Geopolitical conflict between the US and China is bringing new e-commerce players into Thailand, which is expected to heat up market competition and widen the cross-border e-commerce market.
According to Thanawat Malabuppha, chief executive of Priceza and honorary president of the Thailand E-Commerce Association, the ongoing geopolitical conflict involving the US and China has resulted in Chinese brands and manufacturing companies expanding in Southeast Asia and other markets to minimise reliance on their exports to America and escape ever-intensifying domestic competition.
Many e-commerce operators in Southeast Asia also rely on the import of products from China, South Korea and other countries.
The value of Thailand's e-commerce market is 980 billion baht, or US$28 billion, the second largest in Southeast Asia after Indonesia, Mr Thanawat said in the company's event E-Commerce Insight 2024 and Thailand's E-commerce Landscape 2024.
In Southeast Asia, marketplaces accounted for 55% of the total e-commerce market, while social commerce accounts for 28%, TikTok 9%, grocery quick commerce 11%, and e-tailers and e-commerce websites by product brand owners at 6%.
He forecast intensifying competition among the e-commerce platforms this year as Shopee is expected to focus on marketing subsidies to beat TikTokShop and Chinese newcomer PDD Holding's Temu-online e-marketplace.
"Temu targeted lower-tier cities in the US first and this led to a good outcome. It had expanded to 17 countries as of May 2023," Mr Thanawat added.
Mr Thanawat said each of the platforms has its own unique strength. Shopee has a large inventory with gross merchandise value (GMV) generated from diverse product categories. Its average order value in the region is $6-8.
Around 43% of Lazada's GMV comes from electronics and appliance products. This leads to an average order value of $8-10. Lazada also focuses on brands and its mall.
TikTokShop's GMV share in Thailand is 16% out of its total global GMV, the second largest after Indonesia, which contributes 42% of its total GMV. But its Thai average order value is at $6, compared to $5 in Indonesia as of April 2023. TikTokShop will need to raise its average order value in the near future, Mr Thanawat said.
Another trend is that content will converge with commerce and will increase business for agents who can make sales in an affiliated marketing approach.
"Content, in particular entertain- ment, will lead users from shopping and commerce. This is seen from the collaboration of Amazon and Instagram in the US. We can expect those e-marketplaces to collaborate with Instagram or Facebook," Mr Thanawat added.
He expects YouTube Shopping to be available in Thailand in the future to enable creators to gain revenue from affiliated marketing.
He also expects 2024 to be the year of mega live sellers in Southeast Asia, with million-dollar live selling stars emerging in all markets.
A total of 81% of Thais make purchases due to influencers' recommendations.
Another trend is the e-commerce silk road bridging Thailand with China from general import/export to cross-border e-commerce. This also offer opportunities for Thai exports to China.
With regulatory changes in Southeast Asia such as Indonesia's limited cross-border sellers, the e-commerce platforms have also seen diversified stock keeping units by onboarding local sellers and selling cross-border products through Business-to-Business-to-Customer or the dropshipping format.
Dropshipping is a supply chain model that allows a business to ship a product directly from a wholesaler's warehouse to the customer's address, eliminating the need to manage logistics and operations.
The cross-border dropshipping for local sellers already covers millions of orders every day. This leads to the growth of ancillary industries servicing cross-border e-commerce from logistics, warehouses, and payments.
The other trend is the new retail that mixes online and offline with digitally influenced sales on the so-called omnichannel.
Mr Thanawat also expects to see leading department stores having live sales sections in their shops, just like the case of Yowant X27 Theme Park, a new online + offline consumer commercial complex in China.
The latest trend involves a continual rise in the cost of online advertising. As a response, brands are shifting their advertising budgets towards online retail media channels, aiming to achieve more precise targeting and leverage affiliated marketing. This approach empowers users to promote sellers' products, making viral marketing more effective.
Online retail in Thailand is continuing to grow but is not expected to reach the heights it did during the pandemic when the sector registered growth of 47%, said Chayanit Somsuk, an analyst at the Economic Intelligence Center under SCB.
The local e-commerce market will reach 910 billion baht in 2024, up 10% from 820 billion baht last year. It is expected to post a compound annual growth rate of 8% during 2025-2027.