Intro Thailand
Thailand is a fast-growing market and one of the largest e-commerce markets in Southeast Asia. To prosper, new entrants will need a localised product and a customer experience that is well adapted for mobile devices.
The IMF predicts that the Thai economy will grow by 3.3% in 2022 and 4.3% in 2023 [1]. However, this may need to be revised down. The country’s central bank is now estimating full-year growth of between 2.2% and 3.5% for 2022 [2]. According to the latest available labour-market figures, the Thai unemployment rate is just 1.64% [3].
Thailand’s e-commerce market
The Thai e-commerce market is worth US$ 76 billion and is growing at a rate of 20% a year [4]. The average Thai online consumer spends US$1,074 a year with cross-border and Thai e-commerce merchants [4]. But the sector is still small, e-commerce sales make up just 13% of all the country’s retail sales [4].
The number of Thai households that used e-commerce rose by 58% in 2020, with a massive rise in the food category of 74% compared to 60% for the non-food segment [5]. The Thai e-commerce market share for FCMG goods has risen from 14% in Q1 2019 to 23% in the same period in 2021 [6]. On 1st September 2021 non-resident companies providing digital services in Thailand will be expected to register to pay 7% VAT if their annual income exceeds 60,000 USD [7].
Thirty percent of online shoppers have shopped cross border [4]. And Thai cross-border purchases spend US$8.1 billion a year [4]. E-commerce users complete 60% of all online purchases on a mobile device [4].
Payment methods in Thailand
In the Thai payments market, cards have a 17% share of the market. 19% use e-wallets, 31% bank transfer and 22% prefer cash payments [4]. The remaining 11% is shared among various cross-border and Thai local payment methods [4]. The card market is dominated by Visa, with a 68% market share [4]. Mastercard is second, with 20% of the card market. American Express has just 1% [4]. Local cards and other payments make up the last 11% [4].
Enabling and limiting factors
82% of Thais have a bank account but just 10% have a credit card [4]. However, this is not the full story. Although relatively few people are completely unbanked, as many as 45% are underbanked — with only a deposit account and no access to any other financial services [8]. But a recent report by the World Bank notes the potential of fintech to transform financial-services in the country for the better, with 140 native fintech firms already operating 43% of digital-finance activity in the country focusing on payments [9].
70% of Thais have Internet access and 54% have an Internet-enabled smartphone [4]. According to eMarketer, more than 90% of Thai Internet users rely on their smartphone to go online compared to only 25% who use a laptop [10]. Any market strategy for the country must be mobile first, or risk losing out on almost half the available customer base.
Footnotes:
- https://www.imf.org/en/Countries/THA
- https://www.aljazeera.com/economy/2022/5/17/bb-thailand-lowers-gdp-outlook-on-ukraine-war-china-slowdown
- https://www.reuters.com/markets/asia/thai-q4-jobless-rate-lowest-level-since-pandemic-curbs-ease-2022-02-28
- Original PPRO research
- https://www.nationthailand.com/business/30403806
- https://www.statista.com/statistics/1208410/thailand-market-share-of-ecommerce-for-fmcg
- https://pugnatorius.com/e-commerce
- https://www.getbanqin.com/post/a-look-into-financial-inclusion-in-thailand
- https://startupinthailand.com/thailands-fintech-growth-is-amongst-the-fastest-in-asean/
- https://www.emarketer.com/Article/More-than-90-of-Internet-Users-Thailand-Use-Smartphones-Go-Online/1015217
