Shopee, a Singapore-based ecommerce company, has chosen to close its operations in India just six months after launching in the nation. Three persons familiar with the situation told ET that Shopee informed its local workforce of the news in a companywide town hall on Monday, stating that it will suspend operations in India immediately.
They stated the etailer, which competes with Meesho, Flipkart, and Amazon India, especially at the lower end of the market, will close its doors on Tuesday. A Shopee representative confirmed the news to ET, saying, “In light of global market concerns, we have chosen to close our early stage Shopee India effort.”
Following its recent entry into Europe, Shopee pulled out of France earlier this year. The Indian government recently banned Shopee’s parent company Sea’s gaming app Free Fire as part of a broader crackdown on Chinese apps. Despite the fact that Sea is based in Singapore, the company has been scrutinised for its Chinese ties, including a Tencent investment.
According to at least two individuals, the government’s inspection of Sea’s Free Fire app added to the uncertainty of Shopee’s future in India, and this was taken into account when the decision to shut down was made.
On Monday, Sea’s stock price on the New York Stock Exchange (NYSE) was down roughly 6% to $116.12 per share, after falling below $100 earlier this month. After India banned its gaming software, the company’s market capitalization dropped by more than $16 billion. On Monday, Shopee informed merchants that sell on its platform of its plan to close shop.
The move is surprising given Shopee’s aggressive intentions for the Indian market, which included hefty discounting to compete with established behemoths. Trader groups such as the Confederation of All India Traders (CAIT) have appealed to the government, accusing Shopee of having Chinese investments and failing to follow Indian regulations.
CAIT has also filed a complaint with India’s antitrust regulator, the Competition Commission, citing exploitative pricing on its website. However, the case was recently dismissed. CAIT Secretary General Praveen Khandelwal “welcomed” Shopee’s resignation.
So, what’s next for vendors and employees?
Shopee is expected to offer its India employees internal opportunities within Sea, according to people familiar with the situation. “If it doesn’t work out,” one of them remarked, “they’ll be offered a three-month severance payout.” Meanwhile, Shopee’s India vendors have been advised that services such as payments, refunds, returns, and disputes will be available till May 30. Existing orders will be transported and delivered in accordance with the process, according to the notice to vendors.
Shopee had around 300 employees in India as of December 2021, with a seller base of over 20,000. These figures have not altered significantly since then, even though the company has added additional employees and sellers.
ET had a copy of the note in his possession. “From this date–March 29, 12:00 am–buyers will not be allowed to place any additional orders,” it stated.