The rapid proliferation of e-commerce, there is an increased demand for small-scale delivery.
The COVID-19 shock in early 2020 marked the global spread of e-commerce. Thailand was no exception to this trend. The e-commerce market in Thailand was reported to be 29.4 billion Baht (over 100 billion yen) in 2020, and further market expansion is expected in the future. Additionally, by 2018, Thailand had already surpassed Japan's level of smartphone penetration, exceeding 70%.
E-commerce extends beyond retail. Its proliferation and expansion signify the integration of "retail" x "finance" x "logistics" through digital means, making it a central player in digital transformation.
While the market is expanding, fierce competition arises from the entry of local logistics companies such as Kerry Express and other private players.
Unlike Japan, which has had a domestic parcel delivery market for decades, Thailand lacked established private players with established positions and logistics infrastructure, apart from the state-owned Thailand Post.
Kerry Express, as a private logistics company, has been a formidable competitor to Thailand Post since the early days of e-commerce. It differentiated itself by offering unprecedented services to Thai consumers while maintaining a sophisticated and youthful image unique to private enterprises. Kerry Express, a subsidiary of the Kerry Group based in Hong Kong, operates delivery services not only in Thailand but also in Hong Kong, Taiwan, Vietnam, Cambodia, and Malaysia.
However, despite the significant growth of online shopping in Thailand amidst the COVID-19 backdrop in 2020, Kerry's revenue for the fiscal year 2020 decreased by 4.4% to 1.405 billion Baht (approximately 5 billion yen), and its stock price experienced a significant decline from the initial public offering price. As of May 2021, the stock price has yet to recover. Why is this so?
The backdrop is the competitive environment of the Thai market. In addition to local players, there's a variety of new entrants such as Flash Express, Best Express, SCG Express in collaboration with Yamato Transport, Nim Express, as well as international players like J&T Express, LALAMOVE, and Grab.
Expansion of branches necessitates a balance between initial investment costs, price competitiveness, improvement of user experience, and deepening of the business model.
In the dawn of the parcel delivery market's growth process, establishing a comprehensive delivery network is crucial. A solid delivery infrastructure enhances customer convenience.
Flash Express and Best Express continue to expand their branches through a franchise model, which distributes profits to subscribers during transportation, allowing courier companies to expand their delivery networks more easily without incurring additional management costs.
Flash Express, in its second year of operation last year, announced that it had raised $200 million (approximately 21 billion yen) in a Series D round led by PTT, a conglomerate in Thailand, and VC under the umbrella of Krungsri Finnovate, a subsidiary of the Thai Commercial Bank.
Cost reduction, in particular, will be crucial in the future. Komsan Lee, CEO of Flash Express, stated, "In advanced countries, shipping costs in e-commerce businesses account for about 8-10% of the retail price, but in Thailand, they still account for nearly 30% of the retail price. Therefore, if these costs are reduced, there is a high possibility that e-commerce will further develop." Future developments are eagerly anticipated.
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