Shopee to shut down operations in India

Sea Ltd’s e-commerce company Shopee is set to pull out of the Indian market just months after the platform joined the country and welcomed sellers. This follows India’s ban on several mobile games including Free Fire from Garena, Sea’s digital entertainment arm, which the Indian government believes has ties to China.

However, there are clarifications that the closing down of Shopee and the ban on Garena Free Fire are not related. A spokesperson for Shopee has stated that the shutdown was due to ‘global market uncertainties’. In the same statement, Shopee has reassured buyers and sellers will still be supported until the day the e-commerce platform closes down for good.

Concerns were raised by local retailers when Shopee first came to India in November 2021 with business owners alleging that Shopee’s ‘unfair trade practices’ will harm the local business landscape. Meanwhile, Shopee employees in India were surprised about the move and those who have the Shopee app on their phones received the same announcement on March 29.

How Shopee competed with leading Indian e-commerce brands

The three leading e-commerce brands in India are Flipkart, Snapdeal, and Amazon. Out of these three, only Amazon is the only foreign brand and it got outperformed by the two local platforms before 2020.

Shopee, meanwhile, entered the Indian market in November 2021. The platform’s mobile app had over a million downloads and it had received around 100,000 orders a day despite its soft launch.

A report from Bernstein Research states that Shopee is offering steep discounts at products sold at already low prices. This means that the platform is losing around $20 million per month while it aggressively competes with the aforementioned brands. However, Bernstein Research believed that the loss would have a positive impact in the long run for Shopee had it not decided to pull out of India.

The same report has indicated that one reason Shopee is pulling out of India is due to the unwillingness of Tencent (a major shareholder of Sea Ltd) to invest in management bandwidth in India.

How Sea Ltd and Shopee got connected with the Indian government’s ban on Chinese-linked games

Sea Ltd is a Singaporean tech giant founded in 2009, Among the multiple businesses it has are the digital entertainment arm Garena and e-commerce platform Shopee.

One of the major investors of Sea Ltd is Tencent, one of the biggest companies in China. The geopolitical tensions between India and China have also affected Sea Ltd because of the connection between the two companies. This led to speculations that India’s ban on Garena’s mobile game Free Fire has motivated Shopee to pull out of the Indian market.

The India-China spat allegedly stemmed from allegations that certain mobile apps are selling data of India’s citizens to Tencent. As of late, Sea Ltd is still under scrutiny by the Indian government.

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