Shopee’s parent Sea Group is valued at $32.8 billion
On August 16, when it released its second quarter balance sheet, Sea, the Singaporean group, decided to suspend the annual revenue forecast for Shopee, its e-commerce arm. Until then, the company predicted the unit would earn between US$8.5 billion and US$9.1 billion in 2022.
The move was taken in light of an increasingly uncertain macroeconomic scenario, and following the decision the group emphasized that it was proactively changing its strategies to focus even more on the efficiency and profitability of the division.
This Tuesday, September 6, exactly three weeks after this announcement, a Goldman Sachs report brings to light one of the measures taken in this direction by Shopee in what is considered one of the main markets for the operation: Brazil.
According to Bank of America, as of Sept. 1, Shopee has expanded its take a rate – transaction brokerage fee – charged to sellers of his platform in the Brazilian market. In the standard plan, the commission went from 12% to 14%, while in the premium plan the change went from 18% to 20%.
“This price change comes amid similar changes by competitors in the Brazilian market and Sea’s focus on capital preservation,” said analysts Irma Sgarz, Felipe Rached and Gustavo Fratini of Goldman Sachs.
The trio highlighted other changes that Shopee is promoting in the country with the aim of improving the level of service on the platform. One of the novelties is its program aimed at major retailers, who determine which sellers it will appear prominently when searching for a specific product or category.
The company launched a feature that mandates keeping the non-shipment rate below 2%, so that the seller remains in a prominent position. At the same time, those registering rates above 5% will no longer have their products displayed in searches. Items will only be available in the seller’s store.
These measures have as a background the result achieved by Sea in the second quarter. The group reported a net loss of R$569.8 million in the period, representing a 77.4% increase over the loss of US$321.1 million reported in the same period a year earlier.
Between April and June, the group recorded revenue of USD 2.94 billion, an annual increase of 29%. In the e-commerce division, revenues rose 75.6% to $1.75 billion, with gross merchandise volume (GMV) of $19 billion, an increase of 27.2%.
However, Shopee’s operating loss widened from $579.8 million a year ago to $648.1 million in the second quarter. In Brazil, the company, which does not publish consolidated results, reported a 270% annual increase in revenue.
Shopee arrived in Brazil in 2019 and since then it has been expanding more and more in the local market. In March of this year, Goldman Sachs estimated in another report that the company had reached a 5% share of Brazilian e-commerce in 2021 and predicted that the company would likely end 2022 with a “high-digit” share of the country..
The status that Shopee has achieved has been accompanied, however, by accusations that the platform sells counterfeit products or without accounts. Following these complaints, in July the company’s distribution centers in São Paulo were subject to an inspection by the National Telecommunications Agency (Anatel).
As a result, Anatel reported seizing around 2,000 unapproved telecommunications products, valued at R$53,000. The list includes cell phones, cell phone chargers, smart watches, bluetooth speakers and headphones.
Before visiting Shopee’s facilities in the metropolitan region of São Paulo, the agency had already inspected Amazon and Mercado Livre centers, seizing 5,700 and around 10,000 products, respectively, under the same conditions.
However, the distribution centers show that Shopee and Sea continue to bet on Brazil. Also in July, the company announced the opening of five new units in the country, expanding its local network to six structures in the states of São Paulo, Minas Gerais and Rio de Janeiro. At the time, the company reported that it had more than 150 vacancies in the logistics field.
Recruitment, however, seems to be another point of focus on the platform at the moment. According to a report published this Tuesday, September 6, by ReutersShopee has canceled dozens of job listings across its global operations.
According to the sources he heard Reuters, the decision would be made just a few days before the hired experts started work. Sought, Sea confirmed that it has suspended some of the recent hires, but did not confirm how many vacancies were excluded in this process.
The fact is that this measure was preceded by other recent moves by the group, which during the year reduced its staff in countries such as Indonesia, Thailand and Vietnam.
In Shopee’s case, Sea shut down the platform in India in March and in Spain in June, while promoting cuts to its payments arm ShopeePay and its food delivery arm, ShopeeFood.
Sea shares closed at $58.42 today, down 2.52%. In the year, the company’s shares accumulated a devaluation of close to 74%. The company, which was worth more than $200 billion in October 2021, is now valued at $32.8 billion.