SINGAPORE – Sea’s e-commerce arm told employees on Thursday it was shutting local operations in Chile, Colombia and Mexico, and leaving Argentina entirely, according to three sources with direct knowledge of the matter and an internal e-mail.
The Singapore-based company will maintain cross-border operations in the first three markets but will cut the majority of its teams in the countries, affecting dozens of employees, the sources said. Brazil, in which Shopee has become a dominant player, will not be affected.
In an internal e-mail seen by Reuters, Shopee chief executive Chris Feng wrote to employees that “in light of the current elevated macro uncertainty”, the company needed to “focus resources on core operations” and had decided to concentrate on a cross-border model in Mexico, Colombia and Chile.
Shopee confirmed later in a statement to Reuters that it would operate a “cross-border model in Chile, Colombia and Mexico, and close in Argentina”.
Latin America is Sea’s most important region after South-east Asia, accounting for almost 19 per cent of its revenue in 2021. Shopee expanded into Mexico, Chile and Colombia just a year ago – two years after going into Brazil – banking on the region’s rising population of young, mobile-savvy users.
Shopee’s second-quarter revenue in Brazil, its core market in Latin America, rose more than 270 per cent from a year earlier. The service also ranked first by average monthly active users in the shopping category in Brazil, Sea said in its quarterly earnings report, citing analysis from data.ai.
Sea’s pullback from Latin America was unsurprising, said Mr Zennon Kapron, managing director of Singapore-based consulting firm Kapronasia. “We’re clearly in a ‘risk-off’ environment with rising interest rates and increasing uncertainty around the direction of the global economy.”
Sea faces increasing pressure to cut costs after growth in its e-commerce business slowed from pandemic-era highs. Consumers are pulling back on spending online as rising interest rates and prices weigh on the economy.
Sea’s market value soared to more than US$200 billion (S$280 billion) last October as its gaming and e-commerce units surged in popularity during the pandemic, but its shares have tumbled since then and are now worth just US$27 billion.
The company’s leadership has given internal directives to Shopee managers to achieve profitability in its key markets in South-east Asia by 2023, a separate source told Reuters.
“Shopee has been around for seven to eight years… so now they have to focus their effort on turning a profit at its core markets,” said lead analyst Ke Yan at Singapore-based DZT Research.
Shopee announced in March it was shutting down nascent operations in India and France.
In June, Shopee cut jobs across its e-commerce and food delivery divisions, according to sources, both in South-east Asia and its Latin American operations. Shopee has also rescinded dozens of job offers in the past two weeks, including for positions at its headquarters in Singapore.
Staff at Sea’s gaming live-stream app, which is part of Sea’s gaming unit Garena, were told they would be let go, separate sources told Reuters, adding that projects at Sea’s development unit were also shut down. REUTERS, BLOOMBERG