We at KResearch expect that the last-mile delivery business will grow steadily at 11.0 percent p.a. over the next 2-3 years. Its turnover is projected to reach approximately THB36-37 billion in 2020, supported chiefly by steady growth in the e-commerce business in terms of the number of online shoppers, greater variety of goods sold and turnover. The thriving e-commerce business has bolstered demand for the delivery service of goods sold via e-commerce channels. Meanwhile, competition in the last-mile delivery business is set to intensify, in particular pricing competition, among large players, thus forcing others to cut prices to attract more customers. Therefore, those having low capital may experience long-term risk.
Looking ahead, KResearch projects that the last-mile delivery market may grow at a slower pace due to a number of factors, in particular if new needs in the e-commerce market begin to saturate or slowdown and competition in the last-mile delivery business becomes more intense amid the proliferation of new operators. Eventually, we expect that the market will be left with only players that are flexible in meeting the needs of customers more efficiently. KResearch views that last-mile delivery service offered by e-market place operators will play a greater role and has an edge over rivals because of steadily improvements seen in their fulfillment systems or complete service solutions, especially investments in their last-mile delivery services either by themselves or in collaboration with partners to cement their businesses throughout the supply chains. As a result, other last-mile delivery operators, especially SMEs may see their bargaining power and competitiveness eroding.
Amid increased competition, last-mile delivery operators may need to adjust quickly by using technologies to help improve their business efficiency or adopting a new business model, such as offering delivery service for new products, including fresh seafood, fresh fruits and vegetables, plus FMCG products. They may also need to promote environmental conservation, such as the use of electric vehicles in their delivery service, or seek new opportunities in the cross-border e-commerce market. However, such adjustments may not be easy as they may require additional capital and flexibility or business partners. Eventually, mergers and acquisitions, plus establishment of partnerships will likely be seen in the last-mile delivery business ahead as operators seek to cement their businesses.