![]() Shopee needs to prepare for a future in which demand mightbe much more diverse across product categoriesand supplierscould tapsources outside China.But that is tomorrow’s battle. “The Southeast Asian e-commerce market is heavily reliant on Chinese imports." While e-commerce’s share of salessurged to 20%in 2021, from 5%in 2016, “right now, transactions are concentrated in apparel and low-value electronics, and most of the activity is happening in consumer-to-consumer marketplaces such as Shopee and Lazada,"says McKinsey & Co. The Southeast Asian online retail market has grown rapidly, but that doesn’t mean it has fallen into a fixedpattern. Their task, at least for this year, is to defend that moat against ambitious forays by social media firms like TikTok, which is giving sellers a platform to entertain Indonesian audiences before selling them stuff. Tencent-supportedSea (the Chinese behemoth still owns 18.6%) and Alibaba Group Holding Ltd.-backed Lazada are Southeast Asia’s e-commerce leaders. The problem was that to buttress its topline, Shopee spent $840 million on sales and marketing in the last quarter of 2021, leading to a cash loss of around the same magnitude. It has also started to take in about 12% of those transactions as revenue, compared with 5% in late 2019. In three years, the unit has more than tripled the merchandise it handles in a quarter to $18 billion. That’s when attention turned to the losses at Shopee. Then India banned Free Fire, Sea’s most popular mobile-game title. First, Tencent Holdings Ltd., Sea’s big-name Chinese backer, sold $3 billion of its stake. ![]() Yet as the region’s economies gradually reopened, the world’s hottest stock dropped 90%. But at least Sea’s billionaire founder Forrest Li has read the tea leaves right.ĭuring the pandemic, the Singapore company’s US-listed shares rose nearly 10-fold. ![]() Investors are still less than gung-ho about the prospects of the global technology industry, and Shopee has yet to demonstrate that it can hold its own against emerging online marketplaceslike TikTok. ![]()
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