E-commerce job cuts signal S-E Asia’s shift from scaling to deeper user engagement

[SINGAPORE] Recent job cuts by e-commerce players Lazada, Shopee and Amazon highlight a broader shift in South-east Asia’s maturing e-commerce sector. This comes as platforms move beyond a growth-at-all-cost mindset to focus on profitability and competitive differentiation, say analysts.

In the past two months, Shopee has cut about 8 per cent of its developer workforce; Lazada has reduced headcount by about 5 per cent across South-east Asia; while Amazon has shuttered its grocery service in Singapore, affecting less than 10 per cent of its workforce here.

Oliver Wilkinson, strategy leader at consultancy PwC Singapore, noted that the industry is moving from a phase of aggressive expansion towards prioritising monetisation and profitable growth.

“With higher interest rates than in the past and a less buoyant consumer economy, that is putting pressure on all players for financial outcomes,” he told The Business Times.

The job cuts have been a reflection of shifting business priorities – both Amazon and Lazada cited that as the reason for their cuts. As scaling becomes less important to e-commerce platforms in South-east Asia, there will be a lesser need for big customer acquisition teams in the next phase of competition, where deeper user engagement is key.

Differentiation matters

Market observers have noted that e-commerce platforms in the region have evolved from trying to serve everyone to differentiating themselves by their strengths and value propositions.

Having scale alone in South-east Asia is no longer a differentiator as e-commerce platforms seek to deepen customer engagement, shopping frequency and share of their wallets, they added.

Customers are becoming more intentional about which platforms they are transacting on, and e-commerce players are increasingly focused on strengthening their distinct advantages, noted Li Jianggan, founder of consultancy Momentum Works.

“Some platforms are stronger in assortment and price competitiveness, some in brand relationships and quality assurance, while others are building advantages around content-driven discovery and engagement,” he added.

While price remains an important consideration for customers in South-east Asia, the e-commerce platforms’ customer segmentation has helped to reduce the race to zero, said Li. Consumers in the region will naturally gravitate towards a better deal when quality, trust and service levels are perceived to be similar.

“The difference today is that platforms have more ways to differentiate themselves before the price comparison even begins,” said Li.

This is also happening on the merchant side, as Shopee has hiked its take rate or merchant commission to 13.7 per cent in Q1 2026, without fear of merchants leaving the platform for competitors which are charging lower rates.

High barriers

Despite the market’s maturity, there is still room for growth in the sector, with challengers still looking to join the fray.

Among the e-commerce platforms in South-east Asia, gross merchandise value grew 22.8 per cent in 2025 to US$157.6 billion from US$128.4 billion in 2024 indicated a report by Momentum Works.

In South-east Asia, the e-commerce sector has become increasingly concentrated, with Shopee, TikTok Shop and Lazada controlling about 98.8 per cent of the market.

Pinduoduo, a Chinese e-commerce group known for its Temu marketplace in the US, has attempted to enter into South-east Asia. Its Temu brand has launched in Malaysia and the Philippines. Pinduoduo has an ongoing marketing campaign to attract new users in Singapore by offering a coupon for S$16 as well as free shipping.

But observers said that the barrier to entry is much higher for any new entrants today than a few years ago.

“They are competing against platforms that have already accumulated loyal users, merchant ecosystems, logistics infrastructure and strong positions in specific customer segments,” said Li.

Competing with incumbents on price is not a sustainable way to grow market share, especially since the market has moved on from just focusing on price alone, noted Wilkinson. Global scale matters less than local execution, he added, as consumer behaviour, merchant needs and logistics differ across the markets in South-east Asia.

“Success will increasingly depend on owning a distinctive niche, customer segment, or shopping mission rather than replicating incumbent models,” said Wilkinson.

TikTok Shop’s success in South-east Asia, for instance, was due to the platform’s introduction of new shopping behaviour through content commerce, rather than competing head-on as a traditional marketplace, noted Li. New entrants will need to answer the question of whether there is a meaningful customer segment or value proposition that is not already well served, he added.

Depth, not breadth

The maturing e-commerce market in South-east Asia will reward platforms that move shopping from a transaction to a habitual daily experience, noted Wilkinson. Price alone is no longer the strongest advantage.

“With a transactional-only approach, profitability will be low, or negative, as consumers just compare prices (in) a race to the bottom,” he added.

Rather than chasing the next hundred million users, the next challenge will be on deepening current customer relationships, observers noted.

Attention will be paid to increasing purchase frequency, variety across categories and lifetime value of existing customers, as platforms seek to integrate themselves into consumers’ daily shopping habits.

E-commerce platforms will double down on their established competitive advantages, as they use artificial intelligence, advertising, logistics and merchant tools to strengthen their ecosystems, noted Li.

Shopee, for instance, has been leaning heavily into AI. It recently announced an integration with OpenAI’s Codex platform. AI has been tapped to aid in better product discovery, and to help sellers create better product listings, said Sea’s CEO Forrest Li in its recent Q1 2026 earnings call.

“These efforts supported a 14 per cent improvement in purchase conversion rate year-on-year in the first quarter,” he added.

Scale is no longer a challenge. Instead, it is about remaining a preferred destination for customers despite the other options available.

“In that sense, South-east Asian e-commerce is becoming more similar to mature retail markets, where leadership is determined not only by size, but by how effectively a platform serves its target customers and delivers a differentiated value proposition,” said Li.