SINGAPORE (Nov 18): This year, a newcomer joins the ranks to capture a slice of the online shopping pie: Shopee, powered by Southeast Asia’s most valuable start-up, Garena.
There are about 1.5 million registered sellers on Shopee, while 70% of the user base comprises repeat customers. Garena recently raised US$170 million in Series D funding to help Shopee grow in Southeast Asia. During its inaugural 9.9 Mobile Shopping Day sale this year, orders increased fivefold.
But the rise of flash sales and online shopping also signals an underlying problem in Southeast Asia: Many e-commerce platforms have not started to think about profits. Meanwhile, retailers and logistics partners are starting to feel the pinch from lower margins as competition among marketplaces grows.
In 2014, Garena started an e-payment services firm, AirPay, as an attempt to transform itself from a gaming arena to an internet consumer giant.
But as what is similarly happening in the e-commerce sector, e-payment start-ups are facing pressures. Competition is brutal as it does not take much to start an e-payment company.
Although both Shopee and AirPay have seen some early success, the cards are still up in the air on whether Garena will be able to replicate the same long-term success it has had with games amid the stiff competition and razor-thin margins in the e-commerce and e-payment spaces.
Is Singapore’s most valuable start-up likely to come out ahead in these industries? Find out in our cover story “Growing beyond games”, in this week’s issue of The Edge Singapore (Issue 755, Week of Nov 21), available at newsstands now.