E-Commerce Giants Shopee and Lazada Defy Thai Economic Woes with Soaring Revenues

 

Against a backdrop of Thailand's lacklustre economic performance, plagued by rising prices and dwindling consumer spending, e-commerce powerhouses Shopee and Lazada have reported staggering revenues, providing stark evidence of the sector's robust health.

 

The two platforms together pulled in a massive 78.255 billion baht (in 2024, according to data from Creden, and their combined profits approached 5.467 billion baht.

 

Singapore-based Shopee led the charge, with revenues exceeding 49.964 billion baht and a profit of 4.630 billion baht – its most successful year in Thailand since launching operations.

 

Not to be outdone, China's Lazada generated a substantial 28.291 billion baht in revenue, alongside profits of over 836 million baht, demonstrating effective cost management and an increasingly efficient platform business model.

 

This impressive performance stands in stark contrast to the sluggish Thai economy, which continues to grapple with weak domestic consumption, stagnant wages failing to keep pace with the cost of living, and a lacklustre recovery in exports.

 

The e-commerce sector, however, is bucking this trend, exhibiting explosive growth.

 

The financial results of Shopee and Lazada for 2024 underscore this, revealing their combined revenue hitting 78.255 billion baht and a total net profit of 5.467 billion baht.

 

Several key factors underpin the success of these two dominant platforms.

 

Their initial strategy of aggressive pricing, offering promotions, discount codes, free delivery vouchers, and enticing flash sales, effectively lured consumers away from traditional brick-and-mortar stores.

 

 

 

Furthermore, their integrated logistics networks, such as Shopee Xpress (SPX) and Lazada Logistics, provide better control over costs and service quality compared to smaller competitors.

 

Crucially, both companies heavily invest in technology and data analytics, employing artificial intelligence and Big Data to understand consumer behaviour and tailor their offerings, significantly improving conversion rates.

 

These results clearly illustrate the counter-cyclical growth of Thailand's e-commerce industry.

 

Data from the Electronic Transactions Development Agency (ETDA) indicates that the Thai e-commerce market was valued at over 600 billion baht in 2024, with consumers increasingly purchasing everyday items online, from groceries and clothing to electronics.

 

This shift in purchasing habits accelerated rapidly following the COVID-19 pandemic and shows no signs of reversing.

 

The online sector's resilience, despite broader economic fragility, can be attributed to three primary advantages: the sheer convenience of shopping from home, the ease of price comparison allowing consumers to find the best deals swiftly, and access to a vast array of products, both domestically and internationally, unconstrained by geographical boundaries.

 

However, Thai business analysts warn that Shopee and Lazada's near-monopoly signifies that many local businesses are forced to compete on a playing field dictated by foreign entities with significant financial backing and cutting-edge technology.

 

The direct-to-consumer influx of Chinese goods further intensifies the competition, undercutting local producers who face higher domestic production, marketing, and logistics costs.

 

 

This presents a worrying outlook for Thai businesses, potentially leading to a loss of competitive ground as they face an uneven price war.

 

Many Chinese sellers can afford to sell at a loss to gain market share, a strategy unavailable to most Thai manufacturers.

 

 

Moreover, Thai brands risk being drowned out by platform algorithms that often favour high-volume, responsive sellers, predominantly those importing foreign goods, turning Thailand into a mere "end market" with limited domestic value creation as profits largely flow overseas.

 

Analysts suggest that government intervention is crucial.

 

Measures to scrutinise cheap imports, such as setting a minimum taxable value to curb tax avoidance through small parcels and enforcing online product standards equivalent to Thai goods to prevent low-quality imports from destabilising the market, are deemed necessary.

 

Simultaneously, there's a call to accelerate the development of homegrown Thai e-commerce platforms and to regulate the algorithms of international platforms, similar to the EU's Digital Services Act (DSA), which mandates transparency in product rankings.

 

For their part, Thai businesses are urged to move away from price-based competition and focus on building brand value, strengthening their presence on other social media platforms, and cultivating long-term customer relationships beyond reliance on single dominant platforms.

 

The unfolding situation in the Thai e-commerce market is not merely a business story but a matter of "economic geopolitics" in the digital age, with Chinese and Singaporean capital exerting significant influence on consumer behaviour.

 

Without a proactive strategy to protect and bolster the competitiveness of domestic businesses, Thailand risks complete domination of its internal market, with all added value draining out of the national economy, leading to long-term economic fragility.

 

Earlier analysis from Pawoot Pongvitayapanu, a veteran in the Thai e-commerce sector and CEO of Pay Solutions Co., Ltd., indicated that foreign platforms currently control two-thirds of the Thai e-commerce market.

 

Thai SMEs are largely dependent on these platforms, particularly Shopee and Lazada, which together command a 79% market share, while TikTok is rapidly expanding its influence and putting increasing pressure on Lazada.

 

"A monopoly has already emerged. The majority of platforms operating in Thailand are foreign-owned. With so few players, they can control everything," Pawoot stated.

 

He further explained that this monopoly results in Thai sellers losing access to crucial customer data and the ability to build direct customer relationships.

 

This empowers major platforms to arbitrarily raise fees without robust government oversight. Moreover, the influx of Chinese goods forces Thai online sellers into a position of "capitulation" to the dominance of these giant platforms due to the intense and challenging price war.

 

A report titled "Ecommerce in Southeast Asia 2024" by Singapore-based business consultancy Momentum Works estimates the Thai e-commerce market to be worth approximately 680 billion baht, with Shopee holding a 49% market share, Lazada 30%, and TikTok Shop 21%.

 

Pawoot highlighted the "anti-dumping" strategies employed by foreign platforms, involving massive financial investment in the market.

 

"Initially, they offered discount coupons and free shipping, while allowing sellers to join without any service fees – everything was free. This led to annual losses in the billions of baht, with the highest reaching nearly 5 billion baht in a single year. Such sustained losses are something Thai operators cannot compete with, forcing many to exit the market," he said.

 

The fundamental dependence of Thai operators on these foreign platforms leaves them in a precarious position with limited bargaining power, forcing them to accept unfavourable terms.
 

The current battleground of Thai e-commerce is thus a three-way fight: the foreign platform armies (Shopee, Lazada, TikTok) that dominate and set the rules, the diverse armies of other sellers, both Thai and foreign, engaged in fierce competition, and the army of goods from China challenging with significantly lower prices compared to Thai products.