Exclusive: Shopee shutters India business

Update (March 28, 6:.03 p.m. SGT): Adds details on CAIT’s response to Shopee’s exit from India. 

Shopee, the ecommerce arm of Southeast Asian internet giant Sea Group, is shutting down its operations in India, three people familiar with the matter told Tech in Asia.

The company confirmed to Tech in Asia that it has discontinued its early-stage Shopee India initiative. “During this period of transition, we will focus on supporting our local seller and buyer communities and our local team to make the process as smooth as possible,” it said in a statement.

The ecommerce firm announced its exit from India to its local team at a company-wide town hall on Monday.

SPAIN – 2021/07/08: In this photo illustration, a Shopee logo seen displayed on a smartphone. (Photo Illustration by Thiago Prudencio/SOPA Images/LightRocket via Getty Images)

Shopee’s exit from India comes as the platform is looking to reduce its burn rate and shut newer markets that are not “slam dunk” wins, one of the sources added.

Another source revealed that the company’s user base in India had been growing fast before its decision to discontinue operations. Shopee’s active users in the country hit nearly 12 million in March, up from about 1 million in October 2021.

Indian firms, particularly tech giants, are seeing a decline in their share prices, partly owing to a volatile market due to the current geopolitical situation. Shares of other Indian tech companies such as food delivery firm Zomato, beauty ecommerce platform Nykaa, and fintech companies Paytm and Policybazaar are all down 35% to 50% from their first-day close.

See also: Can Shopee win in India?

Meanwhile, the Confederation of All India Traders (CAIT) has welcomed the decision of the Shopee to exit from India and said that any company that breaches data collected from India will “meet the same fate.”

CAIT secretary general Praveen Khandelwal said that Sea uses Tencent cloud to store data, and its gaming unit Garena licenses most games from Tencent, which leads to huge royalties. He added that the investment makes sure that there is significant control and access to data.

However, Tech in Asia could not verify these claims.

Earlier this month, Shopee shut down its operations in France after setting foot in the country in October 2021 as part of its European push. The company told Tech in Asia that it was a short-term, preliminary pilot, and that it decided not to continue the service.

Shopee was expected to reach positive adjusted EBITDA (before the allocation of headquarters costs) in Southeast Asia and Taiwan by this year. However, the company incurred rising costs from its expansion into new markets like Latin America and Europe.