The withdrawal comes only weeks after Shopee announced its exit from France and after India banned Sea’s famous gaming software ‘Free Fire.’
Shopee, the e-commerce arm of Southeast Asia’s Sea Ltd, announced on Monday that it is ceasing operations in India due to “international market uncertainty.” The Singapore-based technology company started in India in October 2021 as part of a worldwide expansion plan that had included Europe. Shopee was released in India less than six months ago.
As per sources, the social commerce network will stop its operations from midnight, according to IST, on Tuesday. As a result, all orders placed on the platform until that moment will get completed. After a brief excursion into Europe, Shopee withdrew from France earlier this year.
Shopee’s departure shortly occurred after the Indian government banned its parent company, Sea’s gaming app Free Fire as part of a broader crackdown on Chinese applications. Although Sea has located in Singapore, the company got scrutinized for its Chinese ties, including a Tencent investment.
According to at least two sources, the government’s inspection of Sea’s Free Fire app added to the uncertainty of Shopee’s future in India. That was taken into account when the decision to shut down got announced.
Sea’s stock price on the New York Stock Exchange (NYSE) was down approximately 6% on Monday, closing at $116.12 per share after falling below $100 earlier this month. Following India’s ban on its gambling app, the company’s market value dropped by more than $16 billion.
On Monday, Shopee informed merchants selling on the Shopee platform of its plan to close up shop. Shopee is an inexpensive e-commerce site that started in India in November 2021. The decision is surprising, given Shopee’s ambitious intentions for the Indian market. That also includes giving steep discounts to compete with established giants.
Shopee had arisen as arch-rival for Meesho, which had switched from social commerce to a traditional e-commerce strategy last year, resulting in its cash burn issues. It also competed with Flipkart’s Shopsy and Snapdeal.
Behind the Scenes
However, during its short stay in India, it was dogged by controversy. Some customers accused it of sending fake goods, and local traders accused it of leaking Indian consumer data to China. Shopee suffered from unit economics due to low average order values in India.
Trader groups such as the Confederation of All India Traders (CAIT) have appealed to the government. The CAIT alleged Shopee of holding Chinese investments and failing to follow Indian regulations. CAIT has also filed a complaint with the Competition Commission of India, alleging exploitative pricing on its website.
The case, however, was recently dismissed. In March, Sea said that it did not send or keep data of Indian consumers in China. When asked to comment on the statistic, the business said it was “not factual” and that “the decision involving Shopee India has nothing to do with regulatory problems.”Shopee’s departure was “welcomed” by CAIT Secretary General Praveen Khandelwal.
What comes next for merchants and employees?
According to those acquainted with the situation, Shopee has expected to offer internal opportunities inside Sea to its Indian employees. “They would get offered a three-month severance package if that doesn’t work out,” one person added.
“Employee accessibility has been disabled since Monday morning, and operations will get suspended from starting tonight,” the source told. However, Shopee has advised its Indian merchants that services such as payments, refunds, returns, and disputes would be available till May 30. Previous orders will get transported and handled under the process, as per the notice to vendors.
Shopee had over 300 employees in India as of December 2021, with over 20,000 sellers. These figures have not changed significantly since then, even though the firm has added additional employees and vendors.
“From this date–March 29, 12:00 am–buyers will not be allowed to submit any additional orders,” it stated. In India, the regulatory framework for e-commerce firms is quite tight. For years, New Delhi has placed limitations on safeguarding small-scale shops.
Edited by Subbuthai Padma
Published by Iram Rizvi