In 2021, TikTok launched its online shopping service TikTok Shop, starting in Indonesia. TikTok Shop has since expanded to other markets in the region, where Sea’s Shopee, Alibaba’s Lazada, and Tokopedia dominate.
In the business results report meeting on August 15, Chairman and CEO of Sea Forrest Li said that the e-commerce landscape is experiencing a period of diverse user interaction growth through livestream, short videos , and affiliate marketing with influencers.
According to Mr. Li, it brings new opportunities for development and growth. Considering this positive trend and progress, Sea has and will increase investment in its e-commerce business in all markets, but he did not disclose specific numbers.
Shopee beat TikTok to the punch with its livestreaming feature in 2019. The company recently revamped the feature to focus on categories like fashion , health and beauty, which are also TikTok’s strengths. Li said that its livestreaming campaign in Indonesia last month saw transaction volume increase 12 times compared to the daily average, while the number of shoppers increased 10 times.
The company has an advantage in converting orders thanks to the integration of logistics and payment services, said Yanjun Wang, director of the company.
However, Mr. Li warned that the investment would affect business results and could lead to losses for Shopee as well as the entire group over a certain period of time.
The competition heats up at a difficult time for Sea, as investors demand a clear path to profitability after years of heavy losses. Even as Shopee, which is estimated to account for nearly half of Southeast Asia’s e-commerce market, has seen growth slow in the wake of the Covid-19 outbreak.
Sea’s net income was $330 million in the second quarter of this year, rebounding from a loss of $931 million a year earlier. It was the third consecutive quarter of profit for the company. However, revenue rose just 5.2% to $3 billion, significantly slower than the more than 100% increase during the Covid-19 period. Marketing and sales expenses across all divisions were cut to $493 million, down 49.3% from the same period in 2022.
Shopee’s adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $150 million, up from a loss of $648 million in the same period last year. Revenue rose 32.3% to $2.32 billion, the slowest on record.
(According to Nikkei)
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