Shopee tightens grip on South-east Asia's sellers as take rates climb

Business Times

17 hours ago

IZA, a seller of customised bags and keychains on Shopee Philippines, used to earn 240,000 pesos (S$5,354) a month across her three shops on the platform. But that was before Shopee began raising its commission fees in the second half of 2024.
Since then, the total fees Shopee deducts, including shipping and transaction charges, can climb as high as 25 per cent of her sales.
'These days, I only take home around 70,000 to 90,000 pesos a month,' Iza tells Tech in Asia.
Over the past year, Shopee has gradually increased seller fees across its markets. While other platforms have also raised their fees, Shopee's rates generally remain the highest.
And that's not all, the company recently introduced additional flat fees per transaction in certain markets.
In response, a growing number of sellers are starting to speak out. But a Shopee spokesperson points out that the fees will be 'reinvested to benefit buyers, whether through shipping perks or payment benefits.'
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'We hope to continue supporting purchasing power and domestic consumption, which will in turn stimulate economic activity and benefit our sellers,' the spokesperson added.
Pressure builds
Rezky, an e-commerce specialist at an FMCG brand in Indonesia, echoes Iza's complaints. With rising fees and newly introduced charges, his product margins have dropped by around 3 to 5 per cent.
This has forced his store to raise product prices as well as cut back on marketing spend, limiting the shop to run campaigns that have already proven effective.
'We can't afford trial and error in marketing this year,' he says. While his store's revenue is still growing, the pace has slowed year on year, Rezky admits.
The new flat fees, at 1,250 rupiah (S$0.10) in Indonesia, 3,000 dong (S$0.15) in Vietnam, and RM0.54 (US$0.17) in Malaysia, are hitting low-priced items the hardest. Sellers may even choose to bundle such products rather than sell them individually.
This move has also been followed by Lazada, where the platform will implement similar flat fees, with the same amount, starting Aug 1 in Indonesia.
Daisuke Mori, CEO of ecommerce marketing agency Feedforce Vietnam, said that the firm is likely gearing itself towards 'larger, higher-margin brands' in the long run.
But it's not just the fees. Sellers have also started feeling the squeeze from other policies, such as stricter delivery timelines and return options that include 'change of mind'.
Since last year, sellers are required to ship orders placed in the morning within the same day. Those coming in after noon can be fulfilled the following day.
Rezky said that his shop has no issue with the new delivery policy, thanks to a well-equipped operations team, and he believes the policy benefits consumers. However, he acknowledges that it could pose challenges for smaller sellers who lack similar resources.
Returns are another story. Rezky notes that his shop has received returned orders because buyers changed their minds. While the volume is not yet alarming, fewer than 10 returns per month, he admits that it's an issue.
Shopee has begun tightening its return policy in response to complaints from sellers. That said, both Lazada and TikTok Shop also allow such returns.
While TikTok Shop does not offer returns for a 'change of mind', it does permit them under the label of 'no longer needed', provided certain conditions are met.
Maintaining profitability
Shopee is clearly working to boost its take rate as part of its push towards profitability. In 2024, it posted its first full-year positive adjusted Ebitda.
The marketplace's typical take rate now falls between 9 per cent and 13 per cent, including commissions, payment fees, and other mandatory selling costs, according to Simon Torring, co-founder of insights firm Cube Asia.
However, that figure can climb much higher when factoring in marketing and logistics co-investments. Sellers often have to shoulder part of the shipping cost to offer free delivery to buyers.
As a result, total selling expenses for many merchants can reach 20 to 25 per cent of post-discount sales.
While it's clear that Shopee raised its take rates to maintain profitability, the higher fees also give the company more room to reinvest in subsidies and marketing efforts aimed at attracting buyers.
In turn, consumers enjoy more frequent promotions and discounts. These incentives help boost sales on the platform and allow Shopee to defend its market share against TikTok Shop.
In 2024, Shopee reported a 21 per cent year-on-year increase in gross merchandise value (GMV) to US$66.8 billion, a faster pace compared to 2023's 15 per cent growth, according to the latest report from Momentum Works. Meanwhile, TikTok Shop posted a 38 per cent GMV increase over the same period.
That GMV growth has translated into revenue gains. Shopee's revenue rose 38 per cent year on year in 2024, driven by growth in advertising and seller commissions. Its income from commission fees alone jumped 41 per cent year on year in Q4 2024.
Le Tuan Anh, former country head of Vietnam at Leap Commerce, says that Shopee appears to be defending its position by prioritising buyers through perks – even if it comes at the cost of small merchants.
Cube Asia's Torring notes that most sellers are frustrated with the changes. But they have also tolerated them, mainly because the increased take rates are being reinvested into promotions that help drive traffic and sales.
'Most sellers are facing rising costs, but their sales are going up as well,' he points out.
No better options
In Vietnam, more than 88,000 sellers closed their stores on Shopee last year, according to local media reports. Feedforce's Mori attributes this in large part to rising fees, a sign of just how much pressure sellers are facing across the region.
As Shopee's ecosystem becomes more centralised, sellers are gradually losing their bargaining power. Leap Commerce's Anh notes that merchants would have to 'play the game' to continue to succeed.
'This means using all the available tools in e-commerce, such as live selling, affiliates, and paid ads,' he added.
Cube Asia's Torring likens the evolving dynamic to that between retail tenants and landlords.
'It's symbiotic but not overly friendly,' he explained. 'Both parties seek to extract maximum value from the partnership.'
This shift has pushed some merchants to look at alternative sales channels.
Without meaningful alternatives that can match Shopee's reach, it's hard for niche platforms to attract and retain a critical mass of sellers and buyers. PHOTO: SHOPEE
Smaller sellers are testing 'guerilla' commerce strategies such as conversational selling on WhatsApp or Telegram, most of Vietnam's ecommerce transactions are still done on Facebook, Anh points out.
For larger brands, Anh suggests exploring direct-to-consumer websites, affiliate marketing, and livestream-driven commerce. These models allow them more control over margins, customer data, and brand narrative.
But scaling these alternatives remains challenging. Mori notes that many small sellers still rely on the traffic and infrastructure that platforms such as Shopee provide.
Without meaningful alternatives that can match Shopee's reach, it's hard for niche platforms to attract and retain a critical mass of sellers and buyers.
For Philippine gadget shop Kimstore, staying on Shopee is still worth it, for now.
'We are still getting very decent sales from the platforms,' said Kim Lato, CEO and co-founder of Kimstore. 'So the strategy now is to take advantage of platform campaigns and guide customers to whichever channel gives us the best deal.'
FMCG brand seller Rezky also said that has started testing alternative channels such as WhatsApp. But Shopee and the stable sales it provides means it will still be a key focus.