Why did Shopee suddenly leave India, on March 28, 2022?
Why did the Shopee suudenly leave India, on March 28, 2022?
Shopee has announced that it will cease operations in India less than six months after its introduction. Why? What effect will this have on the social commerce market?
Shopee, a social commerce network that began in India less than six months ago, is leaving the nation due to “global market uncertainty,” even though the platform, which Singapore’s Sea Group owns, swiftly became one of the most popular apps on the Android Play Store.
Shopee made a soft entry into the Indian market in November 2021. It processes 100,000 orders per day and has over one million app downloads in India’s Google Play Store. However, five months later, on March 28, 2022, Shopee stated that it would cease operations in India at midnight on March 29, 2022.
Shopee, a Singapore-based e-commerce company, has chosen to close its operations in India just six months after launching. On Monday, Shopee informed its local workforce of the news in a companywide town hall, stating that it would halt operations in India immediately. According to reports, the e-tailer, which competes with Meesho, Flipkart, and Amazon India, notably at the lower end of the market, will close its doors on March 29.
“In light of global market uncertainty, we have chosen to close our early stage Shopee India initiative,” a Shopee representative stated.
Following its recent entry into Europe, Shopee pulled out of France earlier this year.
What is the purpose of the exit?
Shopee’s departure comes just over a month after the Indian government banned the Sea Group-owned gaming software, Garena Free Fire. “We have chosen to discontinue our early-stage Shopee India venture due to global market uncertainty,” a Shopee representative stated. According to insiders, the social commerce site will shut down at midnight IST on Tuesday, and all orders placed on the platform up to that point will be fulfilled.
According to one of the sources stated above, Shopee has sent an email to its platform vendors alerting them that the company is ceasing operations in India. “Until May 30, all Shopee Seller Centre services, including payment withdrawal and return dispute resolution, will be available through existing channels, “The platform’s logistics partners will continue to pick up and deliver all outstanding orders and handle return deliveries according to the source.
Opposition to Shopee’s business model
Apart from the pressure on Sea Group due to the prohibition of Garena Free Fire, Shopee had several challenges throughout its time in India. EARLIER THIS YEAR, an FIR was lodged against the company in Lucknow, saying that identical products were being delivered through the platform.
Shopee also encountered criticism from a group of local traders led by the Confederation of All India Traders (CAIT), who demanded that the platform be banned and wrote to Finance Minister Nirmala Sitharaman, stating that the company had violated India’s FDI guidelines.
What effect will this have on the social commerce market?
In the market targeting cheaper goods ordered in bulk for reselling, Shopee developed as a significant competitor to social commerce platforms like Softbank-backed Meesho and Flipkart Group’s Shopsy. As a result of the exit, the market is now open to competitors.
So, what’s the following for vendors and employees?
Shopee is expected to offer its India employees internal opportunities within Sea, according to people familiar with the situation. “If it doesn’t work out,” one of them remarked, “they’ll be offered a three-month severance payout.”
“Employee access has been disabled since this morning (Monday), and operations will be suspended beginning tonight,” they said.
Meanwhile, Shopee’s India vendors have been advised that services such as payments, refunds, returns, and disputes will be available till May 30. According to the notice to vendors, existing orders will be transported and delivered following the process.
Shopee had around 300 employees in India as of December 2021, with a seller base of over 20,000. Since then, these figures have not altered significantly even though the company has added additional employees and sellers.
There is a memo sent to all staff. “From this date–March 29, 12:00 am–buyers will not be allowed to place any additional orders,” it stated.
More about Shopee
Increased regulatory scrutiny, culminated in the banning of Sea’s gaming app Free Fire as part of a crackdown on enterprises allegedly transferring data to Chinese servers, spurred Shopee’s decision to leave India, according to one source with firsthand knowledge of the company’s thinking.
Shopee launched in Argentina in January 2022, a country where e-commerce has exploded since the pandemic began. Compared to 2020, sales increased by 101 per cent in the first semester of 2021.
Shopee began offering food delivery in Malaysia and Thailand in 2021.
BtoB was named the official ambassador for Shopee’s K-Collection, a Korean brand show in which 50 domestic small and medium-sized businesses participate via Shopee’s Live in June 2021. Shopee Singapore, Shopee Malaysia, Shopee Philippines, and Shopee Vietnam are online shopping destinations. To actively attract local K-pop fans as customers, the group would offer products directly through ‘Shopee’s Live’ and organize an exclusive online fan meeting.
Marian Rivera, a Kapuso actress and host, was chosen as the brand’s spokesperson for the 3.3-3.15 Consumer Day Sale in March 2022.
What do they do?
Shopee is Southeast Asia’s and Taiwan’s most popular e-commerce site. It’s a platform designed specifically for the region, offering customers a simple, secure, and quick online shopping experience and solid payment and logistical assistance.
Through constant product optimization and localized user-centred tactics, Shopee seeks to improve its platform and become the region’s e-commerce destination of choice.
Shopee began operations in Singapore in 2015 and has since expanded to include Malaysia, Thailand, Taiwan, Indonesia, Vietnam, and the Philippines. Throughout Greater Southeast Asia, Sea is a digital entertainment, e-commerce, and digital financial services leader. The company is quoted on the New York Stock Exchange under the code SE, and its goal is to employ technology to improve the lives of consumers and small companies.
The Shopee team is rapidly expanding across the region, and we’re always on the hunt for people who want to be a part of a fast-paced, dynamic environment. Please take a look at our career page.
Why do they do it?
The Shopee team believes in the transformative potential of technology and strives to better the world by uniting buyers and sellers in a single community. As shopping on mobile devices becomes the new norm, Shopee plans to continuously improve its platform to deliver a seamless and pleasurable purchasing experience for all customers and be the region’s e-commerce platform of choice.
How do they go about it?
Shopee upholds its core values of serving, adapting, running, committing, and remaining modest. We’re a fun group of people who believe in working hard and playing hard. We’re in a never-ending quest for success while dealing with constantly shifting forces.
Why do they do it?
The Shopee team believes in the transformative potential of technology and strives to better the world by uniting buyers and sellers in a single community. As shopping on mobile devices becomes the new norm, Shopee plans to continuously improve its platform to deliver a seamless and pleasurable purchasing experience for all customers and be the region’s e-commerce platform of choice. Shopee upholds its core values of serving, adapting, running, committing, and remaining modest. We’re a fun group of people who believe in working hard and playing hard. We’re in a never-ending quest for success while dealing with constantly shifting forces.
Shopee’s activities in India will be shut down tomorrow. Take a look at its message to shoppers.
Sea Ltd, an e-commerce and gaming company, announced on Monday that it is exiting India’s retail market only months after launching operations there. The second reversal in a foreign expansion drives this month as the loss-making company faces a bleak growth prognosis.
The move, which takes effect on Tuesday, comes weeks after its e-commerce arm Shopee announced its exit from France and India banned Sea’s popular game Free Fire.”
Following the embargo, the value of Sea, a Singapore-based company, dropped by $16 billion in a single day, prompting some investors to liquidate their shares.
Shopee said that it was withdrawing due to global market uncertainty and that the process would be as painless as possible.
Here’s what it has to say to shoppers:
Dear Shopee Users,
“We regret to inform you that the Shopee India platform will cease operations from March 29, 12.00 am (IST). Rest assured that all orders placed before this date will continue to be fulfilled. After-sale services and support will continue to be available to all users who have made purchases on our platform. If you have any questions, please contact me at [email protected].
We thank you for all of your support. It has been a pleasure serving you.
Sincerely, Shopee India Team
Sea announced earlier this month that revenue growth in its e-commerce division would slow to roughly 76 per cent this year from a blazing 157 per cent in 2021, owing to fewer online transactions and engagements as more countries recover from the pandemic.
“All of these e-commerce companies are under significant pressure to at least break even as soon as possible due to a drastic shift in market attitude towards growth stocks,” said LightStream Research equities analyst Oshadhi Kumarasiri, who publishes on the Smartkarma platform.
Sea’s stock had already plummeted 11% in January when Chinese tech giant Tencent stated it would sell 14.5 million shares in the company.
Shopee’s India operations
Shopee’s India operations began in October 2021 as part of an aggressive international expansion strategy that included the company’s expansion into Europe. Sea had a market capitalization of up to $200 billion. In March 2022, it had reduced to $64.76 billion.
Shopee India, the local unit, hired local vendors and created a shopping website and app. Amazon.com Inc and Walmart Flipkart were already dominant in India’s fast-growing e-commerce business.
Sea had stated in March that it did not send or store data from Indian consumers in China.
Shopee had planned to invest up to $1 billion in India, according to the source, and the decision would damage Indian logistics companies with whom it had inked lucrative contracts.
According to Reuters, Singapore authorities expressed concern to India over the restriction in February, citing sources, and asked why Sea had been singled out.
In India, e-commerce firms face a stringent regulatory environment. For years, New Delhi has implemented limitations to safeguard tiny brick-and-mortar businesses.
Indian merchants have accused foreign corporations of circumventing restrictions and offering huge discounts that affect the local company, claims that the companies rejected. In recent months, such traders in India have called for a boycott of Shopee.
In premarket trade in the United States, shares were down 5.84 per cent at $116.12.
Meesho mocks Shopee’s exit from India by announcing that they are hiring.
While Shopee India has declared that it would cease operations in India on March 29 at midnight, Meesho has positions available across all teams with flexible location possibilities.
Meesho has launched a permanent Boundaryless Workplace Model, which allows employees to work from home, the office, or any other location.
Meesho, a social commerce platform, took a swipe at Shopee on Monday after the e-commerce arm of Singapore-based internet giant Sea announced that it is shuttering its India operations “in light of global market concerns.” Last October, the technology company began operations in India as part of an international expansion plan that included plans to expand into Europe.
“Shopee-ing is the simplest, easiest, and fastest with Meesho,” Meesho wrote on Twitter. It also put up a job posting.
Meesho has 136 open positions across all teams, including product, engineering, design and UR, and data science, according to its website.
The platform also unveiled a permanent Boundaryless Workplace Model, allowing employees to work from home, the office, or any other location.
The Indian government, on the other hand, restricted Sea’s popular gaming programme “Free Fire,” putting Shopee’s future in jeopardy. Last October, the IT company began operations in India as part of a global expansion plan that included moving into Europe.
“Shopee-ing with Meesho is the simplest, easiest, and fastest,” Meesho wrote on Twitter. It also advertised job openings.
Meesho has 136 positions open across all departments, including product, engineering, design and UR, and data science, according to the company’s website. According to the platform’s permanent Boundaryless Workplace Model, employees can choose to work from the home, workplace, or any other location. When the Centre banned Sea’s popular gaming software “Free Fire” in India, things took a turn for the worst for Shopee.
In a nutshell, Why did Shopee go out of business in India?
The government has banned Sea’s gaming app “Free Fire” amid geopolitical concerns with China, prompting Shopee’s decision to exit the Indian market.
Tencent, a Chinese investor, is a significant shareholder in the NYSE-listed SEA. For its e-commerce activities in India, it had engaged roughly 300 individuals.
“We have chosen to close our early-stage Shopee India initiative due to global market uncertainty,” a SEA spokeswoman stated.
The company’s official statement cites GLOBAL MARKET UNCERTAINTY as the cause for the shutdown. Something else, according to the market grapevine. According to sources acquainted with the matter, the government’s scrutiny of Sea’s Free Fire app has added to the uncertainty surrounding Shopee’s future in India.
“The parent firm was highly concerned about India’s Free Fire Ban. The ban was taken into account when the decision to shut down Shopee was made, according to a reliable source.
Government Crackdown on China-linked Companies
On February 14, India banned Garena Free Fire, a famous battle royale game. The prohibition was enacted by the Ministry of Home Affairs, along with 53 other apps.
The Google Play Store and the Apple Software Store have already removed the app.
Garena’s most recent announcement was on February 15. Since that time, the corporation has not issued an update on the situation in India.
“We are aware that Free Fire is presently unavailable in India’s Google Play and iOS app stores, and that the game is currently unavailable to some customers in the nation,” says the company.
In a statement, Garena said. “We are working to resolve this situation, and we apologize for any trouble this has caused our users,” it continued.
The game is presently unavailable for official play in India.
Free Fire Ban India: ‘Very concerned about the Garena Free Fire Ban in India,’ the same parent business-owned E-Commerce company Shopee SHUTS DOWN operations in India.