1. Layoff Wave Sweeps Shopee: Cost-Cutting Measures Take Toll
The June layoffs were merely the beginning. Recent topics like "Shopee China layoffs" have frequently trended online, drawing widespread attention. Many Shopee employees, including freshly graduated hires, found themselves affected. This isn't limited to China—Shopee's parent company Sea plans to cut 3% of its workforce in Indonesia to curb losses and restore investor confidence. Internal memos reveal affected employees will receive notifications starting September 19, along with severance packages.
Shopee initiated layoffs in June, primarily targeting Southeast Asian food delivery and payment services, plus cross-border operations in Mexico, Argentina, and Chile. In September, Sea's gaming division Garena reportedly suspended updates to its Booyah app, with 30-40 positions eliminated.
2. Leadership Sacrifice: Executives Forgo Salaries Amid Austerity
Beyond layoffs, Shopee implements stringent cost controls. Sea CEO Forrest Li announced in an internal memo that top executives would waive salaries and enforce strict spending limits. Temporary measures include capping hotel expenses at $150/night and reducing meal reimbursements during business travel. "Until the company achieves self-sufficiency, the leadership team won't accept cash compensation," Li stated.
Li described Sea as weathering an unprecedented storm that may persist. With fundraising challenges, the company prioritizes achieving positive cash flow within 12-18 months. "The only way to escape external capital dependence is generating sufficient cash for all needs," he added. The salary forfeiture signals Shopee's urgent push toward profitability.
3. Strategic Retreat: Market Exits and Core Focus
After withdrawing from multiple markets, Shopee struggles to find growth avenues. Persistent losses necessitated painful cuts. Management acknowledged the difficulty of layoff decisions, while overseas expansion proved particularly challenging this year.
Shopee increased transaction fees in Southeast Asia before shuttering operations in France, India, and Spain. Recently, it exited Argentina and closed local businesses in Chile, Colombia, and Mexico. CEO Chris Feng cited "heightened macro uncertainty" as reason to concentrate resources on core markets, maintaining only cross-border operations in three Latin American countries.
4. Mounting Losses: E-Commerce Platforms Face Intensifying Pressure
International setbacks and fierce competition drove Shopee deeper into the red. Q2 2022 adjusted EBITDA losses reached $648.1 million, widening from $579.8 million year-over-year. Mere workforce reductions and halted expansion may prove insufficient to stem losses.
Ultimately, e-commerce competition hinges on user experience and product quality. Without improvements here, cost-cutting alone cannot ensure recovery.
5. Seller Incentives: Can Support Policies Stabilize Growth?
To sustain operations, Shopee introduced seller support programs. Top-performing merchants gain commission waivers based on fulfillment metrics and GMV. Exclusive agreements offer traffic support and fee exemptions to sellers avoiding competitors like TikTok.
Similar to Lazada's specialized portals for cross-border fashion sellers, platforms increasingly adopt refined operations amid market shifts. Whether this strategy reverses downward trends remains uncertain, though sellers benefit from enhanced incentives and growth opportunities.
6. The Road Ahead: Transformation Challenges
Shopee's predicament reflects broader industry struggles during economic downturns and market saturation. Layoffs and salary cuts offer temporary relief, but sustainable growth requires strategic innovation, operational optimization, and enhanced value creation.
The company's future hinges on outperforming rivals through operational excellence and user-centric improvements. Whether this former e-commerce leader can escape its financial quagmire and regain prominence remains an open question.