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23 Mar 2022

Econ Digest

B2C e-commerce market expected to grow by 13.5% in 2022…taking market share from on-premise purchases, especially for food and personal care products

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        KResearch views that rising inflation and living costs, uncertainty about the COVID-19 outbreak, and impacts from the prolonged war in Ukraine will continue to affect the economy and consumers’ purchasing power. Although B2C e-commerce (for products only) may grow by around 13.5% to about THB565 billion in 2022, the growth rate has slowed down and is the lowest compared to the average annual growth of 40% in the last 3 years.

        With budgets still limited or not increasing accordingly, consumers plan to spend less through physical stores and more through online platforms, especially on food and personal care products that consumers used to purchase through physical stores. This is reflected in several retailers’ sales, which grew 2-3 times last year via online platforms, but overall sales did not increase much or grew to a limited extent (primarily attributed to price). Compared to the total retail market value, the B2C e-commerce market share (for products only) is expected to increase from 14% in 2021 to 16% in 2022

        In addition, operators will still encounter fierce competition and possible increase in freight charges due to rising oil prices, which will undermine the overall growth of the e-commerce business. Therefore, operators should develop plans to address the challenges, especially quality control and online service standards to bolster consumer confidence. The survey results show that more than 56% of the respondents still lack confidence in the quality of goods and the reliability of stores, and more than 41% want the operators to improve the service quality of sales and delivery staff. In addition, the shrinking trend of the Thai population in less than a decade will be another challenge that will drive change or limited growth in retail spending, and will lead to more competition in the retail sector. To this end, e-commerce operators may look for new markets and expand their marketing channels to cross-border e-commerce, so that they can get closer to and better meet the needs of foreign customers, but they must study consumer behavior and the regulations governing the cross-border e-commerce operations in each country.

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Econ Digest

B2CE-Commerce