{"id":7628,"date":"2022-05-10T11:05:22","date_gmt":"2022-05-10T03:05:22","guid":{"rendered":"https:\/\/www.retailtechnpn.com\/sg\/?p=7628"},"modified":"2022-06-29T14:18:58","modified_gmt":"2022-06-29T06:18:58","slug":"why-did-sea-limited-stock-drop-is-shopee-ecommerce-not-working","status":"publish","type":"post","link":"https:\/\/www.retailtechnpn.com\/sg\/why-did-sea-limited-stock-drop-is-shopee-ecommerce-not-working\/","title":{"rendered":"Why Did Sea Limited Stock Drop – Is Shopee Ecommerce Not Working?"},"content":{"rendered":"

Sea limited lost half of its value in 3 months<\/span><\/h1>\n

Valued at over US$100 billion, Sea Ltd \u2014 the parent company of Shopee and Garena \u2014 is Singapore\u2019s largest company by market capitalisation.<\/span><\/p>\n

However, just three months ago in mid-October, it was valued at around US$200 billion \u2014 more than all Singaporean banks (DBS, OCBC and UOB) combined.<\/span><\/p>\n

Sea\u2019s leading growth driver, Shopee, has been doing exceedingly well in 2021, beating expectations and even<\/span> eclipsing<\/a>\u00a0Alibaba\u2019s entire international (ex-China) ecommerce business, consisting of brands like AliExpress, Lazada and Trendyol (combined).<\/span><\/span><\/p>\n

So, what\u2019s going on with Sea? Is the company losing steam as the world is trying to live with Covid-19? Has it lost confidence of investors, taking their money to greener pastures? Does that spell trouble for Shopee?<\/span><\/em><\/strong><\/p><\/blockquote>\n

Not at all.<\/span><\/p>\n

Its situation, however, provides an excellent lesson on why companies should not be judged by their stock market capitalisation.<\/span><\/p>\n

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Shopee is the <\/span>best ecommerce platform in Southeast Asia<\/span><\/span><\/h2>\n

Online platforms have come a long way, with over 30 years of history till date since the 1990s. Unlike the last century, online platforms especially those of ecommerce have become the norm around the world today as they integrate into daily lives.<\/span><\/p>\n

Ecommerce platforms have provided the world with plenty of advantages and ecommerce strategy in play. As a consumer, we not only get to enjoy the convenience of purchasing goods online by tinkering a few buttons on the keyboard, we also get to enjoy various things such as speedy deliveries and the massive varieties of goods at relatively cheap or reasonable pricing. Not to mention, the Gross Merchandise Value (GMV) amassed from these platforms has now far surpassed that of offline large department stores and supermarkets.<\/span><\/p>\n

Nevertheless, many investors around the world are remaining cautious and taking the backseat when it comes to the development of ecommerce platforms recently. These sentiments are largely attributable to the nearly 66% drastic drop of share prices from its highest level of more than USD 372.70 in Southeast Asia\u2019s largest ecommerce platform, Shopee, a multi-national technology company which focuses mainly on e-commerce. \u00a0<\/span><\/p>\n

Case Study 1: Shopee<\/strong><\/span><\/h3>\n

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In fact, the slump is so bad that it has completely erased the gains recorded over the entire 2021, putting the company 20 per cent below the level it started the year at in mid-January of 2021.<\/span><\/p>\n

Case Study 2:<\/strong> Lazada<\/strong><\/span><\/h3>\n

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Share prices in Alibaba, the parent company of Lazada, have also seen a more than 50% drop in the past year.<\/span><\/p>\n

As mentioned in one of our previous articles on consumer development<\/a>, I too wonder about the future of ecommerce platforms. Will ecommerce platforms die out like large department stores?
\n<\/span><\/span><\/p>\n

Are ecommerce worth it even after covid?<\/span><\/strong><\/h2>\n

1. Ecommerce platforms adopting the use of demographic dividend to help increase Gross merchandise value (GMV) and therefore accelerate the development of the platform.<\/span><\/p>\n

2. When demographic dividend disappears and competitors increase, ecommerce platforms ended trapped in the vicious cycle where they need to inject additional funds in order to maintain competitiveness.<\/span><\/p>\n

3. The convenience of search and comparing prices resulted in low customer retention rate when customers go for the cheaper deal at other platforms. As such, the ecommerce platform will only be able to gain profits from the sellers instead of consumers (customers). Based on available data analysis, it is also concluded that only the top 5% of these ecommerce merchants are profitable.<\/span><\/p>\n


\nIn order to maintain competitiveness, e-commerce companies (\u201cPlatforms\u201d) cannot obtain profits from these leading merchants, but rather, only from the remaining 95% of merchants that are not very profitable. In my opinion, a business model as such will lead to two scenarios:<\/span><\/p>\n

1. The top 5% leading merchants will continue to see an increase in domain traffic figures due to the presence of loyal customers. This inevitably forms a closed loop. Further, with the existence of platform fees and inability to fully obtain user data, these e-commerce merchants may be \u201ccornered\u201d into such position that they may be less willing to promote their goods unless they can obtain platform traffic or subsidies from other resources.
\n<\/span><\/p>\n

2. 95% of merchants encountered low traffic and maintained growth by purchasing long-term e-commerce traffic. A large part of their profits is usually given to the platform. This naturally damages the positive development of merchants and results in them having to look for new lower-cost channels to promote their goods.<\/span><\/p>\n

What is the best ecommerce solution?<\/span><\/strong><\/h2>\n

Based on these observations, my team and I are pleased to propose the following e-commerce management so<\/a><\/span>lutions:<\/span><\/span><\/p>\n

1. Ecommerce merchants can merge and form an alliance with a tacit understanding of the market or a monopoly of a certain scale.
\n<\/span><\/p>\n