State of the Thai E-Commerce Market

E-commerce in Southeast Asia has seen a dramatic rise in adoption due to the COVID-19 global pandemic. As of 2022, Thailand’s yearly e-commerce gross merchandising value (GMV) is estimated to be approximately $21 billion USD. Our industry experts estimate that the market is split around 50/50 between e-commerce and social commerce platforms. The market leaders for the e-commerce side include Shopee and Lazada while Facebook, Instagram and LINE lead the way on the social commerce side.

E-commerce penetration still low

Thailand’s yearly retail market size is estimated to be around $263 billion USD, implying an 8% e-commerce penetration. This is still low compared to leading markets like China, which is at 47%. Thailand’s Internet penetration of 78% is greater than China’s 71%, which gives us reason to believe that the ceiling for Thailand’s ultimate e-commerce penetration is many times higher than the current level.

In this fast changing e-commerce landscape in Thailand, we have observed a few key trends in 2022.

Imports from China have helped fuel e-commerce growth

Trend 1 - E-commerce growth driven by Chinese imported products

The e-commerce space has accelerated at a fast pace from 2019 to 2022 and part of the reason is because of cheap products imported from China. Chinese manufactured products range from apparel to home products to electronics at a low cost. This has allowed both Thai brands and resellers to buy their products from China and sell them on e-commerce platforms at a competitive price compared to the local offline markets. Because of the inclusive prices of the vast amount of products listed on platforms like Lazada, buyers from a wide range of income levels are able to adopt online buying.

The emergence of TikTok on the social commerce scene presents new opportunities for sellers

Trend 2 - Emerging new player of TikTok

In Q2 2022, TikTok, a Chinese social media platform that focuses on short form videos, launched its e-commerce function in Thailand. This allows users to directly purchase products within the TikTok app whereas previously, sellers could only post links to their products being sold in other platforms like LINE, Shopee, or Lazada. This new entry into the e-commerce space creates new opportunities for sellers and content creators while posing a threat to the current e-commerce players.

Re-opening of offline retail has shifted consumer spend away from e-commerce

Trend 3 - Re-opening of offline retail

In early 2022, Thailand’s offline retail scene has seen a revival driven by factors such as reopening of bars/nightclubs, influx of foreign tou

rists, and a higher proportion of the general population becoming fully vaccinated. These factors have made Thais more comfortable with shopping offline again, which has shifted consumer spend away from e-commerce. Our industry experts estimate that from Dec ‘21 to June ‘22, the e-commerce market has shrunk by around 10-15%. However, this is largely seen as a normalization to the massive growth of 2020 and 2021. The long-term growth outlook for e-commerce remains positive.

What’s next for e-commerce in Thailand?

The Thai e-commerce market is expected to grow at a rate of 14% per year to $35 billion USD by 2025. We predict that the full potential has yet to be unlocked, with many businesses and consumers alike yet to adopt online shopping. What lies in the future is that more and more product types will gradually be sold online, platforms specializing in specific categories will emerge, and retail consumers will gain more trust in e-commerce, accelerating the growth for the online market.