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27 Jul 2022

Econ Digest

Last-mile delivery business in 2022 will face intense competition, increasing delivery costs and weak purchasing power

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        KResearch views that last-mile delivery businesses in 2022 will face a variety of challenges, covering the COVID-19 situation that shows more signs of easing that may cause some consumers to resume offline shopping, and the high cost of living that is undermining consumers’ purchasing power. The market value of last-mile delivery businesses will reach THB98 billion, up by 10-15% from 2021, slowing down from the 30-40% annual growth rate in recent years that stemmed from the high base created by the boom in online shopping due to the lockdown measures implemented. Such growth may not reflect the better performance by all market players due to the large number of players creating a fierce competition in the market and the continuous use of pricing strategies by business operators since 2021. Moreover, raising delivery service charges while oil prices are still rising will be difficult, depending on the cost management of each business operator. However, online shopping is expected to become a new normal behavior for more consumers and will continue to grow.

        Business operators will survive by adapting to the situation, including effective cost management, adding new revenue streams through synergies with business partners, accelerating the expansion of their ecosystem to cover the entire E-Commerce Supply Chain in order to create comprehensive services and increase the bargaining power for businesses while maintaining service quality and developing new services that meet the needs of specific customer segments. However, the above adaptions require capital, customer base and expertise, and business operators have to consider the cost-effectiveness of their investments in the midst of intense competition and accelerating cost increases, as well as be prepared for increasingly difficult business operations in the future.

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Econ Digest