Did you know that in 2021, online shopping in Thailand increased by 18%, ranking as the 8th largest increase globally, surpassing the United States at 15.9%?
And in the first quarter of 2022, Thailand ranked number one as the country with the most weekly online shopping in the world, according to the July 2022 Global Digital Trends report by We Are Social and Hootsuite.
The most popular e-commerce platforms in Thailand are Shopee and Lazada. Many may wonder which one is better, as e-commerce marketing is becoming increasingly popular among entrepreneurs. This channel helps both small and large businesses increase sales opportunities, expand their reach nationwide and internationally effectively, and acquire new customer bases.
But with everyone having access to this channel, competition is inevitable. For new players or brands about to enter this market, there might be questions about which platform is more attractive: Shopee or Lazada.
A look at the basics of Shopee and Lazada, giants in the e-commerce market.
The parent company of Shopee is Sea Limited, valued at 1.17 trillion baht. In 2021, it had revenue of 13,322 million baht, a growth of 129%, and a loss of 4,973 million baht, an increase of 19%. In 2022, Shopee had revenue of 21,709 million baht and a profit of 2,380 million baht, a growth of 147.46%. Meanwhile, the parent company of Lazada is Alibaba Group, valued at 7.96 trillion baht. In 2021, Lazada had revenue of 14,675 million baht, a growth of 46%, and a profit of 226 million baht, a growth of 105%. In 2022, Lazada had revenue of 20,675 million baht and a profit of 413 million baht, an increase of 82.06%.
Shopee is a trending platform.
Shopee is a rapidly growing e-commerce website from Singapore. In Thailand, it has risen to become the second most popular e-commerce platform, and last year it had the highest number of app downloads on the App Store among all e-commerce websites. This is partly due to Shopee offering discounts to first-time customers, which may be considered an advantage over Lazada. They also offer Shopee Coins, a service that provides discounts for subsequent purchases, and have a wider variety of shipping options than Lazada, utilizing multiple carriers such as Thailand Post, Kerry, and DHL.
Although Shopee has a smaller customer base than Lazada, due to its longer launch date, it is still considered a rapidly growing e-commerce marketplace.
Lazada is a leading platform in ASEAN.
Lazada can be considered Alibaba's e-commerce flagship. Last year, Alibaba invested over $2 billion to boost Lazada's sales channels and upgrade its services, aiming to make it the number one e-commerce website in ASEAN. This investment has helped Lazada gain a significant number of users. Furthermore, Lazada offers a fast store setup system and efficient shipping management. They also take responsibility for any errors in delivery.
Furthermore, Lazada offers training and a clear system. They have established an e-commerce business school in Thailand, providing training through Taobao University. This program includes basic training on using Lazada to help users better understand the system.
Furthermore, 81% of Lazada is supported by Alibaba, making the platform flooded with a large quantity of goods from China at low prices. This creates competition for some shops, but they can overcome it because goods from China take longer to ship than ready-to-ship items in Thailand.
Both platforms are conducive to search engine optimization (SEO), as they are major channels in Thailand today. Keywords for various products also contribute to higher search volumes through Google, thus impacting SEO content and outbound marketing efforts on our product pages.
Usage statistics for Shopee vs Lazada
Shopee receives over 290 million monthly visitors across Southeast Asia, primarily from Indonesia. In just 5 years, Shopee has become the number one most downloaded app in Taiwan and Southeast Asia, and the third most downloaded app globally in the shopping category.
While Lazada has over 100 million monthly active users and 80 million annual active users, this represents an increase from % since Alibaba acquired Lazada.
Although Shopee initially significantly outperformed Lazada in terms of monthly visitor numbers, Lazada still generated $16.322 million more in revenue. Conversely, Shopee collected $6.2 billion in revenue, but this is still considered strong growth, as it represents a 74.31% increase compared to the previous year.
In Thailand, according to data from Data.ai, the number of weekly active users for Shopee has stabilized since September 2022, then decreased before slightly increasing in late January 2023 to around 17.5 million accounts per week. However, this figure still lags behind its perennial competitor, Lazada, which has had approximately 21 million active users per week since mid-September 2022 until the present. Furthermore, in its 2022 annual financial report, Lazada reported a net profit of 413 million baht, marking the second consecutive year of profit, while Shopee continued to incur a net loss.
Comparing the strategies of two major platforms, Shopee vs. Lazada, in an era of exponential e-commerce growth.
Currently, the e-commerce market, especially B2C, is experiencing rapid growth, coupled with increasingly fierce competition in online marketing. This reflects the significant growth of the e-commerce market.
According to data from the Electronic Transactions Development Agency (ETDA) under the Ministry of Digital Economy and Society, the value of e-commerce in Thailand in 2020 was 3.78 trillion baht. The largest segment was B2C (business-to-consumer) e-commerce, valued at over 2.17 trillion baht, followed by B2B (business-to-business) at over 0.84 trillion baht, and B2G (business-to-government) at 0.77 trillion baht. The value of e-commerce in Thailand is projected to grow to 4.01 trillion baht in 2021.
Shopee employs strategies to enhance the buying and selling experience in the e-commerce world.
Shopee aims to elevate the e-commerce experience in every aspect by integrating entertainment into marketing. This is achieved by offering innovative solutions to provide users with enjoyable shopping experiences and foster customer interaction through the platform.
This resulted in Shopee becoming the number one e-commerce application in Southeast Asia during the first quarter of 2020, achieving growth of 110%. This is due to the app's ability to meet the needs of Thai consumers who prefer to communicate and chat with sellers before making a purchase. This led to the development of features allowing buyers to instantly communicate with sellers via chat, which not only boosted sales but also significantly increased engagement. Furthermore, the launch of Shopee Live, a live streaming feature that allows buyers and sellers to interact directly in real-time, also contributed to this success.
Lazada enters the Shoppertainment trend, creating entertainment while shopping.
Lazada analyzed the customer journey and found that shoppers spend only a short time on the platform. Most typically search for desired products, compare prices until they are satisfied, then click to order and pay. Lazada observed that the purchasing decision process lacks an emotional element, especially when compared to buying from physical retail stores.
Lazada has therefore developed an ECO-System on its platform through live streaming with Laz Live, aiming for a Shoppertainment strategy. This encourages buyers to interact with sellers and spend more time on the platform with clear video and audio, allowing for the management of incoming messages during live streams. Customers can ask questions and respond throughout the entire process within the application, making purchasing on the platform easier.
TikTok: A new threat to online shopping platforms, along with Shopee and Lazada.
Of course, TikTok is a very popular platform nowadays. Anyone who uses TikTok knows that you might unknowingly become a customer of the sellers there. The way they present content—in a fun, lighthearted way, with humorous storytelling and conversations—along with subtle sales pitches and product demonstrations, can easily lead you to make a purchase.
In 2022, TikTok began expanding into Southeast Asia and has grown rapidly. Shawn Yang, an analyst from Blue Lotus Research Institute, estimates that TikTok's online sales in 2023 could surpass 20%, and its total sales are expected to quadruple to US$4.4 billion. Furthermore, reports indicate that TikTok aims for total sales of US$12 billion this year. This compares to Shopee's total online sales of US$73.5 billion in 2022 and US$21 billion in 2021.
With this growth, Cube Asia conducted a survey to find out if brands would reduce spending from other channels if they spent more in-store on this TikTok platform. The survey results from Indonesia, Thailand, and the Philippines showed that marketers would reduce spending from other platforms by 51% from Shopee, 45% from Lazada, and 38% from offline channels.
Therefore, Jonathan Woo, senior analyst at Phillip Securities Research, further commented that TikTok could pose a risk to Shopee, potentially causing Shopee to lose some market share to TikTok. However, Lazada is unlikely to face the same risk, as it has invested in platform development since 2020. Overall, TikTok may have growth potential comparable to both Shopee and Lazada.
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