Decoding Shopee’s moves in a sea of challenges

The Checkout is Tech in Asia’s free newsletter that breaks down the biggest stories and trends in ecommerce. [Read from your browser]( The Checkout 🛒 Welcome to The Checkout! Delivered every Thursday via email and through the Tech in Asia website, this free newsletter breaks down the biggest stories and trends in ecommerce. If you’re not a subscriber, get access by [registering here](. Hello {NAME} , Privilege hit me hard across the face the other day when a parcel arrived and I couldn’t, for the life of me, remember what I had ordered. In an age when deliveries come thick and fast, it can be easy to lose track of things that are not a priority. My colleague Samreen found out that it can take newer entrants in India’s ecommerce space (read: Shopee) over a week to get packages delivered. But those who value discounts and bargains over speed might want to give Shopee a shot after reading Samreen's report on [Shopee’s foray into India.]( I can’t help but wonder if Forrest Li, the chairman and CEO of Sea Group, has a world map in his office to mark all the markets Shopee has ventured into, and the places he’d like for it to go. But the path to global domination won't be easy, given the challenges coming Shopee’s way, as Simon writes in this week's Big Story. When Shopee was still up and coming, its growth was aided by the fact that Alibaba-owned Lazada had its own troubles. But that seems to be a thing of the past. Besides, Indonesia’s GoTo is also proving to be a strong contender in the region. Shopee doesn’t want to leave anything to chance: It quietly launched a food delivery business in Indonesia in 2021 and is rapidly expanding in other countries. But as Simon explains, this expansion also comes with risks. -- Nikita THE BIG STORY  [What could go wrong for Shopee?]( Image credit: Timmy Loen Shopee dominates ecommerce in Southeast Asia, but it can’t afford to rest easy as the competition gets fierce and its rapid expansion carries risks. THE HOT TAKE  Why India’s q-commerce firms are turning to private labels Photo credit: Zepto Here’s what happened: - Two of India’s leading quick commerce firms, Swiggy’s Instamart and Zepto, are set to launch private labels. - Zepto plans to sell staples, general merchandise, and cooking essentials under its own brand by the second or third quarter of this year. - Swiggy’s Instamart will introduce its first private label through cleaning supplies next month. Here’s our take: Tapioca, sweet potato, banana, or perhaps jackfruit? The mom and pop store down my street has plenty of chips to choose from, including a shelf of unbranded packets. His wife made these, he says. “These are cheaper and better.” Launching private labels is a road well traveled. For instance, Amazon sports a number of private labels, including AmazonBasics. But private labels in the hyperlocal delivery space are a relatively new trend, though several of Instamart and Zepto’s competitors - like Reliance Retail-backed Dunzo - already have their brands in place. At least two quick commerce companies in the US - [Gopuff and Buyk]( - launched their private brands this January. Despite the thrill of having ice creams, groceries, and plant pots being delivered quicker as superfast deliveries become the norm, the spotlight remains firmly on [the trend’s economic sustainability](. Margins in the grocery delivery space are notoriously wafer thin. This is where private labels offer the proverbial ray of hope. Selling in-house products can make for fatter margins than expensive third-party brands. Zepto’s Aadit Palicha says that its private labels will [add 3% to the firm's operating earnings margin](. At Milkbasket, another grocery delivery firm, private labels contributed [20% to 22% of the startup’s revenue]( in 2020. Acquired by Reliance Retail in late 2021, the startup expected those numbers to double as it added more private labels. At least one company, however, is going against the grain. BlinkIt (previously known as Grofers), backed by Softbank and Zomato, had experimented with private labels as far back as 2016. A few years down the line, private labels made up as much as 50% of BlinkIt’s gross merchandise value. But as the firm pivoted to quick commerce late last year, it [scaled down its private labels.]( For representation purposes only / Image credit: 123rf.com While it’s unclear why BlinkIt did this, private labels have their own set of challenges, including manufacturing, quality control, and consumer perception. The last is of particular concern because in-house brands being markedly cheaper than premium-priced products might suggest that the former are inferior in quality. Southeast Asia’s consumer segments, demographically similar to India’s, are willing to try new brands across categories, according [to a recent report by McKinsey](. With price tags of private label brands being 10% to 20% lower than national brands, the McKinsey report says such brands increased margins for firms over a five-year period. Palicha believes the trick for successful private labels is to choose categories where customers have the least amount of brand loyalty and [can be easily swapped with substitutes.]( But the road to promising revenues is paved with speed bumps - the latest being reservations from the Confederation of All India Traders (CAIT). The trade organization has been asking for a tighter leash on ecommerce. Ecommerce marketplaces shouldn’t own brands or create private labels, says [CAIT’s Praveen Khandelwal](. The argument comes at a time when India is finalizing its policy on ecommerce. CAIT says marketplaces should be neutral and treat all sellers on an equal footing. Across platforms, private labels are often displayed more prominently than others. The stakes are high in the tussle between the CAIT and ecommerce portals - India’s quick commerce market is expected to touch [US$5 billion by 2025, according to a RedSeer report](. That said, business isn’t as forgiving as Wordle. The quick commerce firms may not get many chances to get private labels just right. -- Nikita  NEWS YOU SHOULD KNOW Check out Tech in Asia’s coverage of Asia’s ecommerce scene [here](.  1️⃣ Reebelo, a Singapore-based online marketplace for refurbished products, [has raised US$20 million]( in a round that also saw participation from Lazada co-founder Maximilian Bittner. Currently present in Singapore and Australia, the startup has earmarked the fresh funds for international expansion and ramping up hiring.  2️⃣ Society Pass, a Vietnam-based tech firm incorporated in the US, has made its [first foray into the Philippines]( by acquiring Pushkart, a popular online grocery delivery firm in the country.  3️⃣ Duoduo Maicai, the online grocery vertical of Pinduoduo, the China-based ecommerce giant, [may launch a delivery pickup]( service similar to Alibaba’s Cainiao Yizhan. Duoduo has reportedly partnered with some of China’s popular courier service providers, including China Post, ZTO Express, and Yunda Express.  4️⃣ Grow Commerce, an ecommerce roll-up firm based in Indonesia, [has raised US$7 million]( in a seed funding round. Founded in 2021, the firm was previously known as Berrybenka when it was a fashion ecommerce portal.  5️⃣ Dmonstudio, the fast-fashion platform reportedly launched by TikTok to compete with Shein, [ceased operations on February 11](. The platform, which reportedly lasted only for about 101 days, said it will still provide after-sale services to users who’ve bought items from the startup. FYI  Image credit: Timmy Loen [OpenSea’s NFT Free-for-All]( Thanks to the burgeoning interest in NFTs, OpenSea, the “ebay for crypto goods,” has hit a valuation of US$13 billion. But the four-year-old platform now faces a massive challenge: It has to deal with fake collections, spam, and plagiarized works. That’s it for this edition - we hope you liked it! Do also check out previous issues of the newsletter [here](. Not your cup of tea? You can unsubscribe from this newsletter by going to your “edit profile” page and choosing that option in our preference center. In the meantime, if you have any feedback or ideas, feel free to get in touch with Terence, our editor-in-chief, at terence@techinasia.com. See you next week! [ADVERTISE]( | [SUBSCRIBE]( | [HIRE]( | [FIND JOBS]( P.S. Don't miss out on the biggest tech news and analysis. Add newsletter@techinasia.com to your address book, contacts, or safe sender list. Or simply move us into your inbox. Too many emails? Switch to a different frequency or get new content through our [preference center]( or [unsubscribe](. You can also break our hearts and remove yourself from all Tech in Asia emails over [here](  Copyright © 2022 Tech in Asia, All rights reserved. 63 Robinson Road, Singapore 068894