Expert warns of disruption as Temu enters Thai e-commerce market
Government urged to fix loopholes that allow Chinese retailers to sell ultra-cheap and often substandard goods online
An e-commerce expert is warning Thai online retailers about a greater influx of cheap Chinese products following the entry of online retailing platform Temu to the Thai e-commerce market on Monday.
In an interview with Krungthep Turakij’s Deep Talk programme on Wednesday, Pawoot Pongvitayapanu, founder and chief executive officer of Creden.co and PaySolutions, noted that Chinese products have been flooding the Thai online market via applications like Shopee, Lazada and TikTok Shop, which host both Thai and Chinese retailers, but this is about to change after the entry of Temu.
“The Temu application brings Chinese products to Thai consumers without going through a middleman,” he said. “It’s also available in the Thai language, accepts Thai currency and offers free shipping and a money-back guarantee, on top of promotions and discounts of up to 90%. The application will be a new disruptive force and significantly affect Thai online retailers.”
These online retailers are already struggling in the highly competitive market inundated with hundreds of rivals, both domestic and foreign, leading to intensive price wars.
“Furthermore, platform operators have been increasing fees and the profit share collected from retailers, which is not regulated by the government,” he said.
Pawoot predicts that Temu could spell the end for small retailers who will be unable to compete in the price wars while large entrepreneurs who own manufacturing facilities will suffer from declining sales as their costs are higher than those of Chinese producers.
This will result in lower demand for domestic manufacturing, affecting the supply chain and related industries, as well as the workforce as factories are forced to shut, he said.
Pawoot also predicted that market leaders in Thailand such as Shopee and Lazada will adjust their strategies to fight Temu, by rolling out promotions and discounts more aggressively to retain their existing customer bases, as well as by increasing the efficiency of logistics services.
These platforms could also increase the variety of products, with a focus on authentic Thai products to differentiate them from Chinese counterparts available on Temu, he added.
“We will soon see a new round of price wars in the Thai e-commerce market. It will benefit consumers in the short-term, but will hurt small and medium entrepreneurs who cannot compete in the long term,” said Pawoot.
He advised Thai retailers to adapt to the situation and try new strategies to stay ahead of the competition, including finding business partners to help improve after-sale services, building their own brands, and using AI technology to improve sales techniques.
He also urged the government to fix the loophole in the law and issue new regulations to prevent the influx of cheap Chinese goods, especially substandard products that do not have FDA or industrial standard certification.
