Describes what a company needs to know to take advantage of e-commerce in the local market and covers prominent B2B websites.
Due to the COVID-19 pandemic, the enforcement of social distancing, lockdowns, and other measures led consumers to ramp up online shopping, social media use, internet telephony for teleconferencing, and streaming of videos and films. These trends resulted in spikes in online shopping businesses, especially in business-to-consumer (B2C) sales and business-to-business (B2B) e-commerce. Before the pandemic hit, Thai retailers generally did a good job adjusting themselves to the digital age. Many retailers created online channels for their customers to do transactions while using data analytics to better understand their needs. However, for those who haven’t done any of these things or are at the early stage of digital adoption, their businesses will need a 180-degree adjustment in order to boost sales and bottom lines.
In Thailand, the coronavirus outbreak turned online shopping into the new normal. The pandemic prompted consumers to use technology like never before, ranging from searching for goods and services, ordering food, checking deliveries, and attending virtual classrooms and meetings. These behavioral shifts will continue after the current incident ends, with expectations of increased online services in the future. According to the Electronic Transactions Development Agency (ETDA), online sales are expected to hit $49 billion in 2020, up from $33 billion in 2017 as a result of the COVID-19 impacts.
Current Market Trends and Domestic eCommerce (B2C)
eCommerce platforms in Thailand are divided into three categories: business-to-business (B2B) transactions, business-to-consumer (B2C) transactions, and business-to-government (B2G) transactions. Among the three groups of transactions, B2B transactions are the largest and account for 55%, followed by B2C transactions at 29% and B2G transactions at 16%, respectively.
The eCommerce market in Thailand is currently the second-largest in Southeast Asia and was expected to grow around 22% annually until 2020. With support from the Thai government, a “Digital Thailand” initiative that started in 2016 brought about a wave of opportunities for businesses across different industries to digitize their operations and services, especially for SMEs seeking to undergo digital transformation. As a result, cross-border market opportunities offered growth rates of approximately 25%, which is well above those found in most traditional retail markets. Cross-border B2C eCommerce is estimated to grow to $1 trillion in 2022.
B2B eCommerce in Thailand is also growing rapidly due to Internet development and mobile transformation. According to the Electronic Transaction Development Agency, the sectors using eCommerce platforms to increase their productivity include the food and service sector with 31%, followed by manufacturing at 16%, and retail and wholesale at 15%. Interestingly, demand for eCommerce services is coming not only from Bangkok but also from the other provinces such as Nonthaburi and Chonburi.
Thailand’s online retail commerce is driven by several factors, including increased smartphone penetration and intense competition among eCommerce operators. The government’s PromptPay service, which falls under the national e-payment scheme, is the key driver to stimulate eCommerce activities.
Over the last couple of years, many courier service companies started launching their eCommerce platforms in Thailand, bringing domestic end-to-end delivery to the market. Consequently, eCommerce delivery costs for products per piece have sharply declined from $1.30 in 2015 to $0.50 in 2016 due to the fierce competition among logistic service providers.
eCommerce Intellectual Property Rights
Apart from other specific laws and regulations that require compliance by eCommerce businesses, intellectual property protection is another concern business owners should be aware of. Trademark registration in Thailand is determined on a first-to-file, first-in-right basis. New entrants should consider how to obtain trademark protection before introducing products or services into the Thai market.
For a company seeking patent registration of their business method in the eCommerce market, please note the Thai Patent Act currently does not grant patents to any computer programs nor to any type of business method. However, under certain conditions, computer programs, including technologies used to protect the company’s information from unauthorized access or reproduction, can be protected automatically under the Thai copyright protection system. In addition, a company’s trade secrets, such as processes, strategies, instruments, or databases, could be protected by the Trade Secret Act (2002). Companies may wish to seek advice from local attorneys or IP consultants who are experts in Thai intellectual property law.
Besides protecting intellectual property rights, companies must run their business in compliance with the Computer Crime Act (Amended 2016). The law prohibits input of forged or false computer data or content that is likely to cause damage to others or to the public, including sending data or email that disturbs the recipient without a means to opt-out. Service providers such as social media platforms and access providers will also be required to delete or otherwise prevent the availability of such content following government notification, or they will be subject to punishment for that content. At the request of relevant authorities, a court can order service providers to block or take down a website that contains illegal content or content which is considered to be against public order.
In addition, the law requires service providers to store traffic data for a period of no less than 90 days from the date on which the data is input into a computer system and up to 2 years in special cases.
Popular eCommerce Sites
Thailand’s mix of international and local eCommerce stores is indicative of Thai consumers wanting variety when it comes to online shopping. Global players such as Amazon, eBay, and Agoda continue to remain popular while WeLoveShopping and Pantipmarket as local C2C marketplaces and online communities, prove strong contenders that cater to local tastes.