Sea ramps up Shopee investments amid Garena slump

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While profitable, Sea Group missed analysts’ revenue expectations for the second quarter of its 2023 financial year, leading shares to fall 28.68% yesterday. Shopee, however, continues to be a bright spot – on top of staying profitable, it generated about 68% of Sea’s total revenue for the period.

“We have become the first and only ecommerce marketplace in Southeast Asia with a proven profitability record at scale,” said Forrest Li, Sea’s group CEO, at the earnings call.

With Garena still struggling to reverse its slump, it’s clear where the company’s priority lies: Li said Sea has “started, and will continue, to ramp up our investments in growing the ecommerce business across our markets.”

One area of focus for Shopee is livestreaming – perhaps a way to hold off TikTok Shop’s rapid growth in the region. Li said that during the 7.7 livestreaming campaign in Indonesia, Shopee recorded a 12x growth in transaction volumes compared to a regular day.

The 8.8 shopping campaign, meanwhile, saw 25% of the ecommerce platform’s Indonesia users watching Shopee Live streams, making close to 5 million orders in that one day.

Another part of the firm’s livestreaming efforts is the Shopee affiliate program. Li said that in Q2 2023, over 1 million influencers registered with the program.

Indeed, Yanjun Wang, group chief corporate officer at Sea, said that the firm is in a “much stronger position and a much stronger footing now to refocus on growth.” But that’s also a result of the past few quarters’ focus on cost efficiency and management, plus the “continuing efforts to focus on cost leadership for our ecosystem as a whole.”

“We will remain highly focused on lowering the cost-to-serve for the entire ecosystem while continuing to improve user experience over the long run,” said Li.

The CEO added that in Q2 2023, Shopee improved efficiency of its logistics operations while expanding its network and capabilities across markets. These include self-collection lockers in Singapore and Taiwan, which have reduced manpower costs.

“Highly cost-effective and seamless logistics operation can serve as a key competitive advantage for us,” said Li.

Still, even logistics isn’t immune from Shopee’s growth mode. Wang said that the firm is ramping up investments in free shipping again to capture more growth opportunities.

Among Ninja Van’s ecommerce seller ecosystem, Shopee emerged as the most popular choice for live selling in Southeast Asia. However, TikTok is not far behind in terms of market share.

Meanwhile, Sea still sees Brazil as an “important growth market” for the company in the long run, with plans to continue investing in the country.