Thailand E-Commerce – Is this market the country’s best bet for economic recovery?  


As the fourth largest country by population in the ASEAN free trade area, Thailand alone had 48.6 million internet users by the end of 2020, an increase of 3.4 million or 7.4% from the beginning of the year. This suggests a flourishing smart electronics industry. Even before the COVID-19 pandemic started in 2020, Thailand’s digital economy sector had been growing constantly due to the expansion of urbanization and the younger generation’s behavior toward digitalization. Thailand’s Gross Merchandise Value (GMV) estimated by Bain Analysis, which includes e-commerce, transport and food, online travel, and online media sectors in Thailand, is projected to reach USD 18 billion in 2020 or grow by 7% y-o-y. Thailand ranked 9th in the world for its share of e-commerce total sales transactions in 2020, leading the market value to reach USD 9 billion. It is estimated that the market grew by 81% from 2019 to 2020 with at least 1 in every 3 digital service consumers being a new user to the service, joining due to the pandemic.

Source: Bain Analysis

With the full impact of the pandemic at the core of the tourism industry, e-commerce in Thailand has shifted its growth and adapted to the new challenging business environment. E-tail categories and consumer preferences are now gradually being replaced by food and personal care (73% growth rate y-o-y), DIY & hobbies (42% growth rate y-o-y), and furniture and home appliances (37% growth rate y-o-y). Business-to-Business (B2B) transactions are still leading the e-commerce market in the country, but they are being closely followed by the expansion of Business-to-Consumer (B2C) transactions. Social media platforms have become significant sales channels with 40% of market share in 2020, replacing the e-marketplace such as JD Central, Shopee, and Lazada which stood at 35%. Rapidly changing technologies have meant agile business practices that rely more on online channels than the physical Thai market.

To move along with the growth of e-commerce, the use of Digital wallet/e-payment (online payment services) for online shopping is predicted to grow at a rate of 19% and is projected to account for 23% of e-commerce transactions by 2023 with more service providers from the non-bank sector. The Bank of Thailand (BOT) recorded that in 2020, the country had made a total of 429 million internet banking transactions (CAGR 2017-2020 of 27%) and 9.5 billion mobile transactions (CAGR 2017-2020 of 93%). Transactions made via Prompt Pay bank transfer services—which allow users to receive and transfer funds with their Citizen ID or mobile phone number via internet banking, mobile phone, and ATM instead of via bank account—recorded an average daily transactions of 28 million in 2021.

Source: World Bank, Bank of Thailand

Meanwhile, the logistics and fulfillment sector has also witnessed strong growth. E-commerce logistics (courier, express, and parcel delivery) spiked significantly to USD 2 billion in 2020, a growth of 34% y-o-y. The average transportation costs are expected to decrease due to competitive players who focus on reducing operating costs to secure their market share.

Thailand has passed the Revenue Code Amendment Act (No. 53) B.E. 2021 in the Government Gazette on February 10, 2021, to execute the country’s new e-Service tax regulation. Effective September 1, 2021, the new service tax subjects any digital and e-commerce operators, who have provided foreign electronic services and electronic platforms with revenue over USD 54,550 per year generated from users in Thailand to a duty to register value-added tax (VAT) with Thailand’s Revenue Department at a rate of 7%.
The services and platforms include any intangible overseas business operation—from advertising space on a website or social media to downloading games, music, movies—that delivers products and services over the internet. The highlights of prominent providers who are now required to register VAT with the Thai Revenue Department are;

  • E-commerce platforms such as Amazon and eBay;
  • Digital music apps, films, and games such as Spotify and Jook Music;
  • Digital image platforms such as ShutterstockAdvertising on online platforms such as Facebook, YouTube, Google, and LinkedinLinkedIn;
  • On-demand, subscription-based streaming services such as Netflix, Disney, HBO, Viu, and WeTV; and
  • Peer to Peer or agency platforms such as AirBnB,, and Agoda.
  • Note: Non-resident service providers of newspapers, magazines and textbooks in electronic form (e-book) are exempt from VAT.

If the service providers offer electronic services including service offers, payment services, and service delivery, that platform operator is required to register for VAT to the Revenue Department on behalf of all service providers who are under the platform.
VAT registrants must file VAT returns (Form P.P.30.9) and pay VAT monthly through the Simplified VAT System for e-Service (SVE). These VAT returns must be filed by the 23rd of the following tax month. The VAT return must be filed every month, even if electronic service providers and electronic platforms have no income from conducting business in that tax month. The VAT can be paid in Thai baht through the SVE in one of the following ways: (1) by wire transfer to the Revenue Department’s bank account; or (2) by credit card.

How can Tractus help you optimize E-commerce opportunities in Thailand?

Tractus offers our clients a range of services to support the growth of your business, help make optimal expansion decisions, and deliver on-the-ground support via;

  • Regulatory Analysis & Compliance
  • Market Opportunity Assessment
  • Business Inc.ubator®

Find out more about Tractus Strategy & Execution practice:

Authored by

Yada Saraneeyatham is a Senior Research Analyst based at Tractus’ Bangkok office.

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