How eCommerce Is Disrupting Thailand’s Economy

Thailand’s eCommerce market grew by 14 percent in 2018, according to the country’s Electronic Transactions Development Agency (ETDA), reaching a total value of US$3.5 billion. In 2019, growth is expected to hit 20 percent.

High internet penetration rates, a growing middle class, and government support

There are three critical reasons for the rapid growth of Thailand’s eCommerce industry: Firstly, Thailand has one of the highest internet penetration rates in the region. According to Internet World Statistics, there are 57 million internet users in Thailand, out of a total population of 69 million.

Secondly, Thailand’s middle class is growing, has higher acquisition power and leans toward online-shopping. Today, the number of eCommerce users in Thailand stands at 12.1 million, and an additional 1.8 million users are expected to be shopping online by 2021 – representing 25 percent of the total population.

Thirdly, the Thai government is supporting the sector. “Thailand 4.0” aims at positioning Thailand at the forefront of the global digital economy. The government has allocated a budget to construct a cross-country broadband network, increasing internet adoption and encouraging SMEs to build up eCommerce channels.

Thailand has benefited from eCommerce in multiple ways

Thailand’s eCommerce landscape is split in platforms focusing on business-to-business (55 percent), business-to-consumer (29 percent) and business-to-government (16 percent) transactions.

So far, eCommerce has had the most significant success in electronics and media sales; the segment is worth US$1.2 billion and includes anything from DVDs and books sales to consumer electronics and smartphones.

eCommerce has also disrupted supply chains and logistics. Both, small businesses as well as large cooperations such as DHL Express Thailand, Aden or Shopee have launched cost-effective and high-quality logistics services that work across the entire country.

While the preferred payment method, even for eCommerce services, is still cash on delivery, the growing eCommerce industry has led to the proliferation and adoption of new payment methods. The Thai Ministry of Finance has launched a national e-payment master plan in collaboration with commercial banks.

As part of this initiative, 550,000 electronic data capture (EDC) terminals have been installed nationwide, enabling credit and debit card payments. Moreover, the government has launched PromptPay, a service that allows customers to register and transfer funds via mobile phone numbers or their citizen IDs. With a booming eCommerce industry, both consumers and businesses have gotten more acquainted with the use of technology.

Meanwhile, Thailand’s growing eCommerce sector has caught the eyes of global players such as China’s eCommerce giants Alibaba and JD.com. Both are currently exploring opportunities in the country.

Platforms like Export Portal have also launched services in Thailand. This particular platform provides excellent solutions for firms that want to increase their reach and connect to international markets. The blockchain-based trade platform spans over more than 100 countries and more than 70 industries, and already includes thousands of registered companies worldwide.

Altogether, eCommerce is a major disrupter in many of Thailand’s industries. Especially remote communities, which have so far been outside of Thailand’s economic ecosystem, have now a way to get connected by using e-payments and e-marketplaces to sell local products and services.

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