Shopee Investment, Will Shopee Always Be Profitable?

Are you interested in Shopee investment? Before you do the investment, you need to know it well first. Are you curious? Let’s check this out!

Shopee Overview

How to invest in Shopee Malaysia? Before you do the softbank investment in Shopee, you need to know about the Shopee overview first. For your information, Shopee is one of the leading ecommerce not only in Malaysia but in Southeast Asia. Shopee’s business model is C2C which means customer to customer. Shopee was launched in 2015 as the subsidiary of Sea Ltd.

Why do you need to invest Shopee Malaysia? It is because Shopee keeps growing from year to year which equates to 24% total e-commerce market share. Besides that, Shopee operates in 7 Asia countries.

Mobile First

Since many Asians use the internet through their mobile devices, it will give Shopee advantages because Shopee is mobile friendly. More than 90% Shopee orders were made through mobile devices. For your information, mobile orders might have smaller basket sizes but it has higher order frequency because everyone uses their phones intensely.

Shopee’s Fashion GMV

What is Shopee valuation in fashion? Based on data in 2017, Shopee has 31% for Fashion GMV, apparel 42%, bags 32% and shoes 13%.

Higher User Engagement

Shopee Malaysia has higher user engagement compared to other competitors. On average, Shopee customers spend more time in Shopee than other marketplace Malaysia with the percentage of 19% compared with Lazada and 77% compared to Tokopedia.

Read also: 5 Things You Need to Know How to Be Shopee Mall in Malaysia

The International Race Between Alibaba And Sea Group

Are you curious on how to invest in Shopee stock? Before you invest in Shopee, it is better you know the international race between Alibaba and Sea Group

Here’s What Happened

Alibaba’s Shopee funding income for the September 2021 period increased 88% to  US$833 million from nearly US$7 billion in the last quarter. In 2022, the group growth has slowed down from 29.5% to 23%. The group blamed it because of the slowing market conditions as well as more players in the China ecommerce market.

Here’s Our Take

In the period of 2018 and 2020, Alibaba injected the funding of US$4.4 billion into Lazada and more than US$2 billion in 2020 but there’s no specific details about how much money was spent on operations. 

In the period of 2018 to 2020, Shopee also got the funds injected around US$6.6 billion. The big investment gap might happen because of Shopee’s overtaking of Lazada in the region. Others believe that this investment gap happened because of the acquisition in 2016 where there is a conflict between the management and staff from Alibaba and Lazada.

In the third quarter of the year, Shopee’s revenue by closing in on Alibaba’s entire international ecommerce business such as Trendyol (Turkey) and AliExpress in addition to Lazada. The gap between Shopee and Lazada might disappear since Shopee is expanding its business to Brazil, France, Spain,Poland and also India.

Read also : Read Shopee Success Stories, Business Will Be Improved!

FAQs

FAQs can help every user on Shopee. The following is about questions about sales on Shopee.

Will Shopee Ever Be Profitable?

Shopee is under the Sea Limited whose stock price had a great run last year with the stock up to 442%. Sea’s shareholders are the biggest gainers in this pandemic situation despite this, Shopee remains unprofitable. It is cited that Shopee is still growing and the elevated cost nowadays is justified when it emerges as Southeast Asia’s market leader for e-commerce and gets the benefit of scale.

In the third quarter of 2020, Shopee recorded 741 million in gross orders and US$9.3 billion for gross merchandise value. Is this reach not sufficient scale to be counted as profitable? It all depends on you, if you believe that Shopee’s profitability will explode in the future and reach the first position, you can start to invest in their stock.

What is Shopee’s Business Model?

Most people must know what Shopee is but they might not understand the Shopee’s business model. So, Shopee is an e-commerce platform that intermediates between  Shopee seller and buyers of goods. The Shopee company will charge the Shopee seller for transaction-based fees, advertising services, and also value-added services.

The Transaction-based fees will be charged to sellers based on a percentage of their selling price. Shopee reveals 2 main types of transaction-based fees such as :

• Transaction fees charge a flat rate of 2%
• Service fees will be charged depending on the participating programme a seller signs up and also the type of products sold with the range from 0% to 5% 

Different from other Shopee sellers,Shopee mall sellers will also be charged for commission fee beside the transaction and service fee. This commission fee will be charged for the premium platform with a percentage of 5%.

If you use Shopee Ads to advertise your business, there will be an advertising fee which is charged based on how many clicks you get on your ads. Don’t forget to use the related keyword because it will help you get the highest bid in the online auction in the search result page.

There are also valued-added services or also known as VAS in Shopee. Valued-added services is a tool of marketing, customer and also product management which is based on Shopee’s data analytics. These valued-added services help Shopee with their large amount of web traffic by providing business intelligence data to Shopee sellers. 

There are several costs that are incurred to generate the Shopee e-commerce such as bank transaction fees, the service fees paid to third party logistics service providers, warehousing costs for goods, server and hosting costs and also the staff compensation.

The Bank transaction fees might be the most punitive because it is charged as a percentage of the amount being paid by the Shopee’s customer which means that there are no scale benefits of lower costs per unit since the bank transaction fees rise with the value of goods.

Conclusion

Shopee is growing up nowadays. Shopee are available in 7 countries in Asia but Shopee still prefers to match its seller with the same country buyer so that they can use the domestic logistics at a cheaper cost rather than the international logistics. 

Ginee Malaysia

Are you the owner of a Shopee-based online store? Ginee Malaysia can help you manage all of your businesses from one central spot! Ginee makes posting products, managing stocks, orders, promotions, chat, ad campaigns, and WMS, among other things, a breeze. Join Ginee Malaysia for free and boost your online sales right away!