Thailand
Thailand: Last-mile delivery set to grow by up to 15%
Thailand’s last-mile delivery business is expected to grow 10-15% to 98 billion baht in 2022 despite intense competition and rising fuel costs, says Kasikorn Research Center (K-Research).
But the growth will be slower than in 2021, which saw a surge of 41%, whipped up by the pandemic-induced lockdowns and a shift in people’s shopping behaviour towards the online realm.
According to K-Research, the industry will continue to grow this year in line with the rise of e-commerce. The volume of delivered parcels is expected to surge 7-9% this year and delivery fees to rise 4-6%.
Despite the prospect of double-digit growth of the last-mile delivery business in 2022, this does not mean better operating results for all the players, the research unit said.
Operators are still facing a host of challenges, including continued intense competition levelled up by newcomers, particularly e-commerce players.
These e-commerce platforms have better bargaining power with users and they are expected to mainly focus on delivery in Bangkok and surrounding provinces where around 30% of the customer base is located.
Operators have been employing an aggressive price strategy since last year to gain more market share with below-cost pricing in a bid to drive small players out of the market.
The last-mile delivery segment in 2022 is hampered by surging fuel costs caused by the Russia-Ukraine war while raising delivery fees is not an option due to severe competition and tepid consumer purchasing power.
These elements are heaping pressure on operators’ net profit margins, causing a challenge for players’ goal to attain profitability.
According to K-Research, to survive operators need to pursue work effectiveness and agility, including having flexible business models and effective cost management.
They can pursue route optimisation and offer a variety of services to create new revenue streams, such as cold-chain logistics and bulky goods shipment, through partnership with other firms.
Operators need to scale up their business ecosystem throughout the supply chain to level up their bargaining power, including financial and fulfillment services, the research unit said.
According to K-Research’s poll, price and promotion are the most significant elements consumers want e-commerce platforms to improve with 71% of respondents, followed by shops’ credibility at 56% and service quality by sellers and delivery staff at 41%.
Last-mile operators should also focus on new services to avoid price competition, such as VIP delivery services with special care, the research unit said.
They also need to take into account the worthiness of investment amid intense competition and rising costs and be prepared for business hardship in the future, it said.
Source: https://www.bangkokpost.com/business/2359019/last-mile-delivery-set-to-grow-by-up-to-15-