Thailand offers e-commerce companies an optimal environment for growth due to the country’s expanding internet user base. The Thai e-commerce market currently values at US$3.5 billion and is will grow at a 13.2 percent annual pace to reach US$5.8 billion in 2022. Undoubtedly, e-commerce is going to be the best business in Thailand in 2023 in terms of customer acquisition and RoI.
More and more customers are choosing internet shopping over traditional retail. Thailand’s society is increasingly reliant on the Internet, especially as new technologies arise that are transforming delivery processes to consumers.
Both domestic and foreign businesses in the retail and service sectors are striving to comprehend the nature of digital channels. This is to take advantage of the potential online prospects in order to gain market share in Thailand. Thailand is the second-largest economy in Southeast Asia.
This guide intends to help you take advantage of e-commerce prospects in Thailand’s developing market which makes it the best business in Thailand. It gives a general overview of Thailand’s digital retail market today, identifies the influential figures on consumer behavior, and offers additional information to take into account before starting an online store or selling goods through the country’s already established online channels.
- Overview: Thai E-Commerce Industry
- Growth-Drivers for Ecommerce Industry in Thailand
- Opportunities in Ecommerce Industry in Thailand
- The Bottomline
Overview: Thai E-Commerce Industry
Current State of Ecommerce in Thailand
Thailand, Southeast Asia’s second-largest economy, has one of the highest rates of internet users in the area. The country has about 57 million internet users who are proficient in using digital technologies, mobile devices, and e-commerce.
Ecommerce Business Landscape of Thailand
Thailand’s e-commerce platforms are typically categorized into three groups:
Consumer-to-Consumer (C2C) Ecommerce Platforms
This business strategy makes it easier for people to buy or sell goods or services to one another. The classified ads in a newspaper, eBay, or Craigslist are examples of C2C. Once a discussion between a buyer and a seller starts, sellers post products online, but transactions often take place offline (unless the platform facilitates payments). C2C is frequently referred to as social commerce, such as transactions made on Facebook.
Popular examples in Thailand: Hipflat, Kaidee, and Weloveshopping. Thailand’s Hipflat is a C2C marketplace for real estate. Both agents and direct home buyers are eligible.
Business to Consumer (B2C) Ecommerce Platforms
The term “B2C business model” refers to an online purchase of goods or services made between a brand (a company) and a customer. The most well-liked and well-known sales model in use today is this one. Customers have high expectations for official brand websites, including round-the-clock customer service, a variety of payment choices, and accommodating return policies.
Popular examples in Thailand: Lazada and kiehls.co.th.
Business to Business (B2B) Ecommerce Platforms
In Thailand, businesses still frequently do transactions with one another over the phone, like in the case of a secretary ordering printing paper in bulk.
However, due to the multi-layered complexity of traditional supply chains, platforms are now being created to streamline business-to-business interactions. Consumers expect the B2B experience to be similar to the B2C experience as they grow acclimated to it.
A popular example in Thailand: Officemate
Originally a stationery store in malls, OfficeMate now offers bulk purchases on its website, www.officemate.co.th, which also serves direct customers.
The government’s push for its digital “Thailand 4.0” strategy to match the worldwide change in consumer behavior towards online can also be credited with having an impact on the rise of online.
Both domestic and foreign enterprises, particularly Internet behemoths from China, are eager to launch e-commerce operations through new ventures or acquisitions in order to secure a significant position in Thailand’s expanding digital economy.
Growth-Drivers for Ecommerce Business in Thailand
Active Involvement of Government in Thailand 4.0 Development
To reorient and improve the nation’s economy away from one that is production-based toward one that is knowledge- and service-based, the Thai government introduced its “Thailand 4.0” economic model. Thailand wants to lead South East Asia’s digital hubs within the next ten years.
A fundamental element of this vision is that digital technology will be the engine of the nation’s economic expansion, strengthen the industrial sector, and enhance the quality of life for its people.
Internet-Savvy, Young, and Mobile-First Generation
In a nation of 69 million people, at least 48 million Thais use smartphones, 57 million are online, and 46 million use mobile devices to access social media.
Out of Thailand’s 69 million inhabitants, Millennials (also known as Gen Y) make up the majority of the population with an Internet penetration rate of 82%. (19 million). The majority cohort logs into the internet for 53.2 hours each week on average.
Only 28% of Thai customers use desktops or laptops to browse the internet, while 69% primarily use their cell phones.
The way Thai consumers explore reflects the country’s mobile-first economy. Approximately 15% of people use their smartphones to seek product information, compared to 7% who use PCs. The significance of mobile-first businesses and mobile-optimized websites is highlighted by this behavior.
The Volume of Foreign Direct Investment in Thailand
Thailand has attracted foreign investment due to its enormous market and e-commerce possibilities. Chinese internet behemoths like Alibaba and JD.com have made investments in Thailand during the past two years. JD.com invested $454 million in a joint venture with Central Group, Thailand’s largest retail conglomerate, while Alibaba invested USD 3.64 billion in Lazada in 2018 and USD 304 million in the first stage of the Eastern Economic Corridor (EEC).
Comparing the payment, logistics, fintech, and food and beverage industries, e-commerce has received the most foreign investment overall. 29 financing rounds in all were completed in 2017 alone.
Due to the rise in foreign interest in Thailand’s e-commerce industry, local businesses have been motivated to become more competitive, and more SMEs have been inspired to innovate in the fields of online commerce, fintech, and artificial intelligence (AI). More cooperative partnerships between offline wholesale businesses and internet businesses also came up as a result of the investment.
Ecommerce Business Opportunities in Thailand
Mobile and Electronics Product Categories
The most popular product category online in Thailand is mobile and gadgets. Thais are used to buying tiny electrical devices in conventional malls like MBK or Pantip Plaza, but more customers are choosing to buy these kinds of products online.
According to BrandIQ data, 14.7 million out of 60 million products on Lazada alone are featured in the mobile and electronics category.
Vertical Ecommerce Play
Numerous “horizontal e-commerce” websites that sell goods under numerous product categories, from household goods to fashion and car components, make up Southeast Asia’s e-commerce scene. These competitors include well-known names like Lazada, Shopee, 11street, Central, JD.com, etc., making it challenging for newcomers to compete.
Being a vertical e-commerce player at launch can be more cost-effective since the company can concentrate its marketing efforts on attracting a specific audience to the platform for a particular category. In addition, the business can spend a lot of money building a distinctive website identity rather than being generic to appeal to different groups.
By creating a social network and a sense of community, creating a brand community develops social hubs that encourage client loyalty. Additionally, vertical e-commerce fosters a sense of belonging and connection in customers, which promotes brand loyalty.
Increasing Demand for Foreign Brands
In all market segments, Thai consumers are more drawn to well-known international brands like Apple and Adidas than to local ones, according to a Y&R Thailand study.
Every time a new international brand debuts in Thailand, there is typically great fanfare, which sparks local interest. Thai customers camped out in front of storefronts whenever a well-known foreign brand opened, whether it be Krispy Kreme, Ben’s Cookies, or the H&M and collaborative design collections.
Over 100 high-end global brands have opened flagship stores in Thailand in the last few years.
The Bottomline
There is a steep YoY growth in some vital metrics that plays a significant role in the growth of the e-commerce industry. Primarily, these factors are:
- Number of Internet & Social Media Users
- Dependency of Netizens on Online Platforms for Shopping
- The increasing trust of Thai citizens in Online Payment Platforms
- Growth in Digital Marketing Platforms
- Increase in the comfort of Thai citizens in using smart devices and the internet
- Digital Transformation in all aspects of the Thai Economy
Moreover, the Board of Investment of Thailand is framing new incentive policies for investors willing to participate in the Digital Transformation of Thailand. Are you having a brilliant business idea to do so? Then share it with us!
For all types of assistance in business registration in Thailand, email us your requirements at [email protected]. Book a free round of consultations today!
