Thai E-Commerce Platform Market Challenges for Local Sellers

Thailand’s e-commerce market has seen exponential growth, driven by high internet penetration, smartphone adoption, and shifting consumer behaviors. As of early 2024, Thailand had over 63 million internet users, pushing the country into a dominant position in Southeast Asia’s online retail space. However, despite this growth, local sellers face increasing challenges due to market monopolization, aggressive foreign competition, and rising platform fees.

The Thai e-commerce landscape is dominated by major foreign platforms. In particular, Shopee and Lazada. Together, both of them control nearly 80% of the market. This dominance limits competition, increases operational costs for local businesses. Furthermore, it makes it difficult for Thai sellers to establish independent brands. Adding to the challenge, Chinese sellers have aggressively entered the Thai market, offering ultra-low-priced products. This has resulted in price wars that erode profit margins for local sellers who cannot compete purely on cost.

Foreign vs Local Sellers on Thai E-Commerce Platform Market

Many Thai businesses have also struggled with rising platform fees, which have increased from minimal levels to as high as 10%, significantly cutting into profits. Foreign platforms also restrict sellers’ ability to collect consumer data, preventing them from creating targeted marketing strategies. The Thai government has attempted to curb low-quality imports by imposing a 7% VAT on goods priced under 1,500 baht, leading to a 20% drop in cheap imports. However, the pricing advantage of foreign sellers remains a major issue.

Indonesia took a proactive approach to protect local sellers by implementing strict e-commerce regulations. In 2023, the government banned direct transactions on social media platforms, forcing TikTok Shop to merge with a local entity, Tokopedia. This move ensured that Indonesian sellers remained competitive while preventing foreign platforms from bypassing domestic regulations. Additionally, Indonesia requires imported goods to meet local quality and pricing standards, preventing a flood of cheap foreign products from overwhelming the market. This level of protection has allowed local sellers to thrive despite strong foreign competition.

To remain competitive, Thai businesses are shifting strategies. Many are leveraging social commerce, building strong brand identities, and utilizing data analytics to refine their offerings. Government intervention, such as stricter import regulations or local platform incentives, could further help level the playing field. Without such measures, Thailand’s e-commerce future will continue to favor foreign platforms over homegrown sellers.