Sea Limited, arm Shopee, a Singapore-based e-commerce and gaming firm, announced its withdrawal from India’s retail market on Monday (March 28), citing “global market uncertainties.”
The business withdrawal comes just weeks after Sea’s e-commerce arm, Shopee, announced its exit from France and India banned Sea’s popular gaming app “Free Fire.”
Following the ban, the market value of the New York-listed Sea fell by US$16 billion (S$21.77 billion) in a single day, prompting some investors to sell their holdings.
Shopee stated in a statement that it would work “to support local seller and buyer communities, as well as our local team, to make the process as smooth as possible.”
Sea earlier this month said revenue growth in its e-commerce business would be cut in half to around 76% this year, from 157 per cent in 2021, due to fewer online purchases and engagements as more countries recover from the pandemic.
“Due to a drastic shift in the market sentiment towards growth stocks, all these e-commerce companies are under real pressure to at least break even as soon as possible,” said LightStream Research equity analyst Oshadhi Kumarasiri.
The stock had already dropped 11% in January after Chinese tech giant Tencent (0700. HK) announced it would sell 14.5 million shares in the company.
The statement only applied to retail activities in India, not gaming.
The company is worth around US$65 billion, with the potential to grow to US$200 billion by late 2021 as a result of a Covid-fueled shopping and entertainment boom.
Shopee Operations in India-
The technology company began operations in India in October 2021 as part of an international push that also included expansion into Europe.
Shopee India, the local unit, recruited sellers and launched a shopping website. However, Amazon.com and Walmart’s Flipkart already dominated India’s rapidly expanding e-commerce market.
According to a source, with direct knowledge of the company’s thinking, Shopee’s decision to exit India was prompted in part by stricter regulatory scrutiny, which resulted in the ban of Sea’s gaming app Free Fire as part of a crackdown on companies allegedly sending data to servers in China.
Sea previously stated in March that it does not transfer or store data from Indian users in China.
According to the source, Shopee had planned to invest up to $1 billion in India, and the withdrawal would harm Indian logistics firms with whom it had signed lucrative contracts.
When asked to comment on the figure, the company said it was “not accurate” and that “the decision regarding Shopee India has nothing to do with regulatory matters.”
In India, e-commerce players face a stringent regulatory environment. For years, New Delhi has imposed restrictions to protect smaller brick-and-mortar retailers.
Offline retailers have frequently claimed that foreign companies skirt regulations and offer deep discounts that harm their business, assertions that the companies deny.
In recent months, such traders in India have called for a boycott of Shopee. Shopee’s India website was still operational as of Monday, and it advertised “bumper discounts and attractive deals” to customers. However, LinkedIn revealed a number of India job openings at Shopee.
According to some sources familiar with the situation, Sea is still lobbying Indian authorities to lift the ban on “Free Fire.”
Shopee is a technology company that primarily focuses on e-commerce. Shopee was founded in Singapore in 2015 and has since grown to become Southeast Asia’s largest e-commerce platform, with 343 million monthly visitors. The company also serves consumers and sellers in several countries throughout the Americas and Europe who want to buy and sell goods online.
Shopee launched in Singapore in February 2015 as a social-first, mobile-centric marketplace where users can browse, shop, and sell. The asset-light platform, which includes logistical and payment support, claims to make online shopping simple and secure for both sellers and buyers.