Shopee's turnaround and what it needs to do to stay ahead

Key lies in navigating current challenges, capitalising on future opportunities: Experts

- Colin Tan

Online shopping platform Shopee has, in the course of a year, managed to turn around its loss-making operations to post a sterling set of earnings.

While most analysts at its Singapore-based parent Sea's results briefing on Nov 12 were impressed with Shopee's third-quarter performance, their questions focused on how much longer Shopee's superb performance can be sustained.

These concerns swirl around several key areas: How far can Shopee continue to extract value from its merchants before they start to push back; the strategy to stay ahead of the competition; and how much further it can penetrate each market before saturation takes hold.

For instance, while Shopee enjoys more than 46 per cent regional market share in South-east Asia, there is a limit to how much this can grow, particularly if markets start to mature.

STIFF COMPETITION Maybank analyst Hussaini Saifee said Shopee's Asean rivals include TikTok Shop and Lazada, with the former being more aggressive in taking market share from smaller operators.

TikTok Shop - launched in 2022 - marries e-commerce with social media engagement, allowing users to shop while enjoying content on TikTok, which is a social media platform owned by China's ByteDance.

Meanwhile, Lazada is a South-east Asian e-commerce platform that allows both businesses and individual sellers to list and sell an extensive range of products and services. It was launched in 2012, and sold a controlling stake to China's Alibaba Group in 2016.

So far, Shopee has been able to fend off its rivals while maintaining its territory, whereas Lazada has "lost a bit of steam", Mr Saifee said, attributing Lazada's loss in market share to its focus on generating both revenue and profits.

Separately, Temu has made waves in the US and across many European markets, although its foray into Asean markets - such as Malaysia, the Philippines, Thailand and Vietnam - has been less impactful.