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DealStreetAsia

Sea's e-commerce arm Shopee to cut staff across Southeast Asia

Startup faces headwinds as rising inflation weakens consumption

Sources say that Shopee has stopped hiring as the company continues to lose money.   © Reuters

SINGAPORE -- Sea Group's e-commerce arm Shopee is laying off staff across multiple markets as it seeks to rationalize its e-commerce business, DealStreetAsia has learned.

The layoffs have affected employees across several of the company's Southeast Asian markets including Indonesia, Thailand and Vietnam, sources told DealStreetAsia. The company is said to have emailed employees affected by the layoffs, the sources added.

Shopee's payments arm ShopeePay and food delivery business ShopeeFood are also said to be facing cuts. A general meeting was also reportedly held on Monday to address the job cuts with Shopee employees.

The extent of the job cuts and the number of employees affected could not be confirmed at the time of publishing. DealStreetAsia has reached out to Shopee for comment.

Two sources aware of the matter said nearly half of Shopee Thailand's payment and food delivery teams have been affected by the downsizing. One of the sources noted that the email was said to have been managed in an off-handed manner, with the company asking staff members to return home and await further notice of termination.

A separate source told DealStreetAsia that Shopee has stopped hiring, with several job offers for regional roles rescinded.

While Sea Group's business continues to show signs of improvement in overall profitability, most of its revenue continues to come from its gaming arm Garena.

Sea Group's first-quarter 2022 financials reflected a 64.4% year-on-year increase in Generally Accepted Accounting Principles revenue at $2.9 billion, with gross profits soaring 81.3% to $1.2 billion over the same period.

Shopee's business, while still losing money, has also reflected improvements, with a 71.3% year-on-year increase in orders to $1.9 billion in the first quarter of 2022 while gross merchandise value rose 38.7% to $17.4 billion. Importantly, Shopee's gross profit margin for e-commerce increased year on year, with faster growth in transaction-based fees and advertising income generating higher margins versus other value-added services.

Shopee, however, continues to face several macro headwinds, including rising inflation and interest rates, that may dampen retail and consumption sectors.

The company also appears to be facing setbacks on some of its ambitious internationalization plans, including its forays into Europe and Latin America. Shopee, which has operations in Poland and Spain, decided to pull out of France after only five months as it was not meeting expectations.

For the original story from DealStreetAsia, click here.

DealStreetAsia is a financial news site based in Singapore that focuses on private equity, venture capital and corporate investment activity in Asia, especially Southeast Asia, India and greater China. Nikkei owns a majority stake in the company.

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