Research: E-Commerce Likely to Continue “Burning Money” Strategy

By Editorial Team 30/01/2024
e-commerce
Summary

E-commerce companies are set to continue their cash-burn strategy to gain a competitive edge in 2024. According to Cube Asia's research, Shopee will still prioritize valuation over profit, forcing it to choose between the cash-burn strategy or targeting profitability. "In the short term, Shopee is likely to continue prioritizing growth over profitability as their current tools do not allow for a balance between the two," Cube Asia's research stated.

This assumption is also grounded in the evaluation that Shopee has not yet reached the average order value (AOV) threshold to sustain market share when the company aims for profit. According to Cube Asia's research in December 2023, Shopee's AOV figures have consistently declined over time. The average transaction value per order is merely in the range of US$1-2. Taking a cue from Uber, the company achieved profitability and maintained a 75 percent market share due to its sufficiently high AOV.

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