This photo reminds me of the legendary a16z’s 2011 article, why software is eating the world. 

13 years later, and a street stall in Thailand can be found selling its food online via food delivery platforms, accepting payments online, and processing it through a POS system. While it doesn’t seem ludicrous. This still is more of an exception than the norm. However, this is changing quite rapidly. 

So, is the time for merchant digitization here? Let’s take a deeper look from a lens of what’s happening in Thailand.

1. ~80% merchants, are looking to increase their IT spends in the next 12 months  

Upon speaking with owners / decision makers at various Consumer Services establishments we find that an overwhelming majority feel that IT Systems are now critical to their business success. 

They see digital channels as a key avenue for sales & payments! 

~80% Merchants expect to increase their spending on IT in the next 12 months. And POS Solutions stand out as the most actively looked at segment for investment followed closely by Marketing & eCommerce enablers. 

It’s one of the segments, wherein customers friction to adoption is lowest and starts off the digitization of data & processes – paving the path for ad-hoc adoption of various other software services

2. POS Systems, the gatekeepers of Retail SaaS adoption

It’s quite clear why Point of sale is the topmost area of interest for merchants. This is because POS is often the first and most straightforward milestone in the digitization process, with the least friction in adoption. Inherently, POS systems start digitizing core data for retail outlets, which then creates a need to further expand digitization across other aspects of the business. 

This dynamic has enabled POS providers to upsell additional SaaS solutions to their existing customer base. A prime example is Square, which sells 4 or more products to approximately 50% of its customers. 

By being the initial point of entry, POS players could serve the entire software needs of retail outlets, positioning themselves as holistic solution providers.

3. Adoption of Point-of-Sale services has been growing at a similar pace as consumer’s digitization….

Consumers across the world have been going digital – starting from discovery to purchase to payments. And as the consumers evolve, so have the merchants! 

We see similar growth rates between the rise of digital models and adoption of Point-of-sale systems in Thailand.

4. However, there is an ample room for growth

Even though the penetration has been on the rise, across the consumer services segment we see adoption levels under 20%. 

Now, while finding direct comparable with other countries can be tricky. Looking at the overall tech adoption or EDC Terminals is a good proxy. Showcasing – that there is still a good headroom for growth in terms of adoption potential. 

Compared to Enterprise SaaS, Consumer Services / Retail SaaS is more scalable, as at a category level need for customization is limited. Broadly, consumer services can be broken down in 3 categories F&B, Retail & Wellness – each having unique needs basis their operations requirements. 

Currently, the POS market remains fragmented, however, we see sizable players emerging from the food services space.

5. With ~2.1 Mn outlets, Thailand’s Consumer Services POS market has a TAM of ~USD 2.1 Bn

By 2028, Thailand’s expected to have 2.1 Mn such consumer service outlets contributing to ~28% of the Thai economy. Digitizing this key economic engine – is a USD 2.1 BN opportunity.