Thailand's internet economy is expected to reach US$16 billion (483 billion baht) this year based on flourishing ride-hailing services and e-commerce, making it the second-largest internet economy in Southeast Asia after Indonesia, according to the e-Conomy SEA 2019 report.
The report, jointly commissioned by Google, Temasek and Bain & Company, monitors the growth of the internet economy in the region. The internet economy takes into account e-commerce, media, ride-hailing, travel and financial services.
The internet economy in Thailand is expected to reach $50 billion by 2025, the report said.
"Thailand's digital economy in 2019 will contribute over 3% of the country's GDP at $16 billion, with a compound average growth rate [CAGR] over 2015-19 of 29%," said April Srivikorn, interim country manager of Google Thailand.
"The growth of Thailand's digital economy is driven by ride-hailing and e-commerce because of intense competition from major players," Mrs April said.
A CAGR of 24% is expected during 2015-25. This gives Thailand the third-fastest growth in Asean, behind Indonesia (32%) and Vietnam (29%).
This year Thailand has 47 million internet users, making it the second-largest market in Asean, trailing Indonesia.
The report said Thailand is the most engaged mobile internet country in the world, with 5 hours and 13 minutes a day spent on digital services.
E-commerce is the largest and fastest-growing segment in Asean.
For Thailand, e-commerce showed the most accelerated growth at 54% CAGR since 2015 to reach $5 billion in 2019. The value of e-commerce is projected to rise to $18 billion by 2025.
"E-commerce players are offering online festive discounts and promotions more often," Ms April said.
Coupon searches on the internet have doubled from last year.
Ride-hailing in Thailand reached $1.3 billion in 2019, growing at 36% CAGR since 2015. It is receiving a boost from the booming delivery service since last year, Ms April said.
The change in consumer lifestyle towards more convenience played a key part in the increase, she said.
Online media (advertising, gaming and subscriptions for music, video and on-demand) is growing rapidly in Thailand at 39% CAGR to reach $3 billion this year. This segment is set to hit $7 billion by 2025.
This is driven by high levels of engagement on social media and video platforms among Thais, Ms April said.
Online travel (flights, hotels and vacation rentals) remains the largest segment in Thailand and the most mature, at $7.2 billion in gross bookings value in 2019, growing at 17% CAGR.
The sector is driven by budget hotel and vacation rentals that tap into price-conscious and millennial users. Super-app platforms, such as Grab, are jumping into hotel booking services with business partners.
Ms April said people in Asean tend to spend more time engaging with platforms or applications that keep providing new services, something that is unique to the region.
The study also found that the next growth opportunity for Asean's digital economy would be in non-urban areas.