Shawn Lim
Feb 16, 2023

Brand Health Check: Has Shopee missed the boat on a post-pandemic strategy?

Globally ecommerce giants predicted the pandemic would change shopping behaviour permanently. They were wrong. Here’s dissecting the tough road ahead for Shopee.

Brand Health Check: Has Shopee missed the boat on a post-pandemic strategy?

As the world emerges from the shadows of Covid, ecommerce giant Shopee is facing some major challenges.  

Despite increasing its gross profit margin in the first half of 2022 to US$1.2 billion, the company has yet to turn a profit. This is due to a number of factors, including rising inflation and interest rates, as well as setbacks on its internationalisation plans.

In an effort to address these issues, Shopee has laid off around 7,000 staff across multiple markets and made cutbacks to its ShopeePay and ShopeeFood services in 2022. In September 2022, CEO Forrest Li sent a memo to employees outlining cost-cutting measures, including restrictions on business expenses and temporary pay cuts for executives. Another round of job cuts was also announced, affecting employees in Singapore, Indonesia, and China. 

However, these measures may not be enough to save the company. Shopee has also pulled out of several international markets, including Mexico, Chile, Colombia, Poland, Spain, France, and India, after failing to gain traction in those markets.  

This raises questions about the company's ability to take on rival ecommerce platform Lazada in the Southeast Asian market. 

In addition, Shopee's exit from multiple markets raises scepticism on its commerce strategy and approach to newer channels like retail media. It is unclear how it plans to revamp on those grounds to regain footing in the ecommerce market. 

In the face of an uncertain economy, shifting consumer behaviours compounded with Shopee's own business challenges, Campaign Asia-Pacific asked experts what the company can do to not just survive but thrive long-term. 

Pamela Tor Das
Managing director, Team Lewis Singapore

The pandemic has accelerated specific changes in consumer behaviour, in particular the use of digital platforms, the exponential usage of online shopping, and ecommerce platforms, as well as from a new breed of creators who conduct “live” sales. While we transition into this new post-pandemic era where restrictions are easing, we must keep in mind that consumers will not return to their pre-pandemic behaviour. Consumers have changed and will continue to evolve. 

Identifying the new market segments would be necessary–who makes up the group still attracted by the convenience of 24/7 shopping with online platforms? Or, in contrast, another segment now prefers integrated shopping experiences that blend online and offline services? Diving deeper and understanding their motivations, interactions, and interests can go a long way in helping Shopee evolve its business model continuously.

One of the areas that Shopee has done well is ensuring customers were entertained, which shone through in particular during the pandemic. Whether through partnerships with artists or influencers to present “live” sales or produce entertaining content–Shopee has been effective in engaging their shoppers and driving sales.   

Understanding the psyche and motivators of their existing audience and adjacent audience segments to expand would enable them to decide how best to gain more market share. For example, I’m certain Shopee is already analysing who their biggest shoppers are and how that differs from those spending on competitor platforms. 

Shoppers aside, it is also essential to analyse the needs of sellers and how better to support them in their sales. Just as live sales streaming was a game changer for sellers on the platform, as a tech-driven brand, what would be the next innovation to consider? For example, are sellers seeking more omnichannel approaches and is this something it would want to move towards to support them? How can it utilise the app to integrate offline with online experiences? 

With many e-commerce platforms venturing into the retail media space, it would not be surprising for Shopee to emphasise this as an alternative revenue stream. What would be critical in ensuring that balance is struck with user experience and what shoppers want. As marketers, we must ensure we remain relevant to shoppers, and that changes made continue to enhance the overall experience with the platform. 

David Mayo
Chief executive officer, ADNA Group

Shopee was already more than an ecommerce platform as Covid hit. Keeping options open, they could easily have looked to a more aggressive diversified offering and spent time during Covid preparing for and developing a new plan to be more than an ecommerce platform and more of a brand or a place or something broader and more accessible.

They only seemed to be something more than a large ecommerce platform, and they didn't harness their momentum to release their latent potential as something much bigger.  

This lack of vision and focus on their core in a competitive environment makes them vulnerable. If people purely want cheap things, it's a race to the bottom, and without the volume, Shopee finds itself where it is today. It could have had a plan to 'take on' Lazada, and it could have had a plan to complement Lazada. How things went for them in 2022 might only mean that they became part of Lazada. 

Ecommerce needs one fundamental aspect of client engagement: 'client engagement'. If you look at TikTok and the way people interact with the content in video and the engagement that it generates, it has always amazed me that I can't see a video or that I can't click what I see and buy (without having to go to a third party) in the broader environment? Why can't Shopee be like Hoverit? Why not buy Hoverit and become the fulfilment engine for anything you see? Shopee got to a fertile and profitable place and stayed there. Like a frog in a saucepan, it left a bit too late for anything but a giant game of catch-up. 

Shufen Goh
Principal, R3

The ecommerce landscape in Southeast Asia is a fragmented one, with no single platform dominating the region. Still, some platforms have made significant headway in their share of spending and time spent on platforms in some markets. Consumers are spoilt for choice and are not loyal or purchase exclusively from any platform. 

There is still growth potential for these platforms in markets that are still growing in terms of internet penetration and digital/mobile adoption. Identifying and wooing these new users would be an opportunity to build a relationship early on with them. 

Macroeconomic headwinds are cyclical, and there is enough past evidence of continued investments in the right places paying off handsomely. Platforms like Grab and Shopee have scaled at all costs with speed to acquire customers, but they haven’t yet meaningfully created a deeper relationship with customers superior to alternatives. The acquisition has been extraordinarily tactical and short-term. 

With the potential reduction of marketing budgets, it is even more essential to ensure that eommerce platforms build and retain consumer trust. Given the relatively high marketing cost of net new customer acquisitions, these platforms need to consider how to retain existing customers and work on long-term brand building and growth in creative ways. It is a dynamic balancing act to ensure that the pressure to deliver earnings every quarter does not eclipse long-term brand strategy, so having a robust framework to measure both short and long-term results become even more important. 

The slowdown will provide a much-needed handbrake on what not to do, forcing brands to be more strategic about what to invest in to create a superior and sticky customer experience. 

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Brand Health Check: We assess and (if necessary) solicit suggested remedies


Campaign Asia

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