Shopee ramps up initiatives to adapt platform to changing consumer base

A WAVE of digitalisation last year during the pandemic widened Shopee's access to consumer segments that have typically been hard to penetrate. Now, the South-east Asian e-commerce player wants to double down on adapting its platform to aggressively engage a diverse customer base.

Shopee observed that older, less digitally savvy users in their 40s and 50s began to transact more online, as did consumers outside tier one cities and affluent users with a taste for premium brands.

"But having more consumers means that you have different segments of people who actually have different kinds of needs," chief commercial officer Zhou Junjie told The Business Times during the inaugural Shopee Brands Summit on Monday.

The company, which is owned by New York-listed Sea, is tackling this on several fronts. For instance, it has created a platform dedicated to high-end brands and has plans to ramp up its grocery delivery service and expand the geographical coverage of its logistics network.

Last October, Shopee launched a dedicated in-app space called Shopee Premium for high-quality brands. Its cleaner, more sophisticated landing page that integrates multimedia storytelling is meant to attract more affluent users, said Mr Zhou.

Retailers on the platform include fashion brand Calvin Klein and beauty brands Sulwhasoo and L'Occitane.

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Shopee also plans to get more fast-moving consumer goods (FMCG) merchants on board Shopee Mart, its grocery delivery platform. Grocery delivery is becoming a hotly contested space in South-east Asia, with newer entrants such as Grab, foodpanda and Deliveroo investing heavily in their capabilities amid the pandemic.

This puts them in direct competition with more established players including Lazada-owned RedMart, NTUC FairPrice and Amazon Fresh.

Mr Zhou said Shopee will need to build up its fulfilment capability, in areas such as warehousing and distribution centres, in order to expand Shopee Mart (known as S-Mart in Singapore). In most markets, the platform provides next-day delivery for users in capital cities.

"It could be a combination of us stocking the items ourselves, or having certain brands or partners, on a consignment basis, put items in a warehouse and we do the fulfilment for them," said Mr Zhou.

More than 10 new warehouses were opened across the region in 2020, and three times more items were shipped from Shopee's warehouses by brand partners compared to a year ago.

In-house last-mile delivery service Shopee Xpress will be expanded to reach more tier two and tier three cities in markets such as Thailand, Indonesia and the Philippines.

The company recorded significant growth in the third quarter ended Sept 30, 2020 amid stay-home measures across the region. Going by its parent company's results, e-commerce revenue was up 173.3 per cent to US$618.7 million while gross merchandise value (GMV) increased 102.7 per cent to US$9.3 billion.

From Q1 to Q3 2020, GMV totalled US$23.5 billion while gross orders came up to 1.78 billion. There were about 10 million active sellers on the platform.

Part of what drove the growth was Shopee Mall, a platform reserved for authentic brand owners and authorised distributors, said Mr Zhou.

Since its launch in 2017, orders on Shopee Mall have grown 10 times, outpacing the overall platform growth. There were two times more brands on Shopee Mall in 2020, compared to the year before. There are now over 20,000 brands on the feature.

The company on Monday launched two new programmes to help brands scale up their online presence. The first was the Regional Champion Brands Programme, a by-invitation programme comprising 16 brands who will receive priority support from Shopee in the areas of marketing, innovation and insight.

The second was a challenge to get brands to achieve US$100 million in GMV in 2021. The first 10 brands to reach the milestone will get special perks including access to exclusive business insights, increased campaign exposure and media support.

Digital payments will be another key area for Shopee in 2021. Mr Zhou said Shopee Pay will be extended to more offline merchants so that consumers have more use cases for the digital wallet.

In addition, the company has a service called SPayLater that allows users to buy now and pay later, or pay for their purchase in installments. In Indonesia, users of the service had on average 30 per cent higher GMV in transactions compared to non-users.