Value of e-commerce forecast to hit B4tn DTC approach now a prevailing trend

Asia's Tech News Daily

The value of Thailand's e-commerce is expected to grow 6.1% to 4 trillion baht this year, crucially driven by businesses that are sharpening their focus on the business-to-customer (B2C) model in the wake of the pandemic, according to the Electronic Transactions Development Agency (ETDA).

The ETDA indicated that the direct-to-customer (DTC) approach is now a prevailing trend as the pandemic has pushed enterprises of all sizes to sell products and services directly to customers.

According to the ETDA, the value of local e-commerce was 3.7 trillion baht in 2020, a decline from 4 trillion baht a year earlier, as the pandemic led to travel restrictions, which hampered accommodation, and the manufacturing and transport industries.

In 2020, the wholesale and retail industry were the biggest contributor to the country’s e-commerce value with 1.43 trillion baht, up 8.7% from 2019.

Weighed down by the pandemic, the accommodation segment saw a vast drop of 54.1% in e-commerce value to 463 billion baht. Manufacturing experienced a 5.02% fall to 460 billion baht and transport saw a drop of 4.03% to 130 billion.

ETDA executive director Chaichana Mitrphan said the pandemic has led to a change in people’s behavior towards online shopping while both large enterprises and small and medium-sized enterprises (SMEs) are gravitating towards the online mode for business in the new normal era.

Of the country’s total e-commerce value of 3.7 trillion in 2020, the largest proportion came from the B2C realm with 2.17 trillion, followed by business-to-business (B2B) at 0.84 trillion and business-to-government (B2G) at 0.77 trillion.

Mr Chaichana said B2C is expected to remain in pole position this year, which has been the case for three years in a row, with e-commerce value reaching 2.03 trillion baht, followed by B2B with 1.09 trillion and B2G at 0.89 trillion.

He said the DTC approach is the most significant move in the e-commerce industry as sellers are ramping up efforts to boost customer engagement through existing channels.

Last year, SMEs raced to capitalise on online sales for their business expansion. E-commerce value created by SMEs stood at 1.5 trillion baht in 2020, up 13.9% from 2019.

The e-commerce value created by larger enterprises reached 1.4 trillion baht in 2020, which was a drop of 30.2% from 2019.

According to the ETDA, SMEs’ e-commerce value is expected to surge to 1.9 trillion baht this year while the e-commerce value of larger enterprises would drop to 1.2 trillion.

The information was garnered from a survey of 3,592 SMEs and 233 larger enterprises in eight key industries from April to June this year.

Among the SMEs surveyed, 47% counted on courier service operators for delivery and 41.7% said they carried out delivery services independently.

Some 25.5% said they relied on Thailand Post and 14.5% on ride-hailing services.

According to the survey, Facebook was the most popular channel for both larger enterprises and SMEs for their advertising campaigns.

Facebook shared the biggest proportion of SMEs’ spending on ads with 40.8%, followed by Google with 33.9% and Line with 9.36%.

Facebook shared 24.3% of enterprises’ spending on ads, followed by Google with 19.9% and marketing influencers with 16.4%.

Mr Chaichana said the pandemic spurred the growth of the e-commerce segment in five ways.

First, customers are becoming more engaged in digital lifestyles. Second, ride-hailing operators have experienced growth, particularly in the delivery of food and consumer goods. Third, there is a rise in digital technology adoption in e-commerce business. Fourth, e-marketplaces are ramping up promotion campaigns to entice customers. Lastly, logistics operators are pivoting towards a full range of services, including fulfilment support.

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