Sea Limited, the parent company of Shopee, was founded in 2009. The company started out as an online gaming company Garena and didn't get into e-commerce until 2015.
Shopee was launched in 2015, and Lazada was already a leading ecommerce platform in the region when Shopee first launched.
However, in the second quarter of 2020, Shopee quickly went from being a new addition to the most-visited ecommerce platform in Singapore.
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Figures from Statista
The company saw user numbers grow by 82 percent from Q1 to Q2 2020 and averaged an additional five million visitors.
The increase in the number of visits may also have been due to the heavy promotion from initiatives like the 4.4 Flash Sale and Super Mart Month during the breaker period.
While Shopee was a newbie to the game, let's take a look at how they managed to overtake Lazada and find their way to the top in Singapore.
A mobile-first approach
Image credit: Bigstock
Shopee pursued a different strategy at an early stage by starting it as an app to initially use the high penetration rate of mobile devices in Southeast Asia (SEA).
According to a study by Google and Temasek, the average usage of mobile internet by SEA is highest in the regions (3.6 hours per person per day).
Shopee also noted that mobile – not desktop – would be the main battleground for e-commerce going forward. Additionally, app users tend to be more loyal and spend more money per order than web users.
In fact, Shopee saw the time users spend on the app per week increase by 40 percent over the past year. This is proof of Shopee's ability to deliver more than just a transactional shopping experience.
In Q3 2020, Shopee continued to see strong momentum as it ranked first in the Shopping category by downloads, average monthly active users, and total time in-app for Android in SEA and Taiwan, according to App Annie.
Campaigns with assignable symbols
Shopee's 9.9 shopping event in 2019 with Cristiano Ronaldo and Baby Shark saw three times more orders than last year.
The soccer star danced to a remix of the viral nursery rhyme while swiping on Shopee's mobile app in the company's advertising campaign.
It may seem terrifying to some, but it turned out to be a viral hit with thousands of people sharing the video across the region.
Last year, Shopee's campaign featured the mascot Phua Chu Kang with his familiar single accent as he joked with viewers and urged them not to miss out on the great deals on the campaign's online and offline channels.
It is clear that Shopee's campaign strategy is to use relatable brand ambassadors to differentiate themselves from other ecommerce players and thereby generate more traffic and sales for them.
Shopee took Lazada's tactic and made it even better
Recognizing the success of parent company Alibaba's in-app entertainment capabilities, Lazada launched “Laz Live” in June 2019, which allows sellers and invited hosts to run live streaming shows to connect with their users.
This function, called "Shoppertainment" by Lazada, was introduced in Thailand, the Philippines and Malaysia.
In the same month, Shopee also launched the same feature. Theirs is called Shopee Live and it covered the same markets as Lazada as well as other markets.
Photo credit: HYPE & STUFF
Shopee didn't stop there. They went one step further and started the “Shopee Quiz” together with their live streaming function.
The interactive game show “Shopee Quiz” is moderated by familiar faces from local influencers.
To get more traffic, they gave away Shopee Coins and multiple products from participating brands and allowed users to invite attendees.
They then also launched Shopee Feed, which mimicked the “Instagram experience” on Shopee, giving brands giveaways to brands and allowing users to comment on and “like” posts.
The user interface is well designed and easy to use. It features specially curated posts from brands and gives the site more credibility.
Lazada had already introduced a similar feed feature in early 2019, but it didn't gain much traction. The user interface wasn't that intuitive and the posts appeared to be AI generated.
This could have deterred customers from using the feature.
In order to build brand loyalty and create memorable experiences for users, Shopee's business model focuses heavily on hyperlocalized activities to meet the demands of each market.
Son Tung MTP – A famous singer in Vietnam supports Shopee / Image Credit: Shopee
For example, Vietnam's large millennial population of 30 percent or 27 million rely on their mobile devices for a more personalized shopping experience.
To reach this segment, Shopee launched months of sales campaigns and selected a popular Vietnamese actor as their brand ambassador.
Thais also view celebrities positively, with 60 percent of those polled confirming that they trust celebrities.
Some of the most popular celebrities in Thailand are of mixed race, so Shopee Thailand has selected the Thai-Norwegian actress and the Thai-Austrian actor / model as endorsers for their multi-faceted campaign.
Now, Malaysian online shoppers are most receptive to discounts and flash sales.
Shopee Malaysia started a daily campaign called "Shocking Sale", which covered the lowest price guarantee as well as free shipping at a minimum purchase price.
In Singapore they named the “cultural icon” Phua Chu Kang, played by Gurmit Singh, as the first Singaporean brand ambassador.
Image Credit: Shopee
In live streams in Singapore, Shopee expanded its coverage to target local university students and micro-influencers as hosts, and to include celebrities and artists in their campaigns like Lazada.
By enabling less distant icons, the app has become more familiar with users and has allowed them to associate the app as something that is close to their heart.
Shopee's personal marketing tactics also resulted in a more effective and long-term result.
On the other hand, Lazada was trying to bring to Singapore what works for Alibaba in China. The China game book at Lazada remains unproven in SEA.
Some strategies include temporary interruptions to free shipping in some markets that led traders to other locations and attempts to encourage bulk shopping, sources said.
What worked for mainland China didn't have the same effect in SEA.
The e-commerce potential In the sea
With a young and large population of 650 million people, SEA has been known as the fastest growing internet region in the world in recent years.
A joint study by Google and Temasek Holdings last year predicted that SEA's digital economy will triple and reach $ 240 billion by 2025.
As the main driver of this economy, e-commerce is expected to have a gross merchandise value of $ 102 billion in 2025.
Despite the growth of e-commerce in the region, online retail accounts for less than 2.5 percent of total SEA retail and only accounts for one percent of total retail sales.
Photo credit: Marketing in Asia
Given the size of the SEA market, this is quite small compared to Europe and North America, where online retailing accounts for around six to eight percent of total retail sales.
There are also three main challenges preventing the region's e-commerce market from realizing its full potential: limited logistics, over-reliance on cash on delivery, and a lack of customer familiarity and trust.
The market is in the early stages of moving from offline to online shopping and is still largely undersupplied.
It is therefore not surprising that many local and international companies such as Amazon or Tokopedia are competing intensely for a lead in the game.
Shopee is currently taking the lead over Lazada while Lazada is set to ramp up its digital innovation and commercial development and has appointed a new CEO to drive its growth this year.
Selected image source: Shopee