thai spending patterns nonetheless support the idea that Thai consumers do spend, they just do so carefully.
These insights, from social savviness to price sensitivity, provide a window into the minds of Thai consumers–a necessary step for anyone looking to understand how to start up in Thailand.