E-commerce marketplace Shopee to monetise platform, starting with paid ads

KUALA LUMPUR: E-commerce marketplace Shopee, which plans to start monetising its platform by introducing paid ads this year, wants to be the “Alibaba of Southeast Asia” and become Southeast Asia’s mobile commerce destination of choice.

Although it is focusing on growing rather than monetising now, Shopee regional managing director Ian Ho (pix) said the company will need to bring in revenue at some point with some plans of monetisation.

“Monetising is not rocket science. Typically, there are three ways to monetise on e-commerce platforms, which are via listing fees, commissions and paid ads. These are some of the monetisation models that we’re considering and we plan to roll out something along the lines of paid ads this year,” Ho told SunBiz in an interview recently.

“The expectation is to grow in the market and provide good service for buyers and sellers. We’re not bothered by what competitors are doing. We’re focused on growing our pie in the market. We’re predominantly mobile-centric and we want to bring on board the rights brands to our platform,” he said.

Shopee has presence in seven markets, namely Malaysia, Singapore, Indonesia, Vietnam, Thailand, the Philippines and Taiwan with 40 million downloads. Shopee is a platform tailored for Southeast Asia, combining customer-to-customer marketplace with payment and logistical support, making online shopping possible.

“We hope to be number one in terms of gross merchandise value (GMV) in the market in the near future. As an e-commerce platform, we’re able to leverage on economies of scale to push prices down,” Ho said.

Shopee has achieved over US$3 billion (RM13 billion) in annualised GMV across the seven markets in the first half of 2017. To date, Shopee Malaysia has garnered over 3 million downloads, with over 100 million listings. In Malaysia, Shopee started in 2015, and has expanded its team to over 200 employees.

Shopee continues to focus on mobile commerce as mobile penetration surpass computer usage with more people surfing on their mobile devices than on computers.

Ho said Shopee is free to use and does not charge any listing fee or commission. It offers free shipping up to 5kg for items over RM30 in Peninsular Malaysia.

Offering such freebies has contributed to Shopee Malaysia’s growth over the past two years, he said. Last year, he added, Shopee Malaysia grew 43% in GMV month-on-month.

“With these free stuff, we’re able to negotiate with the sellers to reduce the prices of items and pass on cost savings to buyers. We’ve been running campaigns with the lowest price guarantee, whereby we will refund you the difference, up to 120% (in cash vouchers), if you find the same item for a lower price elsewhere.”

Ho said categories that are popular in Shopee are typically what you buy in a shopping mall, such as fashion, mobile and accessories, groceries, cosmetics.

“Shopee is just like a shopping centre on the internet,” said Ho.

Shopee is owned by internet platform company Sea Ltd, which also owns gaming platform Garena and payment platform AirPay.

“We’re fully funded by Sea. Sea has reached multiple rounds of funding and we recently (in May) raised a new round of funding of about US$550 million from various investors for Sea. Most of the funding that Sea is raising will be going to Shopee to help us grow in the seven markets that we are in,” said Ho, who oversees the operations for Shopee Malaysia and Singapore.

He said Shopee leverages on some of the user base of the entities of Sea as well as operationally, as Sea already had a presence in Malaysia prior to Shopee’s entry. However, from a technology and hiring perspective, Shoppee has separate resources from its parent.