Thailand: Growth to slow in 2023 as local market saturates
The growth of business-to-consumer (B2C) e-commerce is expected to soften to 4-6% in 2023, the slowest rise in three years, caused by market saturation in the wake of the pandemic coupled with high inflation, says Kasikorn Research Center (K-Research).
According to a report by K-Research, the market value of B2C e-commerce is expected to reach between 606 and 618 billion baht in 2023.
The forecast growth of 4-6% in 2023 contrasts with the trend the past three years, when the average annual growth was 26% a year, driven by the pandemic.
The slower growth next year is partially attributed to market saturation as a huge number of users flocked to e-commerce platforms during the pandemic, the report said.
“People’s purchasing power in 2023 will be beset by various vexing factors, including high inflation,” the report said.
K-Research said online purchases of fresh food and necessities is expected to continue to rise, while online orders of fashion and beauty items would weaken as people become more conscious of their spending.
The share of B2C e-commerce in the overall retail market is expected to climb to 16% in 2023, up from 8.5% in 2019.
According to K-Research, entrepreneurs engaged in B2C e-commerce are also expected to face multiple challenges, including tougher competition and increasing logistics costs.
The research house said merchants need to ensure effective supply chain management that covers everything from product sourcing to various sales channels, while providing good customer service in order to maintain sales volume amid limited purchasing power.
Merchants must offer products that customers feel are worth the purchase based on quality and trends that respond to customer needs, K-Research said. Brands may have to pivot towards omni-channel, offline, and online mixed commerce to deliver more purchase options for customers.
K-Research found 51% of the respondents surveyed said they are interested in doing more online shopping on e-marketplaces, followed by 34% in social commerce.
“Entrepreneurs may have to pursue marketing campaigns through various sales channels while developing their own websites to minimise risk and creating brand awareness,” K-Research said. “In the long run, the decline in Thailand’s population could take a toll on spending and online merchants may have to explore cross-border e-commerce to reach out to customers abroad.”