Thailand's e-commerce industry speeds up

News that the Japanese retailer Uniqlo and the South Korean e-commerce giant 11Street have launched new online shops in Thailand suggests something special is happening in the Thai e-commerce market.

The e-commerce holy trinity: Users, mobile penetration and payment systems

And that’s because, like other nations in Asia, e-commerce is seeing rapid growth in Thailand, with revenues from business to consumer e-commerce alone expected to grow 15.3% to reach $13.6 billion in 2016, according to Thailand’s Electronic Transactions Development Agency.

Growing internet use and smartphone penetration are driving the market. Thailand’s total user population grew 15.8% y-o-y in 2015 to 27.4 million, and total smartphone users grew 16% to 17.9 million. Together with a government-sponsored national e-payment service, the market is booming.

Five main players emerge, led by Lazada

And this is giving rise to a whole new range of internet players in Thailand. Lazada, a Singapore-based e-commerce company with operations all over South East Asia, has emerged as a market leader in Thailand, followed by WeLoveShopping Tarad, Zalora and Ensogo, according to Oxford Business Group.

Thailand: Google Search Trends, 2004-2016

Source: Google Trends

Foreign investors become more active

And investors are making their moves to cash in on this fast-growing market. Alibaba’s $1 billion deal for control of Lazada, Thailand’s most searched e-commerce site, has given it a strong footing in the market, and this followed Thailand’s Central Group April purchase of Zalora’s Thai site for a rumoured $10 miilion.

But while the Thai market has great potential, it faces some formidable challenges, including scarcity of qualified staff to manage e-commerce operations, and a still to be developed delivery service (especially in rural areas).

But challenges remain................

But these challenges are similar to those faced in China and South Korea and, while they may have grated in the early stages, operators in both countries overcame them to develop multi-billion dollar e-commerce markets.

Positive outlook: 18% annual growth expected to 2020

And DHL sees enough potential in the market to launch a new same day delivery service, and with investments like this going into the sector, as well as government support and a positive response from consumers, the future looks bright, so bright, in fact, that Statista is forecasting average annual growth of 18% between 2016 and 2020.

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