To D2C or not to D2C? That’s the question amid Shopee, Lazada fee hikes in Thailand

Derek Burke is Co-Founder & COO of IsWhere, board advisor at Marketplace Distri and the former CEO for Singapore and Malaysia at aCommerce.

The decision by Shopee and Lazada to raise commission fees for sellers on their ecommerce platforms in Thailand will have an impact on the strategies of brands and retailers.

The Bangkok Post reported that the fee Shopee charges non-mall sellers will rise in October from 4.28% to 5.35%. The same month, Lazada will bump the commission fee in its LazMall marketplace for general products and fashion from 6% to 7%. It will also increase the commission fee for electronic goods from 4% to 5%.

The metal parcel box on the back of Lazada motorcycle in Bangkok / Photo credit: pisitbz / Shutterstock

I have a few thoughts on how these fee increases might influence the direct-to-consumer strategies of businesses in the country:

Cost considerations

Higher commission fees can significantly impact a seller’s profit margins, with smaller businesses especially vulnerable. This could incentivize brands and retailers to explore alternative channels, including D2C, where they have more control over pricing and costs.

Diversification

Businesses may consider diversifying their sales channels to reduce their dependence on Shopee and Lazada. This may involve expanding their presence on other ecommerce platforms or even investing in their own online stores.

Building brand loyalty

D2C strategies allow brands to establish a direct relationship with their customers and potentially build stronger brand loyalty. A D2C model becomes more attractive when third-party platforms increase fees as it can be seen as an opportunity to invest in long-term customer relationships.

Customization and control

Selling directly to consumers provides greater control over branding, shopping experience, and product listings. Brands can tailor their stores to reflect their identity and values.

Marketplace negotiations

Marketplace vs. D2C