2019 J.P. Morgan Global Payment Trends

2019 Global Payments Trends Report - Thailand Country Insights

THAILAND INSIGHTS REPORT


At 0.8 percent of total retail sales, e-commerce still takes only a tiny proportion of overall retail spend in Thailand. As the nation’s digital infrastructure continues to improve, this means there is a huge amount of untapped potential in this nation of mobile-first internet users. To help our clients locate, attract and keep their customers, we have tracked and assessed e-commerce developments in 34 mature and emerging markets around the globe.

Introduction

 

The expected 3.3 percent year-on-year gross domestic product growth in Thailand in 2019, projects a step up in fiscal transfers, subsidies and tax rebates that will offset an expected slowing in export growth.1 To this end, incoming data suggest government spending ratcheted up sharply towards the end of 2018. The rise in fiscal stimulus should continue to bolster household spending, supporting domestic demand through 2019.2 E-commerce spending per capita is high in Thailand at $1,746.20 per person per year,3 and increases in private consumption could boost growth further.

This document is based on projected figures and is subject to change at any time.

 

A developing market poised for double-digit growth

 

The online shopping sector in Thailand is valued at $26.2 billion.14 As an emerging e-commerce market, it has expanded prodigiously over the past five years, with 48.7 percent growth in 2016 and 26.8 percent growth in 2017.15 That said, e-commerce is far from overtaking physical retail in the country. At present, it takes just a 0.8 percent share of the total retail market,16 and only 21.7 percent of the population has shopped online.17

Those that do engage in e-commerce, however, are spending significant amounts. The average annual online spend, at $1,746.20,18 is the highest of the south east Asian countries surveyed in our report series.* This suggests an appetite for higher-ticket items and possibly that e-commerce is at present restricted to higher-earning citizens. The most popular online shopping category is travel, followed by consumer electronics.19 Shopping activity peaks mid-week in Thailand: Wednesday is the most popular day to spend online, and sales volumes tend to fall over the weekend.20 International e-commerce events such as ‘11.11’ in November, Black Friday and Cyber Monday are also growing in prominence in Thailand.21

 

Rural internet expansion to fuel e-commerce sales

 

Looking ahead, business to consumer e-commerce growth is expected to level out to a compound annual growth rate of 12.5 percent to 2021.22 Several factors will influence the pace of e-commerce expansion. Perhaps the most significant is the fact that internet penetration, at 53 percent, means a significant section of the Thai population doesn’t have the ability to shop online.23 The government’s ‘Thailand 4.0’ policy is looking to change this reality by installing broadband infrastructure in villages across the country.24

E-commerce growth will grow in line with rising internet penetration. Major global e-commerce merchants are taking matters into their own hands and collaborating with the Thai government to drive investment and innovation into the country’s digital economy. In 2018, online retailer Alibaba and the Thai government entered into a strategic partnership to develop the country’s e-commerce capabilities and bring domestic merchants on to Alibaba’s sales platform.25

 

International merchants take half of Thai e-commerce market

 

An increase in domestic e-commerce merchants will also promote sales growth. Cross-border spending makes up half (50 percent) of Thailand’s total e-commerce spend,26 suggesting a strong appetite for international goods and brands, but also a lack of local options. The top three overseas sales destinations are China, Japan and the U.S.27 This balance may shift as domestic merchants begin to seize on the opportunities presented by having a digital sales presence. At present, the biggest e-commerce sites in the country by traffic are international players: Lazada (first), Shopee (second) and 11street (third).28

Thailand’s e-commerce delivery infrastructure is still developing to meet demand. International courier businesses including UPS, FedEx and TNT have all established domestic delivery networks, and there is growth in the number of warehouses and local providers offering express services.29 The increasing number of delivery providers present in Thailand is driving down shipping costs, again boosting the attractiveness of e-commerce to consumers.30 Merchants are entering into partnerships with couriers to offer expedited delivery in certain parts of the country, which could raise expectations of delivery speeds. Adidas and DHL, for example, provide same-day or next-day delivery within greater Bangkok and within two to three days beyond that area. DHL reported that this service helped drive a 40 percent increase in revenue for Adidas in Thailand.31

A mobile-first, app friendly nation awaiting 5G speeds

 

Thailand is considered a mobile-first country,32 with the use of smartphones and other mobile devices outstripping desktop internet usage. The Thai mobile commerce market is already the dominant e-commerce sales channel in the country, used for 52 percent of all online shopping transactions and worth $13.6 billion.33,34 This makes the country one of the regional forerunners for mobile commerce.35

The mobile commerce market is expected to grow at a compound annual growth rate of 16.4 percent to 2021, by which point it will generate $25 billion in annual sales.36 Thai smartphone users are keen e-shoppers, with 71 percent shopping online at least twice a month.37 Some 90 percent of smartphone users plan to shop online in the future.38 Apps are the most-used method to shop online, closing 65.2 percent of all transactions – offering in-app purchasing will therefore be crucial for merchants to reach the majority of Thailand’s online consumers.39

Looking ahead, the rise of mobile commerce should be aided by plans to introduce ultra-fast 5G internet to the country’s communications infrastructure. In February 2019, Thailand and Huawei began trialing 5G speeds as part of a plan to roll out this service nationwide by December 2020.40

Social media should not be ignored as a means of attracting business. Facebook is the primary research channel before buying goods: nine out of 10 online shoppers research products on Facebook before making a purchase.41 The social network has 48 million users in Thailand.42 Line, Instagram and Twitter also have millions of Thai users.43 The global rise of social media as an e-commerce sales platform has had a considerable impact upon Thailand’s e-commerce market. Over half (51 percent) of Thai online shoppers have made a purchase through a social media site.44

Thai government focuses on digital payments infrastructure

 

Cards are Thailand’s dominant e-commerce payment method, used in 30 percent of all transactions.45 This is despite the fact that card penetration, at 0.77 debit cards and 0.29 credit cards per capita,46 is not particularly high in the country.

The government is making efforts to drive up card use when spending online. Alongside commercial banks, it has installed 550,000 electronic data-capture terminals across the country to enable online shoppers to settle invoices via card payments.47 The government incentivizes sellers via tax rebates to adopt the services.48

The state has also launched PromptPay, which allows registered users to transfer funds between consumers and businesses using their mobile phone number or citizen ID. The scheme already has 14 million users.49

International payment gateways including WorldPay and PayPal® have entered Thailand’s e-commerce payments market, and domestic players are capitalizing on their ability to support card payments in local currency (Thai Baht) and therefore offer higher margins to merchants. Local providers include Bangkok Bank and Thaiepay.50

These measures, alongside growing smartphone penetration, should also boost digital wallet adoption. Digital wallets are currently used to pay for 23 percent of e-commerce transactions, tying with bank transfers.51 The use of digital wallets is forecasted to rise at a compound annual growth rate of 18 percent to 2021, to take a 28 percent share of the payments market.52 Popular brands in Thailand include PayPal, TrueMoney and AirPay.53

The ongoing availability of cash on delivery payment methods has supported the use of cash in the Thai e-commerce market. This payment method still accounts for 15 percent of sales,54 although this figure will decline to take a 12 percent share by 2021.55

Fraud an ongoing battle for the e-commerce sector

 

Assuring Thai e-shoppers of a merchant’s security credentials is an important step in attracting customers. Fraud is an ongoing issue in the country, with 32 percent of Thai tech professionals questioned in a recent survey reporting that they had personally experienced payments fraud relating to e-commerce in the past year.56 Looking ahead, the rise of cards and digital wallets and their associated payment authentication services should help drive down incidences of fraud.

 

Key takeaways

 

Cross-border spending makes up half of Thailand’s total e-commerce spend, suggesting a strong appetite for international goods and brands, but also a lack of local options. The top three overseas sales destinations are China, Japan and the U.S. Although Thailand’s e-commerce delivery infrastructure is still developing to meet demand, international courier businesses such as UPS, FedEx and TNT have established domestic delivery networks, and there is growth in the number of warehouses and local providers offering express services. While cards are currently the preferred way to pay for goods online, digital wallets and bank transfers are growing in prominence.

 

Data may vary from historical figures, due to certain categories being re-stated as new information sources have become available.

J.P. Morgan 2019 Payments Trends – Global Insights Report series includes the following countries: Australia, Brazil, Canada, China, Hong Kong, India, Indonesia, Japan, Malaysia, Mexico, New Zealand, Singapore, Thailand, Turkey, U.S., Vietnam.

Global Payments Trends Reports

International e-commerce success can hinge upon understanding the needs, nuances and growth patterns of individual nations. J.P. Morgan’s Global Payments Trends Reports aims to offer merchants the knowledge they need for global success through in-depth, country-by-country analysis.

For more information, please contact:

Your J.P. Morgan Relationship Manager or visit: https://www.jpmorgan.com/country/US/en/merchant-services/payment-insights

 

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1 Economic Research, J.P. Morgan Chase Bank, March 2019.

2 Economic Research, J.P. Morgan Chase Bank, March 2019.

3 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via EDC Analysis, 2017.

4 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via World Bank, 2017.

5 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via CIA World Fact Book, 2017.

6 World Bank Open Data. ‘Thailand.’ Accessed March 2019.

7 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Electronic Transactions Development Agency of Thailand, 2017.

8 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via EDC Analysis, 2017.

9 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via export.gov, Thinkwithgoogle and EDC Analysis, 2017.

10 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via World Bank, 2017.

11 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via McKinsey ‘The Digital Archipelago’, 2018.

12 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via World Bank, 2017.

13 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Bank of Thailand, 2017.

14 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Electronic Transactions Development Agency of Thailand, 2017.

15 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Electronic Transactions Development Agency of Thailand, 2017.

16 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via SEA Google Report, 2017.

17 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Statista, 2017.

18 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via EDC Analysis, 2017.

19 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via ASEAN Briefing: Thailand's E-Commerce Landscape and EDC Analysis, 2017.

20 CIO.com, February 2019. ‘How ecommerce is changing Thailand's economy.’ Accessed March 2019.

21 ThaiVisa.com, November 2017. ‘Lazada to hold Black Friday and Cyber Monday online shopping sale later this month.’ Accessed March 2019.

22 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via ecommerceIQ, 2017.

23 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via World Bank, 2017.

24 CIO.com, February 2019. ‘How ecommerce is changing Thailand's economy.’ Accessed March 2019.

25 EnterpriseInnovation.net, April 2018. ‘Alibaba, Thai gov enter strategic partnership in support of Thailand 4.0.’ Accessed March 2019.

26 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via ecommerceIQ, Payvision and EDC Analysis, 2017.

27 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Acapture, 2017.

28 AseanUp.com, March 2019. ‘Top 10 e-commerce sites in Thailand 2018.’ Accessed March 2019.

29 Businesswire.com, February 2019. ‘The Warehousing Market in Thailand - Outlook to 2022 - ResearchAndMarkets.com.’ Accessed March 2019.

30 Export.gov, July 2018. ‘Thailand – eCommerce.’ Accessed March 2019.

31 Postandparcel.info, September 2018. ‘Adidas Thailand enjoys 40% growth online thanks to DHL ecommerce.’ Accessed March 2019.

32 eShopWorld.com, 2019. ‘Insights into the growth of Thailand eCommerce.’ Accessed March 2019.

33 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via export.gov, Thinkwithgoogle and EDC Analysis, 2017.

34 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via EDC Analysis, 2017.

35 Export.gov, July 2018. ‘Thailand – eCommerce.’ Accessed March 2019.

36 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via EDC Analysis, 2017.

37 Export.gov, July 2018. ‘Thailand – eCommerce.’ Accessed March 2019.

38 Export.gov, July 2018. ‘Thailand – eCommerce.’ Accessed March 2019.

39 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via export.gov, Thinkwithgoogle and EDC Analysis, 2017.

40 CIO.com, February 2019. ‘How ecommerce is changing Thailand's economy.’ Accessed March 2019.

41 Export.gov, July 2018. ‘Thailand – eCommerce.’ Accessed March 2019.

42 Export.gov, July 2018. ‘Thailand – eCommerce.’ Accessed March 2019.

43 Export.gov, July 2018. ‘Thailand – eCommerce.’ Accessed March 2019.

44 Export.gov, July 2018. ‘Thailand – eCommerce.’ Accessed March 2019.

45 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2019.

46 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Bank of Thailand, 2017.

47 CIO.com, February 2019. ‘How ecommerce is changing Thailand's economy.’ Accessed March 2019.

48 CIO.com, February 2019. ‘How ecommerce is changing Thailand's economy.’ Accessed March 2019.

49 Dezshira.com, October 2018. ‘Four Trends Driving Thailand’s e-Commerce Market.’ Accessed March 2019.

50 Chargebee.com, February 2019. ‘Payment gateway integration options for startups in Thailand.’Accessed March 2019.

51 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2019.

52 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2019.

53 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2019.

54 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2019.

55 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2019.

56 ACIWorldwide.com, 2018. ‘Ecommerce is appealing to Thai tech workers, but merchants must overcome security concerns.’ Accessed March 2019.