Singapore’s giant Sea said on Monday it is shutting down its e-commerce business, Shopee, in India, months after the firm began recruiting sellers in the country. The announcement follows India’s decision to ban Sea’s popular title “Free Fire” in the country last month, a move that contributed to a loss of over $15 billion in Shopee’s market cap.
A source familiar with the matter told TechCrunch Shopee’s India shutdown decision is not linked with the Free Fire ban in India. The company also insisted in a statement that it is closing down the business in the South Asian market factoring in the “global market uncertainties.”
“In view of global market uncertainties, we have decided to close our early-stage Shopee India initiative. During this period of transition, we will focus on supporting our local seller and buyer communities and our local team to make the process as smooth as possible. We will continue to focus our efforts on delivering a positive impact to our global communities, in line with our mission to better the lives of the underserved through technology,” a spokesperson told TechCrunch.
In September last year, TechCrunch reported that Shopee had quietly launched a website for sellers in India. The six-year-old e-commerce service, which was seen as a late entrant in Southeast Asia, was also onboarding sellers and offering them lucrative perks such as free shipping and zero commission. A month later, the company officially launched in the country.
The launch of Shopee in India last year had prompted criticism from local retailers in the country. The Confederation of All India Traders (CAIT), an influential lobby group for scores of offline retailers in India, had reached out to Prime Minister Narendra Modi, cautioning him that the arrival of yet another foreign player engaging in what it alleged “unfair trade practices” will hurt the local ecosystem.
Shopee — which has expanded to as many as nine global markets including Brazil, Poland, Mexico, Columbia and Chile in recent years, said it will cease operations in India on Tuesday. It plans to process all orders placed before March 29 and will provide after sales support services.
“We have been positive about its global expansion, as we believe that this stage is still appropriate for increasing the scope of its business,” analysts at Bernstein wrote in a report last month. “This will help it in the long-term as it can de-risk, build scale, have a diverse merchant base, larger customer footprint, and build pricing power. However, all of this comes with compromising on near-term profitability.”
The move has come as a surprise to hundreds of people that Shopee employs in India. The local India team learned about the decision in an all-hands call earlier on Monday.
India, which has blocked over 200 apps with China link in the past one and a half years amid geopolitical tensions between the two neighboring nations, banned Free Fire last month in a move that puzzled many.
Even as India has never said it is particularly targeting developers from any certain country, the vast majority of the apps it has banned had origins in China. Chinese giant Tencent, which is a major investor in Shopee, is one of the few Chinese connections Free Fire carries. But Tencent continues to be an investor in several major Indian startups including local social media app ShareChat.