The competitive landscape of Southeast Asia's e-commerce market is undergoing a quiet transformation. The era of massive subsidies and aggressive expansion appears to be fading, with profitability emerging as the new battleground for major platforms. Lazada's recent success in Thailand may signal this pivotal shift.
Lazada's Remarkable Turnaround
According to Thai e-commerce expert Pawoot Pongvitayapanu, Lazada Thailand achieved both revenue and profit growth in 2022, with total revenue reaching approximately 38 billion baht (about $1.1 billion) and profits estimated at 3.2 billion baht. Lazada Express is identified as the primary driver of this profitability surge. These figures represent a quantum leap from 2021's performance of 14.675 billion baht in revenue and 226 million baht in profit.
CEO Verapong Chaowalit's published data confirms this upward trajectory. Platform sales grew 50% year-over-year, new merchant revenue increased by 75%, and Gen Z consumers tripled. These metrics demonstrate how Lazada's years of substantial investment in customer acquisition and logistics infrastructure are finally yielding tangible returns, positioning the platform for sustainable long-term growth.
Intensifying Competition
However, Lazada faces formidable challenges. Competitors in Thailand's e-commerce market are similarly pivoting toward profitability strategies.
Shopee, Lazada's primary rival, previously relied on heavy subsidies that resulted in 4.9 billion baht losses in 2021. Since 2022, the platform has reduced marketing budgets, curtailed expenditures, and shifted focus to profitability. Notably, Shopee Express has significantly decreased losses, showing promising profit potential.
JD Central, another market player, has struggled with 1.2 billion baht in losses. While rumors suggest Central Group's withdrawal from the joint venture with JD.com and JD's potential exit from Thailand, official confirmation remains pending. Regardless, JD Central will likely implement measures to control losses and remain competitive in the Thai market.
Market Potential and Consumer Challenges
Thailand's e-commerce market holds tremendous potential, projected to reach $24.2 billion in 2023 and $38.72 billion by 2027. This growth prospect intensifies competition as platforms prioritize profitability over expansion.
Simultaneously, Lazada must navigate reduced consumer spending across Southeast Asia. Blackbox-ADNA research indicates high inflation has impacted regional e-commerce, with overall online shopping participation declining 9% in 2022 compared to 2021. In Thailand specifically, 89% of consumers reported cutting expenses due to inflation, potentially dampening e-commerce activity.
Strategic Imperatives
To maintain momentum, Lazada must enhance operational efficiency, improve user experience, and develop new growth avenues. Potential strategies include:
• Strengthening partnerships with local brands to better serve regional preferences
• Leveraging data analytics for targeted marketing and customer acquisition
• Exploring innovative models like live-stream commerce and social commerce
• Optimizing logistics operations, particularly Lazada Express, to maintain competitive advantage
The platform's strong performance among Gen Z consumers—digital natives with high e-commerce adoption—presents significant opportunities. Engaging this demographic through influencer collaborations and personalized recommendations could drive further growth.
Lazada Thailand's profitability breakthrough reflects years of strategic investment rather than short-term gains. As Thailand's e-commerce market matures, platforms must move beyond subsidy-driven models to sustainable operations focused on genuine value creation. The coming years will test whether Lazada can convert its early profitability advantage into lasting market leadership amid evolving consumer behavior and intensifying competition.