The Big Read: E-commerce layoffs – heyday of online shopping could be over, with consumers on the losing end

Another difference is that e-commerce firms have a less-robust revenue stream, while the other tech companies have either multiple or more reliable revenue streams. 

Professor Lawrence Loh, director of the Centre for Governance and Sustainability at the National University of Singapore (NUS), said that for e-commerce firms, their ability to make money depends mostly on whether they generate enough demand from a “front-facing” customer. 

This is despite the e-commerce industry having various revenue streams such as commission fees, advertising revenue, subscription fees from firms listing their products on the platform, and logistics fulfilment services.  

But all these additional streams depend on sales it can generate from consumers, which has become more difficult post-COVID-19. 

“Coming out of the pandemic, there’s a very obvious drop in demand for e-commerce, because people are showing up in brick-and-mortar shops again,” said Prof Loh.  

“The general economic environment is also not favourable, so disposable income is also less.”

Tech firms, on the other hand, have more reliable sources of revenue. 

Both Meta and Google, for instance, are making megabucks from advertisements.

For Grab, it generates revenues through multiple streams, including advertisements, ride-hailing and delivery fees, and transaction fees when payments are made through its e-wallet. 

In addition, services like ride-hailing have seen an increase in demand post-COVID, thus generating a more robust revenue stream for Grab, given social interactions have returned to normalcy, said Prof Loh.  

THE MIXED FORTUNES OF E-COMMERCE FIRMS 

Lazada was established in Singapore in 2012, and by 2015, its gross merchandise value, or the total value of merchandise sold over a given period of time through customer-to-customer deals, had grown to over US$1.3 billion (S$1.75 billion), according to tech media platform KrAsia. 

In April 2016, China’s largest e-commerce company, Alibaba, bought a majority stake in Lazada.  

Shopee was first launched in Singapore in 2015, as a subsidiary company of Sea Limited. In 2018, Shopee went on “an offensive” where it began aggressively advertising throughout Southeast Asia to expand its market there, according to KrAsia. 

Shopee’s advertising campaigns included international stars such as South Korean girl group Blackpink in 2018 and footballer Cristiano Ronaldo in 2019. 

Shopee eventually pulled ahead of Lazada, which was mired by cultural conflicts and boardroom tussles, by the time the pandemic struck the region in 2020, according to a 2021 report by online publisher Asia Times.  

In 2021, Shopee’s parent Sea was able to raise US$6 billion through an equity and convertible bond sale, the largest fundraising in Southeast Asia at that time.  

However, Shopee’s fortunes soon changed. In 2022, less than a year after it had raised record funds, Sea cut more than 7,000 jobs in its offices in Indonesia, Thailand, Vietnam, China, and Singapore across three waves of retrenchments. 

That year, Shopee also pulled out of markets it had expanded into, such as in France, Spain, India, Chile, Colombia, Mexico and Argentina. It also pulled out of Poland in 2023. 

Then, in March 2023, Shopee laid off “fewer than 500” full-time and contract workers in Shopee’s customer service team in Indonesia, Bloomberg reported.