Analyzing the business strategy of Shopee – famous e-commerce platform

To become one of the famous e-commerce platforms in Southeast Asia, Shopee has built and implemented effective business strategies. Let’s learn and analyze Shopee’s business strategy in detail in the article below.

Overview of Shopee 

According to  Wikipedia , Shopee is an online shopping application (Shopee Live), and an e-commerce trading floor headquartered in Singapore, owned by Sea Ltd (formerly Garena), founded in 2009. by Forrest Li.

Shopee was first introduced in Singapore in 2015, and is currently available in the following countries: Singapore; Malaysia; Thailand; Taiwan; Indonesia; Vietnam, Philippines and Brazil.

In 2015, Shopee was launched in Singapore with the orientation of being an e-commerce platform developed mainly on mobile devices, operating as a social network to serve the buying and selling needs of users anytime, anywhere. . Integrating operations, delivery and payment support systems, Shopee is an intermediary that makes online shopping easier and safer for both buyers and sellers.

In Vietnam, Shopee Vietnam’s initial model is C2C Marketplace – an intermediary in the buying and selling process between individuals. However, currently Shopee Vietnam has become a hybrid model when it also includes B2C (business to consumer). Shopee already charges seller fees/commissions and product listing fees.

Since its launch, Shopee has achieved exponential growth. The platform currently has more than 160 million active listings with approximately 6 million sellers, including more than 7,000 leading brands and distributors. Currently, this e-commerce platform is present in most Southeast Asian countries such as Singapore, Malaysia, Thailand, Indonesia, and Vietnam.

Analyze Shopee’s SWOT model

The SWOT model is a famous tool known and applied by many businesses because of its usefulness in helping managers analyze important factors inside and outside the business from which to establish strategies. appropriate strategy and business plan.

SWOT stands for 4 words: Strengths, Weaknesses, Opportunities and Threats – is a famous model that helps businesses analyze and build your business strategy effectively.

Among the 4 elements of the SWOT model, strengths and weaknesses are two factors for internal assessment of the business. For these two factors, businesses can control and change. Often these factors are related to company operations, assets belonging to the business, product development, etc.

Besides, the remaining two factors, opportunities and challenges, are external factors that are often related to the market and are macroeconomic in nature. Businesses may not be able to control these two external factors. Businesses can fully seize opportunities, but they must also pay attention and be wary of external challenges that can occur at any time.

For Shopee, the strengths, weaknesses, opportunities and threats of this brand can be analyzed as follows.

Strengths

Regarding strengths, Shopee possesses some of the following strengths:

• Catching the trend quickly: Although “born late” compared to Tiki, Lazada, Sendo, when Shopee appeared with aggressive advertising campaigns, extremely hot deals, discount codes and free shipping, it attracted Vietnamese consumers.
• Occupy a high market share in the e-commerce market: In 2020, Shopee ranked first nationwide in both downloads and application usage.
• Having large financial resources, continuously pouring capital: In the first 6 months of 2018, the parent company, SEA Group (Singapore), also added more than 1,200 billion VND in charter capital…
• Large and fast distribution network
• The policy to protect buyers and sellers on Shopee is very good.
• Products are sold at very preferential prices, and there are often attractive promotions.

Read more:  SWOT analysis of Vinamilk

Weaknesses

Besides its strengths, Shopee also has weaknesses that need to be overcome.

• Some of the main weaknesses in Shopee’s SWOT model can be mentioned as follows:
• If you exchange goods, the buyer must pay additional shipping fees.
• It is very difficult for Shopee to control the sources of goods of sellers on its platform.
• Purchasing evaluation system is not comprehensive with poor management. Sellers can easily remove bad comments or reviews from users (or they can pay and hire reviewers to leave positive reviews).

Opportunities

To take advantage of strengths and overcome weaknesses, Shopee can seize a number of beneficial opportunities to develop its brand and increase sales as follows:

• Vietnamese people’s Internet usage time is high: On average, Vietnamese people use the Internet for up to 4 hours per day. This is a great opportunity to develop online business.
• The trend of online shopping is increasing strongly: With the rapid development of online business, consumers are tending to buy more and more online, this is a great opportunity for the development of Shopee in particular and other platforms. e-commerce in general.
• Belongs to the top occupations encouraged and prioritized for development by the government

Threats

Besides opportunities, Shopee also needs to face some challenges. The main challenges in Shopee’s SWOT analysis can be listed as follows:

• Strong competitors: With the rapid development of the current e-commerce market, Shopee has many competitors worth worrying about such as Lazada, Tiki, Sendo
• Online business form: Although online shopping is growing strongly, at the same time, many incidents of fake and fraudulent purchases have created a tendency to be cautious when goods are not inspected.
• High sales costs: E-commerce is a relatively new form of sales in Vietnam, so the costs of maintaining the site, warehouses and customer support are very high.

Shopee SWOT analysis table

Strength	Weakness	Opportunity	Challenge
Catch trends quickly Occupy a high market share in the e-commerce market Have large financial resources Large and fast distribution network The policy to protect buyers and sellers on Shopee is very good. Products are sold at very preferential prices, and there are often attractive promotions.	If you exchange goods, the buyer must pay additional shipping fees. It is very difficult for Shopee to control the sources of goods of sellers on its platform. Purchasing evaluation system is not comprehensive with poor management.	Vietnamese people’s Internet usage time is high The trend of online shopping is increasing strongly	Strong competitors Form of online business Cost of sales ca

Detailed analysis of Shopee’s business strategy

To become one of the leading e-commerce platforms in Southeast Asia, Shopee has   extremely effective business strategies . So what is Shopee’s business strategy?

Shopee’s business philosophy

Regarding the philosophy of Shopee’s business strategy, the Shopee commerce platform is built to provide users with an easy, safe and fast experience when shopping online through a payment support system. and operate strongly.

Shopee strongly believes that the online shopping experience should be simple, easy and enjoyable. This belief inspires and motivates the people who work every day at Shopee.

Shopee’s business strategy goals

For Shopee’s strategic business goals, Shopee wishes to continue to develop and upgrade its e-commerce platform to become the best choice of customers throughout the region.

Besides, Shopee truly believes in the power of technology and wants to contribute to making the world a better place by connecting the community of buyers and sellers through providing a platform. ecommerce.

Shopee’s competitive advantage

Regarding competitive advantages, Shopee possesses some outstanding competitive advantages as follows.

Optimize applications on mobile platforms 

While most other e-commerce platforms only focus on the website and consider it as the main platform, Shopee implemented a different strategy from the beginning by launching a mobile application to take advantage of traffic. Consumer usage of smartphones is high in Southeast Asia.

iPrice’s recent report shows that Shopee’s mobile app is ranked top in terms of downloads and monthly active users in the region. More than 90% of Shopee’s transactions come from mobile applications.

Highly localized and customizable 

Another competitive advantage of Shopee is its high localization and customization.

Instead of making one common application for all, Shopee makes independent applications in each different market. This allows the company to introduce features specifically for the 7 markets they operate in: Singapore, Indonesia, Malaysia, Thailand, Taiwan, Vietnam and the Philippines.

For example, in Indonesia, Shopee has launched a separate section for Islamic products and services to serve the Muslim audience. In Thailand or Vietnam, where celebrities and KOLs greatly influence consumers’ buying habits, Shopee introduces online stores selling products advertised and represented by stars.

Shopee’s business strategy model

Initially, the business model that Shopee pursued was C2C – Consumer to Consumer, which means acting as an intermediary for buying and selling between individuals. Currently, Shopee has expanded its B2C – Business to Consumer model, which means buying and selling between businesses and individuals, where Shopee still acts as an intermediary.

With stricter control over product sources, or in other words, B2C model suppliers, Shopee has gradually upgraded its brand, no longer having a reputation as a centralized e-commerce channel for goods. cheap. Genuine brands appearing with the Shopee Mall brand confirm that the quality of products and services is rated relatively high.

Up to now, Shopee is still coordinating smoothly between these two business models and bringing very high efficiency.

Read more :  Top 10 most successful business models today

Shopee’s business strategy activities

Regarding Shopee’s strategic business activities, this brand has focused on developing and improving the following activities.

Research and development

With research and development activities in Shopee’s business strategy, this e-commerce platform also focuses on research and development to increase the quality of its products.

Mr. Pine Kyaw, Director of Shopee Vietnam, soon identified that mobile commerce would be an inevitable trend as mobile application technologies develop, smartphones increasingly have larger screens, better security mode… In addition, social networking sites such as Facebook, Twitter, Pinterest… have also added “like”, “buy”, etc. buttons as a way to encourage users to shop more. more, more comfortable when they are surfing the Internet.

Shopee’s Research and Development team also realized that users are spending more time on smartphones and are getting used to “touch” operations to view and shop. Smartphones have become a tool as well as a mobile environment that transmits information to consumers more quickly than on fixed devices such as personal computers.

Shopee is the first e-commerce platform in Vietnam to own an e-commerce platform with both mobile app and online website versions, leading the e-commerce trend on mobile platforms (M-Commerce & Mobile Commerce). .

Technology

Shopee attracts a large number of sellers and consumers thanks to the application of technology in shopping.

Mr. Tran Tuan Anh, CEO of Shopee Vietnam shared: “Shopee always strives to be a pioneer in expanding the integrated digital ecosystem on the platform to support more users, businesses and the consumer community. access and benefit from e-commerce.

Shopee also continues to offer a variety of digital payments to meet all user needs, including AirPay e-wallet (now ShopeePay). According to Shopee’s records, the total number of orders paid via e-wallets across the region has grown 4 times.

Human resources management

Human resource management in Shopee’s business strategy has had many changes amid the complicated developments of the Covid-19 pandemic.

Shopee has flexibly allowed employees to take turns working at home so that employees can start getting acquainted. In 2 weeks, all Shopee office staff were able to have time to adjust to the difficulties of working from home and avoid the surprises of entering the social distancing period.

With training programs, Shopee switches to online training forms, changing interactive games in each lesson into games through the kahoot.it website. Regarding training content, Shopee prioritizes content that is useful to the business situation at that time as well as necessary soft skills for employees during this period.

With engagement activities, Shopee still maintains online engagement activities through social networking sites, continuing to organize online entertainment activities exclusively for employees (singing shows, search talent,…).

Regarding the working environment, Shopee appreciates its employees and tries to give them the best support. The company continuously creates opportunities for employees to develop and improve themselves as well as provide a passionate work environment to promote a fun and collaborative work culture within Shopee.