Thailand's e-commerce sector faces a storm as Chinese platforms dominate the market, creating a ticking time bomb with wide-ranging economic impacts that Thai entrepreneurs cannot keep up with.
Thanawat Malabuppha, CEO of Prizza Company Limited and honorary president of the Thai E-Commerce Entrepreneurs Association, views the overall e-commerce situation in Thailand as growing annually, especially during the COVID-19 period with rapid leaps, but growth among Thai entrepreneurs has slowed over the past 2-3 years.
The market is primarily driven by three major Chinese platforms: TikTok (ByteDance), Shopee, and Lazada, which dominate both the Thai and Southeast Asian markets.
The market value is estimated at approximately 1 trillion baht, with the three giants capturing more than half the share, at least 500 billion baht.
Platform share is divided as follows: 50% Marketplace, 30% Entertainment Commerce (Live/Short Video), and 20% Quick Commerce or online department stores, with 80% owned by foreign entities and 20% by Thai companies.
These platforms make customers "addicted" by key factors as follows:
1. Good prices are the most important factor attracting consumers.
2. Complete product range with everything consumers want, achieved by recruiting sellers from China, known as the "world’s factory," to diversify offerings.
3. Good quality ensured by designated sections like Shopee Mall or LazMall to guarantee authenticity and build confidence.
4. Entertaining content using reviews and influencers (KOLs) to stimulate purchase desire through fun experiences (TikTok, Short Video), leading to unplanned buying.
5. Fast delivery competing at the hour or minute level, setting a new standard that delights consumers.
6. Good service providing an overall consumer experience that meets expectations.
Era 1: Cheap products without brands, reminiscent of Bangkok's Sampeng market image.
Era 2: Contract manufacturing (OEM) for Thai brands.
Era 3: Currently, creating own brands with high innovation and technology (e.g., BYD, DJI), integrating entire commercial ecosystems (Operating System), platforms, AI, and supply chains.
Capital outflow occurs when people buy goods through foreign platforms, causing money to leave the country via product costs, advertising fees, and commissions.
Thai factories face crisis as local products cannot compete on price, leading to sales decline, staff reductions, or eventual factory closures.
Low added value remains, meaning Thais will be left with low-value jobs such as delivery personnel (last mile) or administrative roles, while high-value jobs like AI and innovation belong entirely to foreigners.
The "too good to succeed" phenomenon: platform sellers bear high risks and costs, including commission fees (GP), advertising, and campaign participation fees, sometimes totaling up to 70% of the product price.
Avoid competing on price; compete on "value" and offer fast, sincere after-sales service.
Adopt Omni-Channel sales across multiple online and offline platforms without relying on any single platform.
Build own customer database (D2C) by transferring customer data from platforms to their own systems (e.g., Line or websites) to perform CRM and stimulate direct repeat purchases, reducing fees.
Focus on innovation by investing in sectors where Thailand has potential, such as Thai Beauty, food, wellness, and leveraging creativity through the Creator Economy.
Tax collection: push for VAT on imported goods from the first baht to ensure fairness.
Registration: require foreign sellers on platforms to register legal entities in Thailand to bring income into the country's tax system.
Support Thai platforms: the government should seriously support domestic platforms instead of allocating budgets only to foreign technologies or platforms.
Technology transfer: attract investment from China that enables knowledge transfer in high-value processes.