Sea Stock

Sea Limited (Sea), through its subsidiaries, engages in the digital entertainment, e-commerce and digital financial service businesses in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam (Southeast Asia); and Taiwan.

Businesses

Shopee E-commerce Platform

The company’s Shopee e-commerce platform is a mobile-centric, social-focused marketplace with integrated payment and logistics infrastructure and comprehensive services it offers to sellers. It is a highly scalable marketplace platform that provides users with a convenient, safe, and trusted shopping environment. Shopee is the largest e-commerce platform in Southeast Asia and Taiwan. The company is also gaining traction in Brazil and building a significant presence locally.

Shopee provides users with a convenient, safe, and trusted shopping environment that is supported by integrated payment, logistics, fulfillment, and other value-added services. The company monetizes Shopee mainly by offering sellers paid advertising services, charging transaction-based fees, and charging for certain value-added services, including logistics.

Shopee’s marketplace model allows it to scale rapidly. In addition, the company introduce many social and gamification elements into Shopee which it enables it to increase organic user acquisition, user retention and user time spent on its platform.

While the company primarily operates as a marketplace, it also purchases some products from manufacturers or third parties directly and sells on its Shopee platform under its official store to meet buyers’ demand. Bulk purchasing and direct product sales for specific product categories also enable the company to offer a better product assortment to its buyers.

Buyers and Sellers

The company’s buyers are individuals and households who mainly purchase from sellers that are within the same market.

Shopee sellers are primarily small and medium businesses, brands, large retailers, as well as individuals, who view Shopee as an efficient and reliable way of managing the selling process while maximizing customer needs. On Shopee, each seller has an online storefront on which they list their products, communicate with buyers, and complete transactions. The company’s Shopee Mall hosts brands and large retailers prominently featuring their distinct logos, and offers a premium shopping experience to a broad base of buyers.

E-commerce Platform Operations

Product Category Focus

The company uses targeted seller engagement and product placement to attract sellers and bring products to its platform. The company leverages its deep understanding of local market conditions and user preferences to prioritize product categories that has higher realization rates and profitability for its sellers. The company offers a general merchandise platform focused on long-tail high-margin categories, such as fashion, health and beauty, and home and living. Meanwhile, it continues to focus on expanding categories to include an increasingly diverse range of products.

Seller Support and Service by Shopee

The company offers strong support to sellers on the Shopee platform through large on-the-ground teams with deep local knowledge. The company’s local teams also offer fast and localized operational and technological assistance in using business management tools. Moreover, an extensive network of logistics and payment solution providers are integrated into the platform to provide users with a one-stop solution. The company also offers sellers integrated payment, logistics, fulfillment, and other value-added services.

Under Service by Shopee, the company offers a range of value-added services to sellers, including inventory management, online store operations, and fulfillment services. Depending on sellers’ needs and preferences, the company may help sellers manage inventory and fulfill orders from warehouses leased and operated by it, operate stores on its platform, or purchase products from sellers for reselling on its platform. Service by Shopee is available to sellers in the company’s Southeast Asia and Taiwan markets. The company takes the user experience beyond a traditional online marketplace environment, making online shopping truly seamless.

Buyer Protection

The company focuses on creating a secure and reliable shopping environment for its buyers and have developed robust consumer protection policies and procedures, including the following measures:

Seller Verification: Everyone that registers to become a seller on the Shopee platform is subject to the company’s verification process and must agree to its standard terms of service before opening a seller account.

Listing Screening: Shopee has adopted a set of policies and procedures to prevent and remove listings of inappropriate or illegal goods and to screen out repeat offenders. All listings on the Shopee platform first undergo automated screenings against a list of illegal product names, categories and descriptions. The company has developed this list based on local regulations and it is frequently updated by its local teams to reflect the latest regulatory requirements. Listings posted by sellers which are deemed to be of high risk based on its screening will not be visible on its platform until they are manually cleared by its operations and compliance teams. Listings that are not cleared due to regulatory violations or other violations of the company’s terms of use will be permanently removed, and the seller will not be able to edit or re-submit the same product listing. The company may suspend or remove accounts that repeatedly submit illegal or inappropriate listings.

Shopee Guarantee: The company provides Shopee Guarantee, a free service to facilitate transactions on the Shopee platform. Under Shopee Guarantee, the company holds payments made by buyers in certain designated Shopee Guarantee account held by it until the ordered products are received or deemed to have been received by the buyer. After this, the company releases the payment to the seller.

Dispute Resolution: The company has on-the-ground teams to help resolve disputes between buyers and sellers. In the case of a dispute, a buyer may submit supporting evidence through the company’s dispute resolution system and seek compensation from the seller.

Shopee Communication Tool

The Shopee platform offers a live chat function enabling real-time communication between buyers and sellers. Buyers typically use the chat function to clarify product-related details, while sellers typically use the function to confirm payment and delivery information. This communication tool has significantly improved the efficiency and security of transactions and the overall shopping experience.

Integrated Logistics Services

Logistics is critical for the development of e-commerce in the company’s markets since many of them have terrain that is difficult to navigate and underdeveloped infrastructure. The company relies on a combination of its own logistics capability and third-party logistics service providers to service Shopee orders. The logistics service providers which the company cooperates with include some of the largest and most reliable service providers in its markets. Because of the large number of transactions from the company’s platform, it is typically able to negotiate preferred terms with these service providers for its users. The company also builds its own local logistics capabilities to effectively service its buyers and sellers.

Moreover, on the company’s Shopee platform, sellers and buyers can track the delivery status of their packages and provide feedback on logistics services. The company evaluates and provides feedback to logistics service providers to improve the level of services provided to its users, including average delivery times.

Payment on Shopee

As transactions on Shopee are protected by Shopee Guarantee, buyers make payments to Shopee’s designated Shopee Guarantee account which are then released by Shopee to the sellers upon buyers’ receipt or deemed receipt of the goods. Depending on the market, sellers and buyers can choose from a number of payment options to complete transactions on Shopee, including its own mobile wallet services, credit cards, bank transfers through ATM or over the internet, and cash payments upon delivery or at designated convenience stores. Shopee has already integrated its payment processing system with SeaMoney’s payment infrastructure.

Marketing and Promotions

The company undertakes both online and offline marketing efforts to promote its brand awareness and attract new users. The company’s online efforts mainly include online advertisements through major web portals, search engines, social media, and its Shopee Affiliate Program. The company’s online advertisements focus on promoting campaigns, such as Shopee 3.3 Mega Shopping Sale, 9.9 Super Shopping Day, 11.11 Big Sale, and 12.12 Birthday Sale, as well as driving order conversions. The company’s offline marketing efforts are based on localized approaches, including television commercials on major TV channels and display advertisements in selected high traffic locations to cater to each market’s consumer landscape.

Social and Gamification Features

As part of its strategy to enhance user traffic and engagement on the Shopee platform, the company has introduced a number of innovative social and gamification features, such as Shopee Coins, Shopee Prizes, and Shopee Live. The company also enhanced its augmented reality tools, namely BeautyCam and SkinCam that enable virtual try-ons for a personalized online shopping experience.

Users can win Shopee Coins from making purchases, sharing reviews, playing mini-games and participating in campaign activities, then use these Shopee Coins to offset the cost of purchase from eligible sellers. Shopee Prizes are a variety of mini games that promote in-app interactions between fellow users through achieving individual or group rewards. Shopee Live enables buyers to watch and purchase directly from livestreams hosted by sellers and Shopee’s community of content creators. These livestreams promote real-time product demonstrations and interactions between sellers, content creators and their viewers, driving a path to purchase.

Monetization

The company monetizes Shopee mainly by offering sellers paid advertising services, charging transaction-based fees, and charging for certain value-added services, including logistics.

Revenue from Shopee also includes revenue of products sold by the company. The company purchases products from manufacturers or third parties directly and sell on its Shopee platform under its official store to meet buyers’ demand for such products.

Garena Digital Entertainment Business

Garena, the company’s digital entertainment business, primarily focuses on offering mobile and PC online games and developing mobile games for the global markets.

The company engages in digital entertainment business. The company offers its users easy access to highly engaging and localized content online that it develops or licenses, as well as organizes and sponsors exciting game activities online and offline. The company focuses on game development, curation, localization, operation, distribution, monetization, and payments, as well as user community building and esports activities.

Games

The company’s games consist of self-developed games and games licensed from third-party developers. The company offers immersive games covering some of the most popular and engaging genres, such as battle royale games; multiplayer online battle arenas, or MOBAs; action role-playing games, or action RPGs; massively multiplayer online role-playing games, or MMORPGs; racing games and sports games. In most of these games, users play online in a virtual environment existing on network game servers that connect a large number of players simultaneously to interact with each other within the games.

Mobile games have gained popularity in the company’s markets. In December 2017, the company launched the first game that it developed entirely in-house, Free Fire, a mobile game of the battle royale genre. Free Fire has enabled the company to grow globally beyond Southeast Asia and Taiwan where it initially launched its game business. It is available on the Google Play and iOS App Stores in more than 130 markets. The company plans to continue to expand its game development capabilities and publishing business.

Game Players

The company has a large and active user base for its online game business.

The company’s large user base, as well as the team and social aspects of its games keep its game players engaged and also creates powerful network effects that further attract users to its games.

In-House Game Development

The company develops mobile games that cater to the demands of highly diverse markets across the globe. The company’s game development capabilities are particularly strengthened by its global experience in game publishing. The company has a sizeable in-house game development team consisting of global developers focused on enhancing Free Fire gameplay and building out its pipeline of self-developed games.

Third-Party Games Publishing

The company also curates top third-party game content globally for publishing in its markets. The company’s market leadership and success in operating and customizing games for its local game players have helped it forge deep relationships with key international game developers in different parts of the world. Game developers choose the company to operate their games in its markets because of its leading market position, strong reputation in the online game community, and successful track record of operating and popularizing games in its markets. The company is therefore able to source high-quality games from world class developers, many of whom work with it as their exclusive partner in its markets. The company relies on its local knowledge and years of game operating experience to select games that will match user needs and genre preferences.

The company provides its game developer-partners access to a large user base in highly diverse markets across the globe, enabling its games to quickly become popular. The company’s services to third-party game developers include game launch and hosting, localization, marketing, distribution, monetization, integrated payment infrastructure, including access to its SeaMoney platform, and online and offline community building activities.

In particular, the company localizes licensed games to adapt to each market. The company works with game developers to translate game content into local languages, revise game design to suit local preferences, and meets regulatory requirements for each jurisdiction. The company also develops exclusive local content for particular markets to enhance game attractiveness to local audiences. The company’s content localization efforts entail continuing feedback loops with developers throughout the life of the games it operates.

Monetization and Payments

The company’s game monetization model is a freemium model that allows its users to download and play fully functional games for free. The company generates revenue primarily by selling its game players in-game items, which include in-game virtual items, such as digital representations of functional or decorative items, as well as season passes. Digital representation of functional or decorative items includes in-game clothing, pets, weaponry or equipment, which players can purchase and utilize within the game environment to enhance their gameplay experience. Players that purchase season passes can receive additional in-game virtual items upon satisfying certain conditions. Players who choose to purchase in-game items benefit from being able to accelerate progress, enhance social interactions, and enjoy a more personalized game playing experience.

The company offers multiple methods for users to purchase in-game items, including through its SeaMoney platform, the Google Play Store and the iOS App Store payment gateways, other online payment gateways, bank transfers, credit cards, debit cards, mobile phone billing, and prepaid cards, including its own prepaid cards, which are sold through agents.

Esports and Community Building

Garena organizes esports events annually and operates one of the largest mobile-game professional leagues in Southeast Asia, Taiwan and Brazil. The company organizes esports competitions that range in size from relatively small-scale local tournaments to widely publicized and promoted global esports events that rival the size of popular professional athletic events.

Some of the company’s users have become full-time professional esports athletes that compete for prize money in tournaments and sponsorships from large corporations that often also sponsor professional sports. Free Fire’s large esports and streaming community is another key pillar of the company’s user engagement strategy. As a result, the company’s esports operations generate strong user engagement for its games, as well as promote user acquisition and retention.

Marketing

The company devises and executes marketing plans tailored for each market. The company markets its games through a combination of online advertisement, outdoor and print advertisements, television commercials, influencer partnerships, as well as social media platforms and other online forums.

SeaMoney Digital Financial Services Business

SeaMoney, the company’s digital financial services business, is a leading digital financial services provider in Southeast Asia. The company began to offer digital financial services in 2014. In the fourth quarter of 2019, the company introduced SeaMoney as the overall brand for its digital financial services business. SeaMoney offers offline and online mobile wallet services, payment processing and other offerings across credit, insurtech and digital bank services. These services and products are offered in various markets in Southeast Asia under ShopeePay, SPayLater, SeaBank, SeaInsure and other digital financial services brands.

The company has integrated the mobile wallet services of SeaMoney with its Shopee platform across different markets, to promote efficient growth of SeaMoney and to reduce payment friction for Shopee users. Moreover, the company has use cases of its mobile wallet services outside of Sea’s platforms, including other online and offline merchants, along with a variety of third-party use cases. Third-party merchants include telecommunications companies, online and offline entertainment service providers, such as game operators or app stores, movie theaters, concert/event venues, utility service providers, food delivery service providers, credit card issuers, banks, insurance companies, and car leasing companies. As it increases the number and type of merchants on the SeaMoney platform, the company is able to offer mobile payment solutions for a wider range of products and services to meet the daily needs of its users and attract more users to the platform.

In addition, SeaMoney provides payment processing services to Shopee in almost all of the company’s markets, which, depending on the operational arrangement in each specific market, may include payments from buyers to Shopee accounts under Shopee Guarantee, as well as outgoing payments from Shopee accounts to Shopee seller accounts that are operationally handled by SeaMoney.

Moreover, SeaMoney offers other digital financial services to its users through technology, such as credit, insurtech and digital bank services. SeaMoney also provides credit offerings to select Shopee users including Shopee buyers and sellers.

The company also offers insurance products through its SeaInsure business. SeaInsure acts as underwriters for selective types of insurance products in certain of its markets and also conducts insurance brokerage business in certain of its markets.

The company mainly monetizes its digital financial services business by charging fees (fees from its mobile wallet services and payment processing services and commissions from third-party financial institutions which offer financial products or lend to consumers on its platform), by earning interest from its credit and banking businesses and by earning premium from its insurance business.

Marketing of the company’s SeaMoney products and services have been done through offline advertisements and in-app advertisements through its Shopee apps.

The financial services industry is heavily regulated and the company is required to obtain and maintain certain licenses in the jurisdictions in which it provides financial services. As of December 31, 2022, the company had obtained licenses and governmental approvals necessary to provide electronic money services in Indonesia, Vietnam, Thailand, the Philippines, Malaysia, Singapore and Brazil and to provide loans in Indonesia, Thailand, the Philippines and Malaysia. The company has also obtained licenses and governmental approvals necessary to offer general and life insurance products in Indonesia and Philippines, and to operate as a broker in Thailand.

The company acquired a controlling interest in a local commercial bank in Indonesia in 2020, and launched SeaBank in Indonesia in the latter half of 2021. The company also obtained a bank license in the Philippines, and launched SeaBank in Philippines in March 2022. In addition, the company’s wholly-owned subsidiary in Singapore has been granted a digital full bank license in Singapore in December 2021.

Customer Service

The company has dedicated customer service teams. The company’s customer service team is well-trained in assisting its users with issues they encounter on its platforms, gathering feedback on how to improve its services and receiving user complaints and suggestions. The company has adopted systematic internal procedures to quickly respond to and resolve customer complaints.

Intellectual Property

Free Fire, the company’s self-developed game, is one of its key intellectual properties. Other forms of this intellectual property include the technology and know-how that the company developed and use to operate its e-commerce and payment products. More specifically, the company relies on a combination of trademark, fair trade practice, copyright, patent and trade secret protection laws, as well as confidentiality procedures and contractual provisions, to protect its intellectual property rights. The company also actively engages in monitoring and enforcement activities with respect to infringing uses of its intellectual property by third parties.

Research and Development Expenses

The company’s research and development expenses included US$1.4 million in 2022.

Regulation

The company’s digital entertainment and e-commerce businesses are required to comply with the Personal Data Protection Act while collecting, processing, transferring, and using the personal information of its users. Failure to comply with the Personal Data Protection Act will give rise to fines and criminal liability.

The company’s digital financial services business in Thailand has obtained e-payment service business licenses for electronic money services, payment facilitating services, receiving electronic payments for and on behalf of sellers, service providers or creditors, and services for transferring money by electronic means.

The company has obtained the investment in-principle license and the business license required for foreign investment companies engaging in game distribution and e-commerce marketplace businesses in Indonesia issued by the Indonesian Investment Coordinating Board. In addition, Indonesian investment laws render void any agreements containing statements by Indonesian shareholders that they hold shares in an Indonesian company for the benefit of a foreign beneficiary. The company has registered its Shopee e-commerce marketplace business with the Ministry of Commerce.

History

The company was founded in 2009. It was incorporated in 2009 as a limited liability company in the Cayman Islands. The company was formerly known as Garena Interactive Holding Limited and changed its name to Sea Limited in 2017.