Thai conglomerate set to launch B2B e-marketplaces

Internet based business to business (B2B) initiatives have been taking off at different rates across Asia. Announcements of e-commerce initiatives by both local and multi-national companies in countries such as Singapore and Hong Kong have been rapid and thorough, covering most industries. The rate of e-commerce activities in Thailand, however, has been slow, until now.

The Charoen Pokphand Group (CP Group), a Thai agro-industrial conglomerate has announced a B2B initiative in conjunction with Commerce One, operator of the Global Trading Web, a network of e-marketplaces across the world.

Asia Freewill will be the flagship company for the e-business initiatives by the CP Group. Asia Freewill intends to launch two e-marketplaces. One focuses on Thailand and is expected to link Thai buyers and sellers of goods and services from different industries by using the Commerce One e-procurement platform. The other e-marketplace will be industrial in nature and focus on the global export food market.

"We realized the potential impact of e-commerce on our trading and strategic partners. We wanted to take the initiative," says ML Subhasiddhi Jumbala, chief financial officer of Asia Freewill. "This will give us the competitive advantage."

Asia Freewill believes that volume will be the key to the success of their e-marketplaces. Accordingly, the company expects to announce memorandums of understanding (MOU) with five of the leading conglomerates in Thailand to ensure transaction volume on both sites from their parent and MOU partners.

Dr Anuchit Anuchitanukul, director of technology at Asia Freewill estimates that the sites will benefit from a combined volume of transactions exceeding $10 billion baht ($229 million). Asia Freewill expects revenue from transaction fees and subscription fees from suppliers and vendors. However, such a revenue model based on transactions alone can expect to come under some scrutiny as many B2B e-marketplaces still struggle to capture revenues from transactions. Therefore, it will be important for Asia Freewill to lure independent third party businesses to become buyers and sellers onto the sites.

But just how internet and e-commerce savvy will the rest of the businesses in Thailand become? Jumbala believes that lack of internet penetration in Thailand will not be a hindrance to success for their B2B e-markets. "It is about having the partners to have enough volume to extend trading reach and to benefit from the cost savings of purchasing on the internet." Jumbala further believes that with time and education, the adoption rate of e-commerce will accelerate in Thailand. Asia Freewill expects their sites to be launched in March of next year.