The e-commerce company Shopee’s plans for global expansion have suffered another setback when its parent firm Sea Ltd announced on 28 March 2022 that it will pull out of the Indian market following a ban on Shopee’s gaming app Free Fire and very few prospects for growth. The company’s announcement comes just weeks after the company withdrew from the French market, marking the end of a disastrous quarter for the prominent online shopping platform.
Reuters reported that Shopee is ending its operations in India as of this writing (29 March 2022). The report also said that, as a result of the announcement, Sea’s market value fell by $16 billion in a single day as investors withdrew their funds from the New York Stock Exchange-listed company. Sea earlier reported that they expected Shopee’s earnings to fall by as much as half to 76% this year from a high of 151% in 2021. While the company cited “global economic uncertainty” as a reason for leaving India, the post-pandemic situation is clearly dealing a blow to Shopee’s fortunes as countries reopen and people return to in-person shopping. This means that there will be far fewer online purchases than before.
While Sea’s shares dropped by 3.2% in New York, this has not been its biggest trading loss this year. In early January 2022, Chinese tech company Tencent announced that it was selling its stake in Sea, resulting in an 11.4% drop in the latter’s depositary receipts (ADRs). The stake was worth US$3 billion. The sale proved to be the start of an increasingly uncertain year for the company.
This uncertainty is in contrast to the sunny picture that Sea’s Chairman and Chief Group Executive Officer Forrest Li painted in March 2022 when the company disclosed full-year and fourth-quarter earnings for the previous year. Li, the company's founder, cited growth in Shopee’s Brazilian venture as one reason for optimism and claimed that by 2025, the company’s businesses would be able to sustain their long-term growth without the need for outside funding. If there was any market scepticism about this announcement, it may have been justified, as this statement came just a few days after Shopee’s French exit.
However, the global e-commerce market shows no sign of slowing down, if a report by enterprise e-commerce platform Shopify is to be believed. They are forecasting that the overall global market would be worth US$5.55 trillion at the end of 2022, with a growth rate of around 21% from the previous year. Among the reasons they cited for this optimistic picture included an end to major supply chain issues, the growth of buy now, pay later (BNPL) as an option for online purchases, the use of augmented and virtual reality technology by online retail outlets and further industry growth in China and the rest of the Asia-Pacific region. This is where platforms like Shopee and Alibaba-owned Lazada have been flexing their muscles over the past few years.
Sea Ltd, which is based in Singapore, was originally founded in 2009 as the game development company Garena. The company was responsible for developing the Free Fire game that was recently banned in India. Garena still remains the digital entertainment arm of the conglomerate, which also owns SeaMoney, Shopee and the Singapore Premiere League team Lion City Sailors FC. Shopee is probably the company's most prominent business, and it was founded in 2015.
Singapore-based e-commerce platform Shopee announced on 28 March 2022 that it was pulling out of the Indian market the day after, citing global economic uncertainty as a reason for the move.
This move comes as Sea Ltd announced a few weeks earlier that Shopee’s foray into the French market would end, marking the end of a dismal quarter for the tech conglomerate.
While industry sources predict a rosy future for the e-commerce sector, a gradual return to pre-pandemic shopping patterns as countries open up is putting the sector in jeopardy.