If you’ve been in Thailand and toured its popular landmarks, it’s most likely you have passed by a store packed with Thais and tourists alike buying bags and bags of…well, bags. Crowded stores filled with unmistakable colorful patterns distinguish NaRaYa from other locally produced labels and its popularity among Chinese, Japanese and South Korean tourists speaks volumes.
The famous brand can be found at over 20 domestic stores scattered around Thailand and 13 international branches and after 30 years in the retail business, shoppers can finally go online to buy NaRaYa products.
Obstacles to a fruitful online journey
For a brand that has enjoyed immense popularity among women in Asia across all age groups, it seems the company is actually late to the retail game given the prevalence of e-commerce in Southeast Asia.
A few factors explain why it took NaRaYa so long to finally focus on digital.
Narai Intertrade Co,.Ltd., the parent company of NaRaYa, is a family owned business established in 1989 and is the manufacturer, distributor and official retailer of its own brand, making the supply chain a tangled web of complexities.
But a common obstacle that keeps manufacturers and distributors from going directly to the consumer is channel conflict. By selling online, the brand would be competing directly with its partners in other markets.
“Initially, we wanted to focus on selling traditionally in our physical stores, and on being a wholesaler for our overseas partners,” shares Mrs. Wasna Lathouras, President of Narai Intertrade Co., Ltd.
“Doing e-commerce would mean cannibalizing our partners.”
“If you notice on our website, you will be directed to the online websites of our overseas partners such as in Japan. If we were to go online, our cost would definitely be cheaper but reduce the opportunity of our partners to market and sell our products in their local markets.”
So how did they get around upsetting current partners?
“We launch ecommerce in markets where none of our dealers exist.”
Channel conflict aside, the owners share a few factors that drove them to tilt the scales in favor of e-commerce. One, it was hard for the company to ignore the pressure to sell online, especially as the executives took to social listening to understand the needs of its customers.
“We have really high demand for our products from customers that don’t live in major cities in Thailand. Being online, everyone with a mobile phone can get NaRaYa products in a few days,” says George Hartel, the company’s Chief Operating Officer. “It opens a new market and opportunity for us.”
Two, they found a partner able to handle multi-channel retail and provide enough flexibility to expand across the region when the company was ready.
“Both NaRaYa and aCommerce need to grow together. That’s why we need to have our backend and distribution center ready for offline distribution, while aCommerce will take care of the online distribution,” says Mr. Pasin Lathouras, Assistant Chief Executive Officer.
Three, they realized what online could mean for new retail opportunities in the US, India and China markets and expansion even within home market Thailand.
“I would say that 80% [online revenue] will come from overseas, and 20% from Thailand,” shared George. “This is because Thailand is a tourism-based country and e-commerce is relatively early in Thailand so primarily people are still shopping offline.”
And three, given their existing footprint, could they reach retail’s pinnacle, omnichannel?
“We are starting an evolution with pure e-commerce in the beginning and in the future, we could roll out an omnichannel experience, for example, tourists can preorder at the airport and deliver to hotels.”
But George is very clear in stating: “We are not substituting offline with online.”
NaRaYa offline also gets a makeover
The evolution of retail isn’t a sign that companies should close down shop and open webstores. What the headlines and trends instead point to are the expectations of a new shopper generation.
What factors will nudge Thais to spend their newfound middle-class income?
Part of creating a wholesome and attractive brand is greatly affected by the user’s sensory engagement in brick and mortar stores. As one loyal NaRaYa shopper put it,
‘Every time I visit NaRaYa, it makes me feel relaxed and free to choose my new bags with quality staff if you want any help you can talk with them.’
Enter the rise of ‘smart stores’ and new technologies bridging offline and online channels like RFID tags, smart mirrors in change rooms and even robots handing out cards to act as virtual baskets in Sephora’s case.
While Thailand’s commerce industry is not ripe for robots, NaRaYa has plans to heighten its in-store shopper experience.
Mrs. Lathouras shares details of the brand’s newest two-floor flagship store at ICONSIAM, scheduled to open in October of this year and estimated to span 1,450 sqm.
Not only will the flagship introduce four new brands, making a total of seven sub-brands available for long-standing fans, it will also incorporate a cafe serving local tea.
The cafe will accommodate customers waiting for friends and family browsing in stores and offer a palatable drink menu suitable for its typical Asian shopper.
The care placed on the customer experience is vital to building any successful business but creating a memorable shopping experience doesn’t come cheap. The company plans to spend up to 2 billion THB ($64M USD) on its distribution channels, existing and new, to not only expand its presence offline but also modernize its traditional brand image.
“We want to rebrand our look and feel to be fewer housewives and domestic. We want to look modern and international but remain a luxury affordable brand.”
The company’s soft launch online will be on Lazada Thailand next week and offer an initial 300 SKUs, while the official launch scheduled for May will look to imitate what is seen in physical stores.
“NaRaYa wants global recognition, ultimately. Of course, it is a dream to see NaRaYa in fashion capitals but we are very conservative when it comes to our goals,” closes Mr. Pasin.
Originally published in eCommerceIQ