Explained: Why has Shopee shut shop in India?

Less than six months after it launched, Shopee has said it is shutting down its operations in India. Why? How does this impact the social commerce market?

Shopee was one of the most downloaded apps on Android Play Store after its launch.

Social commerce platform Shopee is exiting India citing “global market uncertainties”, less than six months after it launched in the country. This is despite the platform, which is owned by Singapore-based consumer internet company Sea Group, becoming one of the most downloaded apps on Android Play Store shortly after its launch.

Why the exit?

Shopee’s exit also comes just over a month after Sea Group-owned gaming app Garena Free Fire was banned by the Indian government. “In view of global market uncertainties, we have decided to close our early-stage Shopee India initiative,” a Shopee spokesperson said. The social commerce platform will cease operations effective Tuesday 12 am IST, according to sources, who said that all orders placed up till then on the platform will be completed.

One of the sources cited above said that Shopee has written a mail to the sellers on its platform informing them about shutting down operations in India. “All services on the Shopee Seller Centre, including payment withdrawal and disputes for returns, will be available through the existing channels until 30 May,” the source said, adding that the platform’s logistics partners will continue to pick up and deliver all ongoing orders, and will process return deliveries.

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Opposition to Shopee’s operations

During its stint in India, besides the heat on Sea Group through the banning of Garena Free Fire, Shopee had run into several hurdles. Earlier this year, an FIR was filed against the company in Lucknow alleging duplicate products being delivered from the platform. Further, a complaint was also filed against Shopee with the Competition Commission of India for indulging in “deep discounting”. The antitrust body earlier this month dismissed the complaint.

Shopee had also faced opposition from a group of local traders led by the Confederation of All India Traders (CAIT), which had called for a ban of the platform and had also written to Finance Minister Nirmala Sitharaman alleging violations of India’s FDI rules by the company.

How does this impact the social commerce market?

Shopee was emerging as a chief competitor to social commerce platforms like Softbank-backed Meesho and Flipkart Group’s Shopsy, in the segment targeting cheaper goods being ordered in bulk for reselling. The exit now opens up the market to competitors.

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Soumyarendra Barik

Soumyarendra Barik is Special Correspondent with The Indian Express and reports on the intersection of technology, policy and society. With over five years of newsroom experience, he has reported on issues of gig workers’ rights, privacy, India’s prevalent digital divide and a range of other policy interventions that impact big tech companies. He once also tailed a food delivery worker for over 12 hours to quantify the amount of money they make, and the pain they go through while doing so. In his free time, he likes to nerd about watches, Formula 1 and football. ... Read More

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