How 5-year-old startup Shopee is leading e-commerce growth in Southeast Asia

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• The value of Southeast Asia's e-commerce sector is estimated at $38 billion and is on track to surpass $150 billion by 2025.
• Founded in 2015, Singapore-based Shopee is the region's leading e-commerce platform by monthly active users
• The company has built its business on a mobile-first strategy that reflects high mobile internet usage in the region
• Shopee is investing in digital inclusion to help new and existing merchants recover from the pandemic
• Because of his work, Business Insider named Shopee's COO, Terence Pang, to our annual list of the 10 leaders transforming retail in Asia.
• Visit Business Insider's Transforming Business homepage for more stories.

While much of the retail sector in Southeast Asia was hit hard due to lockdowns and other restrictions in the early months of the COVID-19 pandemic, e-commerce continues to grow at speed, with consumers and merchants alike increasingly turning to online platforms. 

According to Google Trends, Thailand saw a 63% increase in e-commerce search interest in May compared to the same time in 2019. Malaysia and Vietnam also experienced positive levels of interest, with increases of 32% and 13% respectively.

This growth is nothing new for the region – the pandemic is merely accelerating an existing trend. A joint report from Google, Temasek and Bain and Company estimated that the eCommerce sector in SEA was worth over $38 billion in 2019, up from $5.5 billion in 2015. The report forecasts that e-commerce value in the region will surpass $100 billion by 2025. 

Riding this boom is Shopee, the leading e-commerce site in the region measured by average monthly active users. Headed by CEO Chris Feng alongside COO Terence Pang, Shopee launched in Singapore in 2015 as a social-first, mobile-centric marketplace. Here are four key strategic factors driving Shopee's journey from ambitious startup to a regional retail powerhouse.

Mobile first. Always.

Southeast Asians are the most engaged mobile Internet users in the world. According to the Google, Temasek, and Bain and Company report, there are 360 million Internet users in the region and 90% of them connect to the Internet primarily through their mobile phones. 

From the beginning, Shopee saw mobile as an emerging trend and the way forward for e-commerce in the region. It immediately focused on optimizing user experience and engagement through mobile. The company says online shopping must evolve to fit the needs of younger users in particular who grew up communicating, collaborating, and entertaining themselves on mobile devices. Shopee's mobile-first approach allows it to take advantage of the expected continued growth in mobile subscriber penetration.

Shopee says that over 95% of orders on the platform are now made on mobile. Responding to this demand, Shopee offers an end-to-end online shopping experience directly on the mobile app. Buyers are able to browse products, order, make payment, and track the status of deliveries. At the same time, sellers are able to use the app to take a photo, create listings, monitor shop performance, receive payments and track deliveries through integrated logistics and payment tools. 

Taking a hyper-local approach

Southeast Asia is a region and not a single market. Each country has different e-commerce characteristics and challenges, and the demographics of consumers also differ from market to market. With this in mind, Shopee takes a hyper-localized approach in each market to bring the most relevant online shopping experience for brands, sellers, and shoppers. 

By understanding each market and its user behaviors means Shopee is able to respond to their needs. As well as having local offices and teams in each of the markets it operates, each market is highly localized in its product categories and marketing campaigns. For example, in Indonesia Shopee launched Shopee Barokah to meet the needs of Muslim users for a variety of Shariah-compliant products and services, particularly during the fasting month. 

Shopee also runs  localized initiatives around festivals such as Chinese New Year or Tet, and at the operational level it offers seven different versions of the app and has a variety of payment options to match specific country-level needs.

For customers: more than just shopping

One important area of innovation for Shopee is its ability to provide a personalized and social experience for its users. 

In terms of personalization, Shopee leverages data and AI to identify patterns and insights from users' browsing and purchase data and uses new technologies like AI and AR-powered tools to help brands give their audiences distinct shopping experiences. Instead of focusing solely on driving transactions and competing on price, brands and sellers can win by engaging customers and creating brand affinity through these experiences. 

Shopee has from the beginning integrated shopping and social. The platform creates immersive experiences by building a strong community that enables users to connect and interact with one another. 

Features include: Shopee Live (a live streaming feature); Shopee Games (an in-app gaming function); Shopee Feed (an in-app social feed allows users to share content on what they are listing, buying, and selling with the larger Shopee community); and Shopee Live Chat (a chat function that allows buyers to speak with sellers directly and find out more information before and after making a purchase). 

The company is also using data and AI to make online shopping more secure. For example, scripted machine learning is used to detect potential fraud cases and counterfeit products on the platform, offering users greater peace of mind. At the same time, its integrated mobile wallets ShopeePay and AirPay offer users a convenient and secure option, and in turn helps businesses capture new opportunities.

Support for merchants and digital inclusion

Shopee is committed to strengthening its partner merchant ecosystem. At the most basic level, the Shopee Seller Centre is continually updated with new functions that make it easier for sellers to track and manage their sales performance, payments, inventories, and deliveries on Shopee: 

On top of that, in terms of marketing Shopee provides a range of data and visualisation tools to track and obtain shopping insights, as well as a one-stop portal where merchants can create vouchers and other promotional tools. Shopee recently teamed up with Google to launch Google Ads with Shopee, a first-of-its-kind marketing solution for brands to drive sales online. Brands on Shopee will get access to specialized marketing tools to boost their online presence, create deeper engagements with customers, and flexibly manage and measure their marketing campaigns. 

Shopee is also aiming to power the next wave of digital growth in the region and ensure that more businesses can digitize and tap into the growing opportunity in the region, particularly following the COVID-19 downturn. Support offered includes the Seller Support Package launched in April to help businesses digitize and recover from the pandemic, and  Shopee University, which equips sellers with the knowledge to start their online business. Shopee also offers Seller Masterclasses, which drive sellers to adopt new tools and leverage new trends. One of the specific objectives of the Masterclass is to help sellers better leverage the benefits of live streaming. 

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