Achieving profit again! Shopee’s parent company, Sea, released its first-quarter financial report; Survey Lazada rises to second place in Indonesia; TikTok Shop’s fully-managed business is officially launched

Sea's Q1 financial report shows profit, Lazada is now second in Indonesia, and TikTok Shop's fully-managed business is launched

01 Latecomers arrive first!

TikTok Shop’s fully managed service is officially launched

It is reported that TikTok Shop, a cross-border e-commerce platform, announced on May 16th the launch of a “fully managed” operating model, providing merchants with a more convenient and efficient sales channel.

Merchants only need to provide product supply, reducing operational costs and risks, and the platform will be responsible for all subsequent operations.

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The advantage of the fully managed model is that merchants only need to “purely supply goods”. After the merchant’s product is approved through the push and sample review, the merchant provides the product to the platform, and the platform is responsible for operations, logistics, performance, and after-sales services. Merchants will release a lot of time and energy, and can focus on product research and development and production to continuously improve production efficiency.

In this mode, the merchant’s operating chain is simpler, and the platform can leverage economies of scale to maximize the supply of goods, improve the shopping experience for consumers, and help fully connect the advantages of the cross-border supply chain with TikTok’s global flow advantages.

In addition, TikTok Shop also provides merchants with comprehensive business protection for cross-border e-commerce.

Currently, the platform does not charge commissions or deposits, and merchants do not need to bear traffic fees, overseas logistics and warehousing costs. For merchants, costs only come from the product price.

For payment settlement, TikTok Shop uses the local currency for quick settlement, and merchants do not need to bear the risks of capital inflows and exchange rates.

It is reported that TikTok Shop’s fully managed model for cross-border e-commerce has opened up recruitment in the Saudi Arabian and British markets, and is expected to be launched in more markets.

The fully managed model will be more beneficial to factory-type and trade-integrated merchants. Merchants can save time and energy to focus on optimizing product research and development and production, while fully utilizing TikTok’s traffic advantages and the ability to drive popularity to sell across the entire network, and will be able to fully leverage and release the advantages of the cross-border industry chain.

Furthermore, for cross-border merchants operating in Southeast Asia and other regions, TikTok Shop will continue to support merchants to operate through platform mode.

(Link to enter the fully hosted mode: https://wenjuan.feishu.cn/m?t=sKUJXojg3uMi-csmz)

02 Achieving Quarterly Profit Again

Shopee’s parent company Sea released its first-quarter financial report

Yesterday (May 16th), Sea, the parent company of Shopee, released its first-quarter financial report for 2023.

The report showed that in the quarter, Sea’s revenue was $3.04 billion, a year-on-year increase of 4.9%; gross profit was $1.4 billion, a year-on-year increase of 21.1%; as of the end of the quarter, cash, cash equivalents, short-term investments, and other investments were $7.2 billion, a net increase of $257.5 million from December 31, 2022.

Thanks to continuous efficiency optimization and revenue growth, the adjusted EBITDA turned positive again in the quarter, reaching $510 million. After achieving profitability for the first time in the fourth quarter of last year, Sea achieved profitability again in the first quarter of this year.

It is worth noting that the e-commerce department Shopee performed well, with revenue reaching $2.1 billion, accounting for more than 60%, a year-on-year increase of 36.3%.

The revenue contribution of the e-commerce platform was $1.8 billion. Among the e-commerce platform revenue, the core e-commerce platform revenue composed of transaction commissions and advertising revenue increased by 54.3% year-on-year to $1.2 billion; value-added service revenue increased by 32.6% year-on-year, reaching $700 million. In this quarter, Shopee still maintained restraint in sales and marketing expenses, with a year-on-year decrease of 51.7%.

The steady growth of revenue and cost discipline supported Shopee’s achievement of quarterly profit again, and the adjusted EBITDA for this quarter was $210 million.

Like its e-commerce business, SeaMoney, the digital financial services division, also saw profitability this quarter. SeaMoney achieved revenue of US$410 million this quarter, a year-on-year growth of 75%. Adjusted EBITDA was US$98.9 million.

In addition, Garena, the digital entertainment division, had revenue of US$540 million this quarter, with pre-sale service revenue of US$460 million. Adjusted EBITDA was US$230 million.

03 Survey: Lazada Rises to Second in Indonesia

Recently, the Association of Indonesian Internet Service Providers (APJII) released data on internet user behavior in the country.

Firstly, 63.74% of Indonesian internet users spend 1-5 hours online, with 22.44% spending 6-10 hours, 7.14% spending more than 10 hours, and 6.68% spending less than 1 hour. 99.51% of people use a mobile phone or tablet, while only 7.37% use a computer or laptop.

Secondly, the most visited content by Indonesian internet users is health (36.96%); followed by sports (34.34%), entertainment or gossip (32.32%), economics, finance and business (28.98%), politics, society, law and human rights (24.73%), culture and tourism (22.17%), education and technology (18.44%), international (4.85%), and other (3.63%).

Thirdly, for OTT or social media platforms, the most visited are YouTube, accounting for 65.41%, Facebook accounting for 60.24%, Instagram accounting for 30.12%, and TikTok accounting for 26.80%; in terms of instant messaging apps, the most commonly visited are WhatsApp at 98.63%, Facebook Messenger at 46%, and Telegram at 12.91%.

Finally, online shopping has become a part of people’s lifestyles. Among the many online shopping platforms, 56.04% of visits were to Shopee, followed closely by Lazada at 32.72%, then Tokopedia (12.80%), TikTok Shop (8.29%), Bukalapak (2.84%), and Blibli (0.92%).

According to APJII’s survey, the internet penetration rate in Indonesia is expected to increase by 3.32% in 2023, which is slower compared to the previous year.

Arif stated, “This slowdown indicates that we need to increase our efforts to expand internet access, especially in areas that are not yet covered.”

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