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CEO of Sea, Controller of Shopee, Announces That the Company May Go Bankrupt If Extremely Severe Economic Measures Are Not Followed. Leadership Professionals Will Go Without Salaries In the Coming Months.
After implementing what are considered drastic measures to cut costs, the founder of the group that manages Shopee, Forrest Li, decides to send an email to colleagues worldwide to explain the moment the company is facing and states that Shopee may go bankrupt. The CEO of Sea Group seems focused on reducing the company’s e-commerce operating costs, concerned about economic uncertainties.
Decisions Made by the Shopee Boss
For the executive, everyone must find ways to reduce operational costs and claims that the more money saved, the further away the end of Shopee’s operations. In addition, he listed some of the measures he will adopt to reduce expenses.
The main points are related to the costs associated with its employees. Starting next month, all travel reimbursements for employees will be limited to economy-class flights and US$ 150 per day for hotels.
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Regarding international travel, meal expenses can only be incurred up to US$ 30, and concerning transportation, the CEO advises using the cheapest available local services. No Shopee leader will receive compensation in the coming months until the company achieves positive cash flow.
Shopee’s Arrival and Brand Success in Brazil
The company, which arrived in the country with aggressive marketing, very low prices, and zero fees, seems to have taken its first hit in Brazil. According to Daniela Eiger, Head of Retail at XP Investimentos, the company’s recent actions signal a greater focus on investment rationalization.
In her opinion, Shopee may go bankrupt and is shutting down new operations due to lower results. The company prefers to focus on markets with higher value potential, such as Brazil. However, the reason for the exit and reduction of operations is more related to the marketplace model, like Shopee’s in Brazil. It is a very low-profit operation.
Despite the announcement of the “End of Shopee,” the Sea executive states that users can rest assured that the company has a solid cash base, something that puts it in a better security position. Nonetheless, he warns that Shopee could easily go bankrupt if operations are not handled carefully.
Competition in the Brazilian Market Is Increasing
Shopee found a retail market in Brazil that is dominated by consumers demanding free shipping and fast delivery. It is a tug of war, and a possible salvation for a company in this model is the fulfillment strategy, the logistics operation by the marketplace itself.
The company’s CEO explains that Shopee needs to get rid of external capital, becoming self-sufficient and generating cash for its demands and projects. This way, the competitiveness of retail services in the country expands more and more.
The increase in commission rates may also lead to a distancing of sellers on the platform. According to Daniela, the company is focused on Brazil, at least for now, so it should continue as an important player in the competitive sector.
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