Thailand’s Competition regulators are examining at the decision by Shopee, the country’s most popular e-commerce platform, to choose delivery services rather than letting customers choose. Saying the practice could run afoul of the Trade Competition Act.
Shopee’s move to automatically select couriers for customers has prompted an outcry from some users, who have complained via social media of higher delivery costs and longer delivery times. Their comments have appeared under the hashtag “Shopee – this is not your business”.
The courier selection decision represents a policy change that users should have been made aware of, said Somsak Kiatchailak secretary-general of the Office of the Trade Competition Commission (OTCC).
The move, he said, could affect vendors’ sales on the platform, since customers lose a chance to choose their preferred couriers and could face the possibility of shouldering higher delivery costs.
Unfair business practice
Restricting delivery options could be construed as an unfair business practice under the provisions of the Act that relate to abuse of a market-dominant position.
If such actions damage other operators, violators could face a fine of up to 10% of their revenue in the year the offence takes place, and/or a jail term of up to two years.
The OTCC will investigate Shopee’s practices and those of other e-commerce operators, Mr Somsak said, adding: “If an offence is found, legal action will be stringently pursued”.
Shopee said in a statement that automatic selection of a shipping service provider for customers will “enable more effective and efficient management of delivery volume for each service provider, which will eventually benefit our users”.
“Nevertheless, we are aware of the feedback and concerns raised from various sectors, both users and government-related (agencies), and are always exploring ways to provide users with the best shopping experience from the convenience of their homes.”
Control quality of delivery
Shopee, owned by the Singapore-based, US-listed consumer internet company Sea, has moved ahead of Alibaba-backed Lazada over the past year as the top shopping site in Thailand, according to the tracking service SimilarWeb. It has around 1 million active sellers in Thailand.
An industry source who requested anonymity said Shopee’s move enables the platform to gain more revenue from couriers as it can choose delivery service providers or smaller couriers with cheaper costs to gain a bigger margin.
“Small players are unlikely to be able to control quality of delivery, which can result in delays in delivery and then affect buyer satisfaction,” the source said.
Another industry source who also asked not to be named said Shopee could use the large volume of parcels it generates to negotiate revenue-sharing deals with logistics providers.
“These e-commerce players are trying to gain more revenue sources following years of losses due to heavy subsidies of prices and delivery costs, driven by intense competition,” the source added. These operators aim to gain more revenue from sales commissions, advertising, payment and logistics services.
Source: Bangkok Post,