Asian Tech Shutting e-commerce Business in India

Southeast Asia's largest consumer internet company is closing its e-commerce business in the world's second-most populous country. This could be a precursor to the future, as investors become more sceptical of large and costly growth plans in a more demanding global technology market environment.

In the fast-growing emerging markets including Southeast Asia and India in particular, incumbents that have achieved scale might fare better. On the other hand, plucky startups and foreign latecomers could face a tough time convincing investors to invest in new markets.

The parent company of the popular game “Free Fire”, Sea Ltd has pulled its e-commerce business Shopee from India earlier this week. The analysts supported the company’s decision as they believe that it must control expanding e-commerce losses. The New-York listed shares of the company are down around 66% from their October peak. 

Sea, which is also fighting Grab and Indonesia's GoTo to dominate the domestic market in Southeast Asia, is wary of capital investment in the sluggish gaming business, which is a cash cow that has accelerated the expansion of the deficit Shopee.

The company is now focusing on smaller but profitable markets like Brazil. Shopee was in India for less than six months. Meanwhile, Flipkart, Reliance Industries, Amazon and Tata Group altogether dominate more than 80% of the Indian market, according to Forrester Research estimates. Shopee also stopped operating in France, before it stopped its operations in India.