MGT7106E Digital Business Entrepreneurship Individual Assignment 2026 | PBS

MGT7106E Individual Assignment

Case Study

“Shopee’s Digital Marketplace Dominance and the Future of E-Commerce Competition in Southeast Asia”

Shopee has emerged as one of the most influential digital marketplace platforms in Southeast Asia. Launched in 2015 under Sea Limited, Shopee rapidly transformed from a mobile-first customer-to-customer (C2C) marketplace into a dominant business-to-consumer (B2C) and integrated digital commerce ecosystem.

The growth of internet penetration, smartphone adoption, digital payment systems, and changing consumer lifestyles in Southeast Asia created favorable conditions for digital entrepreneurship and electronic commerce. Shopee capitalized on these opportunities by positioning itself as a highly localized platform capable of serving diverse customer segments across multiple countries including Malaysia, Indonesia, Thailand, Vietnam, Philippines, and Singapore.

Unlike traditional retail businesses, Shopee operates as a digital platform ecosystem connecting buyers, sellers, logistics providers, advertisers, payment service providers, influencers, and merchants within a single marketplace infrastructure. Through its digital platform model, Shopee generates revenue from transaction commissions, advertising services, logistics integration, seller subscriptions, and digital financial services.

Shopee adopted an aggressive market penetration strategy during its early years by prioritizing customer acquisition over profitability. The company invested heavily in free shipping vouchers, cashback campaigns, discount promotions, and celebrity endorsements. These strategies significantly increased platform traffic and customer engagement but also resulted in high operational and marketing expenditures.

One of Shopee’s key competitive advantages lies in its mobile-first strategy. Recognizing the dominance of smartphone users in Southeast Asia, Shopee optimized its application for mobile commerce and integrated user-friendly features such as:

• Flash sales
• Live-stream shopping
• In-app games and rewards
• Personalized recommendations
• AI-powered product suggestions
• Mobile wallet integration
• Real-time customer support

Shopee’s gamification strategy became highly successful among younger consumers. Features such as “Shopee Shake,” reward coins, daily check-ins, and entertainment-based shopping experiences increased customer retention and purchasing frequency. The company effectively combined entertainment and commerce, contributing to the rise of “shoppertainment” in the region.

In addition, Shopee expanded its ecosystem through ShopeePay and integrated logistics partnerships. By developing digital payment capabilities and strengthening supply chain coordination, Shopee improved transaction convenience and delivery efficiency. During the COVID-19 pandemic, online purchasing behavior accelerated dramatically, further strengthening Shopee’s market position as consumers shifted toward digital commerce channels.

However, despite its rapid growth, Shopee faced intense competition from regional and global marketplace players including Lazada, TikTok Shop, Amazon, and local niche platforms. Competitors continuously introduced innovative features, lower commission fees, integrated entertainment content, and social commerce strategies to attract both customers and sellers.

The emergence of social commerce created new competitive pressures for Shopee. Platforms such as TikTok Shop integrated short-form video content, influencer marketing, algorithmdriven product discovery, and live-stream commerce into the shopping experience. Consumers increasingly preferred entertainment-driven shopping experiences where purchasing decisions were influenced by content creators and live interactions.

Shopee also encountered operational and strategic challenges across Southeast Asia due to varying government regulations, taxation policies, and digital governance frameworks. Different countries imposed different rules regarding:

• Foreign ownership
• Consumer protection
• Digital taxation
• Data privacy
• Cross-border trade
• Product authenticity
• Cybersecurity compliance

The issue of counterfeit products and fake sellers also affected customer trust and platform credibility. Although Shopee implemented seller verification systems, AI monitoring tools, and customer reporting mechanisms, maintaining marketplace quality remained a major operational challenge due to the large number of third-party sellers.

Another growing concern involved environmental sustainability. The rapid growth of ecommerce increased packaging waste, carbon emissions from logistics operations, and unsustainable delivery practices. Consumers and governments began demanding more environmentally responsible operations from digital marketplace companies.

From a profitability perspective, Shopee faced pressure from investors to reduce losses and improve financial sustainability. The company began reducing promotional subsidies, restructuring operational costs, and optimizing workforce efficiency. However, reducing incentives risked weakening customer loyalty in a highly price-sensitive market.

At the same time, advancements in artificial intelligence, big data analytics, predictive algorithms, and digital personalization created new opportunities for Shopee to improve marketplace efficiency and customer experiences. Through data analytics, Shopee could analyze customer behavior, forecast demand, optimize recommendations, identify fraudulent activities, and improve advertising effectiveness.

As Southeast Asia continues to experience digital economic growth, Shopee faces a critical strategic dilemma:

• How can the company sustain long-term competitive advantage while balancing profitability, innovation, customer satisfaction, platform governance, and sustainability?
• Can Shopee maintain marketplace leadership amid the rise of social commerce and AIdriven competition?
• What strategic transformation should Shopee undertake to remain relevant in the future digital economy?

Students are required to critically evaluate Shopee’s marketplace strategies, digital entrepreneurship practices, competitive challenges, and future sustainability using relevant business theories, marketplace frameworks, and analytical models.

Task Requirements

Answer all questions.

Section A: Strategic Marketplace Evaluation

Question 1

Critically evaluate the effectiveness of Shopee’s digital marketplace business model in sustaining competitive advantage within the Southeast Asian e-commerce industry.

In your evaluation, discuss:

Answer

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