Shopee empire is being shaken up
After several times of buying products with quality that was not as advertised, Thanh Hoa, an office worker in Hanoi, decided to remove Shopee from her cellphone. She had used the app for five years.
Sometimes she stayed up until midnight to hunt for sales and felt happy with the deals she got. However, she later realized that it had cost her a lot of time. Many products were put in mothballs as they could not be used. Finally, she decided to remove the app so she would not receive information about their sale promotions.
According to Vietnam’s 2022 White Book about e-commerce, Shopee is consistently in the No 1 position, leaving its rivals, such as Lazada and Tiki, far behind. According to Reputa’s updates, by August 2022, Shopee was at No 1 with 108.6 million visits, an increase of 28 percent over the previous month.
To obtain a bigger share, e-commerce platforms have to spend money on promotion programs to lure more buyers. In this race, Shopee is always ahead as it is backed by Sea – the most valuable startup in Southeast Asia.
In 2021, Shopee invited Korean football coach Park Hang Seo as its representative face in the September 9 sale campaign. Popular singer Son Tung M-TP also advertised for this platform.
Starting as a shopping app, Shopee has expanded to food delivery and e-wallet. In 2021, Now, one of the best-known food delivery apps in Vietnam, it was renamed as ShopeeFood, while AirPay e-wallet became ShopeePay.
The austerity period
Impacted by the Covid-19 pandemic, online shopping demand has seen a boom, but it has shrunk recently as consumers have had to tighten their purse strings. They are not spending money on non-essentials and sale promotion programs are not attractive enough. Meanwhile, e-commerce platforms have no more money to burn.
According to Deal Street Asia, Sea Limited (Singapore), the holding company of Shopee, reported a net loss of $931 million in Q2/2022, twice as much as the $433.7 million one year ago. Its revenue increased by 51 percent to $1.7 billion, but its EBITDA (Earnings Before Interest, Tax, Depreciation and Amortization) rose to $648 million, higher than the loss of $580 million the same period last year.
Shopee is the major source of revenue of Sea. E-commerce, and other services make up 58 percent of its total revenue.
Sea withdrew Shopee from India and France just one year after entering the markets.
In Southeast Asia, including Vietnam, Shopee’s difficulties were exposed after reducing personnel and stopping recruitment of workers for new positions, which was expected to optimize operational efficiency.
A source told VietNamNet that Shopee Vietnam is cutting personnel at many divisions of the e-commerce sector, while ShopeePay and ShopeeFood remain unchanged.
He said the personnel streamlining may have negative effects on service quality and operation of the e-commerce platform. Some buyers have complained about slow delivery.
Shopee’s No1 position has been threatened as Lazada, its rival, is taking important steps to conquer the northern market. It has opened an office in Hanoi and is recruiting hundreds of workers.
Shopee now has more rivals as shopping apps have joined the Vietnamese market.
Vietnam’s e-commerce growth rate is expected to boom, with a value of $39 billion by 2025, the second in Southeast Asia to Indonesia ($104 billion) and equal to Singapore.
However, not all players can exist in the market. Vingroup had to shut down Adayroi, while Lotte in 2020 also closed its e-commerce website despite powerful capital from Lotte Group.