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Singapore's Garena Rebrands as Sea, Draws $550 Million

New funds will be funneled to C2C mobile ecommerce platform Shopee

May 9, 2017 | Retail & Ecommerce

Singapore-based online gaming and ecommerce firm Garena has rebranded itself as Sea (short for Southeast Asia), after drawing in $550 million in funding from Tencent, venture capital firms GDP Venture and JG Summit Holdings, and others, according to a report from Bloomberg.

Sea is one of the most successful startups to come out of Southeast Asia so far.

The company did not release a valuation following its latest fundraising round, but in March 2016 claimed a valuation of $3.75 billion following an investment round of $170 million. The company also has an initial public offering in the works that might raise $1 billion, according to a Wall Street Journal report from December 2016.

Sea has built a successful revenue-generating business on the back of its online gaming operation before branching out into digital payments with its AirPay offering and ecommerce through mobile-focused C2C marketplace Shopee, among other services. (The company will continue to use the name Garena for its online gaming business.)

Sea said it’s taking its newfound funds and pouring them into expanding Shopee’s presence in Indonesia.

According to February 2017 data from research firm JakPat, Shopee is enmeshed in a battle with other ecommerce players in the market. Just 15% of mobile shoppers polled in Indonesia said they used Shopee—far behind market leaders Lazada (54%) and Tokopedia (50%).

Leading Mobile Shopping Apps Used by Mobile Shoppers in Indonesia, Feb 2017 (% of respondents)

However, Shopee has targeted platforms, such as Tokopedia, which were created with the desktop in mind by doubling down on creating a great experience for mobile shoppers.

From a mobile-first perspective, Shopee’s main competition is Carousell, another C2C platform that operates in many of the same markets. In that competition, Shopee appears to have benefited from logistics and payments expertise imparted by parent company Sea.

Shopee has also attempted to gain an advantage over competitors by making shipping free for as many customers as possible. In addition, the company has relied on Sea’s deep pockets to fund discounts and other subsidies to quickly grow its user base, but likely at the cost of profitability.

The approach seems to be working in the short term. Bloomberg, citing figures from Sea, reported that Shopee’s annualized gross merchandise value (GMV) now tops $3 billion.

Indonesia is emerging as a new focus for ecommerce companies in Asia-Pacific, and for good reason. eMarketer estimates that the number of digital shoppers in the country will grow from 83.0 million this year to 107.2 million in 2020.

Those figures have made Indonesia a country in which the world’s largest ecommerce players want to establish themselves.

In May 2016, Alibaba purchased the Lazada Group, giving it control of Lazada’s Indonesia unit. In addition, there are unconfirmed media reports that China’s is in talks to invest in Tokopedia as part of a move into Southeast Asia.

Shopee is already available in a total of seven markets throughout Southeast Asia: Indonesia, Singapore, Malaysia, Thailand, Vietnam, the Philippines and Taiwan—and there are signs that the platform has had some success in at least some of them.

For example, according to April 2017 DI Marketing data of ecommerce sites in Thailand, Shopee had the second highest usage rate among digital buyers in the country, at 18.8%. Only Lazada had a higher usage rate of 83.6%.

—Rahul Chadha

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