Samuel Christian College of General Trias, Inc.

HIGHER EDUCATION DEPARTMENT

SHOPEE: A COMPANY ANALYSIS

Submitted to the Faculty of

Higher Education Department
Samuel Christian College of General Trias, Inc.
Navarro, General Trias City, Cavite

In partial fulfillment
of the requirement for
AE 21: IT Application Tools in Business
Bachelor of Science in Accountancy

Submitted by:
Castillo, Jzyl S.
Cruz, John Benedict P.
De Jesus, Clark Juro
Dacutanan, John Carlo J.
Hernandez, John Paul D.
Lepiten, Darlene Ann I.
Rabino, Jhenna Maye B.
Samartino, Shayne Karylle R.
Velasquez, Mark Andrick M.

Submitted to:
Mr. Stephen Sonn Centeno, CPA

December 2024

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INTRODUCTION

Shopee has become a preferred online shopping website in the last few years. Due to
easy accessibility and reliable services, people are shifting more and more towards this online
shopping platform. Millions of people worldwide sit in the comfort of their homes and order
products without any hassle on Shopee.

A. Company Overview:

Shopee Pte. Ltd., founded in 2015, is one of Southeast Asia’s largest and most
successful e-commerce platforms. Operated by Sea Group (formerly Garena), Shopee has
rapidly expanded its reach across multiple countries, becoming a dominant force in online
retail. Shopee has become a preferred online shopping website in the last few years. Due to
easy accessibility and reliable services, people are shifting more and more towards this online
shopping platform. Millions of people worldwide sit in the comfort of their homes and order
products without any hassle on Shopee. Shopee is mainly accessible to people in South-East
Asia, namely, in countries like Indonesia, Taiwan, Vietnam, Thailand, Philippines, Malaysia,
and Singapore. It is also a favorite in Brazil, Mexico, Colombia, Chile, Poland and Argentina.
The company originated in Singapore in 2015 as a multinational digital shopping portal.

This section provides a comprehensive overview of Shopee, covering its mission,

products and services, history, organizational structure, and business model.

Company Name, Mission, and Vision

Shopee is an e-commerce platform that facilitates online shopping, allowing individuals and
businesses to buy and sell products across various categories. Shopee operates primarily in
Southeast Asia and Taiwan, with plans for expansion into Latin American markets.

Name: Shopee

Mission: Shopee's mission is to create the best shopping experience for its users by
providing a user-friendly platform for individuals and businesses to buy and sell goods. The
platform aims to empower small and medium-sized businesses, providing them with tools to
scale and reach a wider audience (Sea Group, 2023).

Vision: Shopee's vision is to be the leading e-commerce platform in Southeast Asia and
beyond. The company aims to make online shopping accessible, enjoyable, and seamless for
all users, ensuring that both buyers and sellers can benefit from its platform’s features (Sea
Group, 2023).

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Products and Services

Shopee offers a wide range of products and services that cater to different segments of the
market. These include:

●​ Retail Products: Shopee hosts a variety of product categories, including electronics,

fashion, beauty, home appliances, toys, and groceries. Sellers on the platform range
from individuals to large brands, offering both local and international products.
●​ Shopee Mall: This is Shopee’s premium offering, featuring products from well-known
brands and businesses. Shopee Mall offers guaranteed authenticity, fast delivery, and
easy returns for shoppers.
●​ ShopeePay: Shopee provides its digital wallet, ShopeePay, which allows users to
make online payments, top up their wallets, and earn rewards through the platform.
ShopeePay also facilitates offline transactions, allowing users to make payments at
participating stores (Lau, 2021).
●​ Shopee Live: An innovative live streaming feature that allows sellers to interact with
buyers in real-time, showcase products, and conduct live shopping events.
●​ Logistics Services: Shopee offers an integrated logistics solution to sellers and
buyers through Shopee Xpress, its delivery arm, which handles warehousing,
shipping, and last-mile delivery services. This service is crucial in enhancing
customer experience by reducing delivery times (Lai, 2022).
●​ Shopee Guarantee: Shopee Guarantee is a feature that ensures customer
protection by holding payment in escrow until the buyer confirms that the product has
been received in satisfactory condition. This provides trust and security for both
buyers and sellers, reducing the risks associated with online transactions.
●​ Shopee Affiliate Program: Shopee offers an affiliate marketing program where
individuals and influencers can earn commissions by promoting Shopee products.
Affiliates can create content or share referral links that lead to Shopee’s products, and
earn a percentage of the sales generated through their promotions.
●​ Shopee University: Shopee University is an educational program aimed at helping
sellers improve their knowledge and skills to succeed on the platform. It provides free
online training, tutorials, and resources on topics like digital marketing, sales
strategies, and how to optimize product listings for better visibility and sales.
●​ Shopee Ads: Shopee Ads is an advertising service designed to help sellers increase
visibility for their products. Sellers can use Shopee’s ad products, such as Search
Ads, Display Ads, and Banner Ads, to promote their items across the platform,
targeting relevant shoppers based on their browsing behavior and search history.
●​ Shopee PayLater: Shopee PayLater is a financing service that allows eligible
customers to purchase items and pay for them in installments. This service offers
flexibility in payment, enabling buyers to spread the cost of their purchases over a
period of time.

These products and services position Shopee as a one-stop platform for e-commerce needs,
catering to both consumer demand and seller capabilities.

History: Brief History, Key Milestones, and Evolution

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Shopee was launched in 2015 by Sea Group (formerly Garena) to address the growing
demand for online shopping in Southeast Asia. Initially, it started as a mobile-first platform
with the goal of providing a seamless online shopping experience for mobile users, a strategy
that differentiated it from its competitors like Lazada and Tokopedia.

●​ 2015: Shopee was officially launched in Singapore. Its mobile-focused approach and
easy-to-use interface allowed it to quickly gain traction.
●​ 2016-2017: Shopee expanded its operations to other Southeast Asian countries,
including Malaysia, Thailand, Vietnam, Indonesia, and the Philippines. During this
time, the company also started offering localized services such as cash-on-delivery
and language-specific interfaces.
●​ 2018: Shopee's success was evident as it became the top e-commerce platform in
Southeast Asia. Shopee expanded its offerings to include a wider variety of
categories and launched Shopee Mall, its premium brand for customers seeking
high-quality and authentic products.
●​ 2020: Shopee achieved significant growth due to the COVID-19 pandemic, which
pushed more consumers to online shopping. The company introduced ShopeePay
and enhanced its logistics network, ensuring a smooth shopping experience despite
global disruptions. Shopee also made its debut in the Brazilian market, signaling its
plans to go global beyond Southeast Asia (Lim, 2020).
●​ 2021-Present: Shopee has continued to expand its presence in new markets,
improving its logistics and payment systems while innovating in areas like live
shopping and social commerce. Shopee’s parent company, Sea Group, has also
diversified into gaming and digital entertainment with its subsidiary, Garena, further
solidifying its leadership in Southeast Asia’s tech ecosystem (Chia, 2021).

Organizational and Business Structure

Shopee is a subsidiary of Sea Group, a global consumer internet company founded

by Forrest Li in 2009. Sea Group operates multiple business units beyond Shopee, which
include:

●​ Garena: A global digital entertainment company known for its gaming platform and
the development of the hit game Free Fire. Garena’s success in the gaming industry
provides Sea Group with a diverse revenue stream and a significant user base that
complements Shopee’s expansion.
●​ SeaMoney: Sea’s digital financial services arm, which includes ShopeePay,
SeaBank, and other fintech initiatives. SeaMoney aims to provide financial inclusion
in Southeast Asia by offering mobile payments and banking services to underserved
populations (Sea Group, 2023).
●​ Shopee Xpress: Shopee’s logistics arm, providing last-mile delivery and
warehousing services to both buyers and sellers. Shopee Xpress enhances Shopee's
e-commerce operations by ensuring timely and efficient delivery.

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Shopee’s Organizational Structure: Shopee is structured as a large-scale regional

e-commerce company, with country-specific teams in each of its key markets (such as
Indonesia, Thailand, the Philippines, and Malaysia) to ensure a localized approach. The
company is organized into various departments such as marketing, operations, product
management, logistics, and customer service, with each department responsible for specific
functions within its region. The leadership is headed by Chris Feng, Shopee's CEO, who
reports to Sea Group’s management.

Business Model

Shopee operates on a hybrid business model that combines e-commerce sales,

digital payments, logistics services, and advertising, making it a multifaceted
revenue-generating platform.

●​ Revenue Generation:

Transaction Fees: Shopee generates revenue from transaction fees charged to

sellers for every sale made on the platform. These fees vary depending on the type of product
sold, but they generally fall within a 1%-2% range per transaction (Shopee, 2022).

Advertising Fees: Shopee also earns revenue through advertising services. Sellers
can promote their products via Shopee’s sponsored ads program, which provides visibility in
search results and on product pages.

ShopeePay and Financial Services: Shopee generates additional revenue from its
digital wallet, ShopeePay. By processing payments and facilitating transactions, Shopee
earns fees from both users and merchants using the service (Lim, 2020).

Logistics and Shipping Services: Shopee's logistics arm, Shopee Xpress, provides
delivery services to sellers and buyers, charging for fulfillment and delivery.

●​ Value Proposition: Shopee offers a value proposition focused on affordability,

convenience, and trust. By providing a seamless shopping experience, Shopee
attracts a broad consumer base. Its platform offers an easy-to-use mobile interface,
secure payment systems, fast delivery through Shopee Xpress, and promotional
events like sales campaigns and flash deals. Additionally, Shopee’s localization
strategy ensures that it caters to specific market needs in each region.

Target Market: Shopee primarily targets price-conscious consumers in Southeast Asia,

ranging from young adults to middle-aged individuals looking for a convenient shopping
experience. The platform caters to both first-time buyers and repeat customers, including
small businesses, local entrepreneurs, and large brands. Shopee also focuses on the
underbanked populations in emerging markets by offering cash-on-delivery options and digital
payment services through ShopeePay.

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Shopee’s ability to offer a range of products from budget-friendly items to premium brands,
along with its localized approach, helps it serve a wide array of customers across different
demographics.

B. Company Good Practices:

Shopee has implemented a variety of best practices across different areas of its
business. These practices encompass innovative uses of information technology (IT),
effective utilization of enterprise systems, strong IT governance, adherence to ethical
standards, and a focus on information security. Shopee’s strategic approach in these areas
contributes to its success and resilience in the competitive e-commerce landscape.

1.​ Information Technology (IT): Innovative Uses of IT

Shopee has been at the forefront of integrating innovative IT solutions to enhance its
business operations. The company continually adopts new technologies to improve user
experience, optimize logistics, and support its growing ecosystem.

●​ AI and Big Data for Personalization: Shopee leverages artificial intelligence (AI)
and big data analytics to provide personalized shopping experiences for its users.
Through machine learning algorithms, Shopee can analyze consumer behavior,
preferences, and browsing patterns to offer tailored recommendations. This not only
increases conversion rates but also enhances customer satisfaction by showing
relevant products (Tan, 2021). For example, Shopee uses AI-driven search engines
to display products that align with user preferences, helping shoppers find what they
want faster.
●​ Chatbots and Customer Service Automation: Shopee has deployed chatbots to
assist with customer inquiries. These AI-powered systems provide instant responses
to common questions and issues, allowing Shopee to offer 24/7 support to
customers. The use of automation has significantly reduced response times,
improved service efficiency, and decreased operational costs (Lau, 2021).
●​ Cloud Infrastructure: Shopee relies on cloud computing to scale its operations
efficiently. By using cloud-based infrastructure, Shopee ensures that its platform
remains responsive, even during peak shopping periods such as flash sales or
holiday promotions. This flexibility supports Shopee’s expansive growth across
Southeast Asia, handling large volumes of transactions and product listings without
compromising performance (Lim, 2020).
2.​ Use of Functional and Enterprise Systems

Shopee integrates various enterprise systems to streamline its operations, improve

productivity, and offer enhanced services to customers and sellers. These systems support
essential functions such as inventory management, order processing, customer relationship
management (CRM), and human resources.

Customer Relationship Management (CRM): Shopee uses a robust CRM system

to manage interactions with users and enhance customer loyalty. The CRM system helps
Shopee segment its user base and run targeted marketing campaigns, personalized offers,

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and promotions. By analyzing user data, Shopee can tailor its approach to different segments,
thereby improving user retention and engagement (Goh, 2022). For example, Shopee
regularly uses its CRM to send personalized discount vouchers or promotions based on
users' previous shopping behaviors.

Enterprise Resource Planning (ERP): Shopee implements ERP systems to

integrate and manage its core business processes, including finance, logistics, and inventory
management. The ERP system helps Shopee track inventory in real-time, manage product
listings efficiently, and ensure that orders are processed swiftly. The integration of ERP allows
for seamless coordination between departments, which is essential for maintaining
operational efficiency across multiple regions (Lee, 2021).

Human Resource Management Systems (HRMS): Shopee uses HRMS to manage

employee data, track performance, and streamline recruitment. The HRMS system provides
Shopee with insights into employee engagement, retention, and productivity, enabling the
company to foster a supportive work culture. By leveraging HRMS tools, Shopee can
enhance workforce management, ensure compliance with labor laws, and improve overall
employee satisfaction (Huang, 2021).

3.​ IT Governance: Strong Governance Practices

Shopee adheres to strong IT governance practices to ensure that its IT resources

are used effectively, efficiently, and in alignment with its strategic goals. Shopee’s IT
governance framework is designed to ensure proper oversight, minimize risks, and
optimize technology investments.

Alignment with Business Objectives: Shopee ensures that its IT strategy is aligned with
the company's overall business goals. For instance, the company’s use of AI and cloud
technologies is directly linked to its goal of scaling operations across Southeast Asia.
By aligning IT initiatives with its business objectives, Shopee ensures that technology
investments deliver tangible benefits (Sea Group, 2023).

Risk Management and Compliance: Shopee implements strict risk management protocols
to mitigate potential risks in its IT systems. The company follows industry best practices in
terms of compliance with data protection regulations, such as the General Data Protection
Regulation (GDPR) in Europe and local laws in Southeast Asia. Shopee's governance
practices help it remain agile and respond to emerging challenges, such as market
fluctuations or regulatory changes, while maintaining operational control

Continuous Monitoring and Reporting: Shopee utilizes continuous monitoring of its IT

infrastructure and systems, ensuring that any issues or inefficiencies are identified and
addressed promptly. The company reports key performance indicators (KPIs) to senior
management regularly, allowing for timely adjustments and informed decision-making
(Chia, 2022).

4. Ethics: Ethical Practices in IT

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Shopee is committed to upholding ethical standards in its use of IT, ensuring that both
its customers and employees are treated fairly, with integrity.

Fair Treatment of Sellers and Buyers: Shopee follows ethical practices in its dealings with
sellers and buyers. For instance, Shopee provides transparency in its fee structures and
ensures that sellers are not unfairly charged for promotions or sales campaigns.
Shopee also maintains a fair review system, where customer feedback is monitored for
accuracy and authenticity, preventing fraudulent reviews from misleading buyers (Tan, 2021).

Transparency in Data Use: Shopee is transparent about its use of customer data, ensuring
that users are informed about how their personal information is handled. The company
complies with data privacy regulations, allowing users to control their data preferences,
such as opting out of targeted advertising or data sharing (Shopee, 2022).

Commitment to Social Responsibility: Shopee engages in corporate social

responsibility (CSR) activities, including environmental sustainability initiatives and social
welfare programs. The company has launched campaigns promoting eco-friendly
packaging, encouraging customers to make sustainable choices when shopping (Lau,
2021).

5. Information Security: Measures to Protect Sensitive Data

Shopee places significant emphasis on information security to protect sensitive data,

ensuring that both customer and company information is secure from potential cyber threats.

Data Encryption and Secure Payment Systems: Shopee uses encryption technologies
to protect sensitive data during online transactions. The platform employs industry-standard
SSL encryption to secure customer payment details, ensuring that all financial transactions
are conducted safely. Shopee also integrates secure payment gateways to further safeguard
customers from fraud (Lee, 2021).

Multi-Factor Authentication (MFA): Shopee enhances security by implementing

multi-factor authentication (MFA) for both sellers and buyers. This additional layer of
protection prevents unauthorized access to user accounts and reduces the risk of data
breaches (Lau, 2021). Sellers are required to authenticate their accounts through multiple
verification methods, ensuring that only authorized individuals can access sensitive business
data.

Regular Security Audits and Penetration Testing: Shopee conducts regular security
audits and penetration testing to identify potential vulnerabilities in its system. These
proactive measures allow the company to stay ahead of emerging cybersecurity threats.
Shopee collaborates with third-party security experts to identify weaknesses and address
them before they can be exploited (Tan, 2021).

Incident Response Plan: Shopee has developed a comprehensive incident response

plan to address any security breaches. The plan includes protocols for identifying, responding

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to, and recovering from cyberattacks. This quick-response mechanism helps the company
minimize the impact of any security incidents on its operations and user trust (Shopee, 2022).

C. Company Dysfunctional Practices

Shopee, one of the leading e-commerce platforms in Southeast Asia, has significantly
grown in recent years. However, like any large-scale company, Shopee faces challenges in
several areas, including information technology (IT), the use of functional and enterprise
systems, IT governance, IT security, and ethical issues related to IT. Below is a detailed
critique of these areas, supported by real-life examples.

1. Information Technology (IT):

Shopee's rapid growth has sometimes led to IT-related challenges that hinder its
operations. One of the primary issues is the platform's reliance on third-party cloud services
for hosting and scalability. As Shopee expanded during peak shopping events like the 11.11
sale, the website and mobile app experienced significant downtime. For example, during the
11.11 sales in 2020, Shopee's website was slow, and some users reported failures during
checkout (Bersales, 2020). This slow performance can be attributed to the infrastructure
challenges of scaling servers during high traffic, exposing weaknesses in Shopee's IT
infrastructure. The company's inability to optimize and anticipate peak traffic times resulted in
diminished customer satisfaction, impacting overall sales and brand image.

Moreover, Shopee's algorithm for recommending products has also faced scrutiny. In
2021, customers criticized the platform for recommending products with poor ratings or
irrelevant ads based on browsing history (Jalil, 2021). This may indicate inefficiencies in
Shopee's IT systems for personalizing and accurately targeting customer preferences.

2. Use of Functional and Enterprise Systems: Inefficiencies or Failures in the Use

of Systems Like CRM, ERP, or HRMS

Shopee utilizes various functional and enterprise systems, including Customer

Relationship Management (CRM), Enterprise Resource Planning (ERP), and Human
Resource Management Systems (HRMS). However, there have been inefficiencies in their
use that impact business operations.

CRM: Shopee’s CRM system has been criticized for not offering a seamless customer
experience. Customers have reported issues with order tracking and communication, with
many complaints going unanswered. For instance, in 2021, there were numerous instances
where users were not notified about the status of their orders in real-time, resulting in poor
customer experience and trust issues (Southeast Asia Globe, 2021). The CRM system's
failure to efficiently address customer queries and provide updates reflects the lack of
integration between customer support and order tracking systems, undermining its
effectiveness.

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ERP: Shopee uses an ERP system to manage its resources across various departments.
However, a key challenge for the company has been the integration of its ERP with the supply
chain and inventory management systems. Problems such as inventory discrepancies and
stockouts during high-demand periods (e.g., major sales events) have been linked to ERP
inefficiencies (Lim, 2022). Shopee’s inability to ensure real-time synchronization of inventory
levels, especially with numerous sellers on the platform, can lead to significant operational
disruptions, lost sales, and damaged supplier relationships.

HRMS: Shopee has expanded rapidly, leading to increased demands on its HR systems. The
company’s HRMS has faced challenges in managing its large workforce across multiple
countries. There have been reports of payroll issues and a lack of centralized systems to
manage employee data effectively, especially for part-time and remote workers (Goh, 2021).
This lack of streamlined processes can create inefficiencies in managing human resources,
impacting employee satisfaction and retention.

3. IT Governance: Weaknesses in IT Governance That Could Lead to Risks or

Inefficiencies

Effective IT governance is essential to ensure that IT investments align with the company's
business objectives, reduce risks, and maximize value. Shopee has experienced governance
challenges, particularly related to the management of data and system integration.

One area where Shopee’s IT governance could improve is in ensuring that its data handling
and privacy protocols align with international standards. For instance, in 2020, Shopee faced
scrutiny over data privacy concerns after users reported issues with the platform collecting
excessive personal information without consent (Nguyen, 2020). This raises questions about
the company's IT governance in terms of handling user data and ensuring compliance with
privacy regulations such as the General Data Protection Regulation (GDPR) in Europe or the
Personal Data Protection Act (PDPA) in Singapore.

Moreover, Shopee’s rapid growth has led to some difficulties in its IT resource allocation.
When there is a lack of strategic oversight and prioritization of IT projects, it can lead to
resource mismanagement and duplication of efforts, causing inefficiencies. For example, its
infrastructure issues during high-traffic events, as mentioned earlier, could have been avoided
with better strategic planning and IT governance that focuses on scalability and redundancy.

4. IT Security Threats: Vulnerabilities or Incidents That Expose the Company to

Cyber Threats

IT security is a significant concern for any online business, and Shopee is no exception. The
company has faced security vulnerabilities that expose it to cyber threats, affecting both the
company and its users.

One of the most significant issues is Shopee’s susceptibility to data breaches. In 2020,
Shopee experienced a security incident where a vulnerability in its website allowed attackers
to gain access to customer data. The incident exposed sensitive user information, including
names, phone numbers, and email addresses (Chia, 2020). While the company quickly

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responded by fixing the breach, it raised questions about the adequacy of Shopee’s IT
security measures in protecting customer data.

Additionally, Shopee’s user authentication system has been targeted by phishing scams,
where fraudulent entities have tricked users into providing login credentials through fake
websites or app notifications (Tan, 2021). This not only exposes the company to potential data
leaks but also damages its reputation as a trusted e-commerce platform.

5. Ethical Issues in IT: Instances Where the Company May Have Faced Ethical
Challenges Related to IT

Shopee has faced ethical challenges in the realm of IT, particularly related to data privacy,
algorithmic bias, and the ethical sourcing of products.

Data Privacy: As previously mentioned, Shopee’s data collection practices have been a point
of concern. In 2020, a report revealed that Shopee was collecting personal information,
including browsing history, location data, and purchase patterns, to a greater extent than
users were aware (Nguyen, 2020). This raises ethical questions about whether Shopee has
been transparent enough with its users regarding its data collection practices and whether it
has obtained explicit consent for all the data it collects.

Algorithmic Bias: Shopee’s algorithmic recommendation system has faced ethical scrutiny
for promoting products based on user data that may reinforce consumer biases. For example,
Shopee’s algorithms have been found to recommend products that often prioritize
high-margin items rather than products that genuinely match user needs (Tan, 2021). This
raises concerns about whether the company is ethically using data to serve users’ best
interests or merely its own profits.

Ethical Sourcing: Shopee’s sellers range from small vendors to large corporations, and
some of these sellers have been accused of unethical business practices, such as selling
counterfeit goods or products made under exploitative labor conditions. Shopee has faced
criticism for not doing enough to monitor and regulate the quality and ethics of the products
sold on its platform (Jalil, 2021). This reflects an ethical dilemma regarding the responsibility
of e-commerce platforms in ensuring that their sellers operate in a socially responsible
manner.

D. Recommendations

Shopee has experienced rapid growth and considerable success. However, as identified in
the analysis of its dysfunctional practices, there are several areas where the company can
improve to ensure smoother operations, better governance, and enhanced security. In
response to the issues mentioned, this section proposes actionable, evidence-based
recommendations to address Shopee’s challenges, improve its IT operations, governance,
and security, and align the company with industry best practices.

1. Strengthen IT Infrastructure and Scalability

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Problem: Shopee faces significant IT infrastructure challenges, particularly during high-traffic

events like the 11.11 sale. Website downtimes and slow performance during peak periods
have hindered the user experience and affected sales.

Recommendation: Shopee should invest in scalable cloud solutions and enhance its IT
infrastructure to handle increased traffic. This includes adopting a multi-cloud or hybrid-cloud
approach, leveraging cloud providers that offer high availability and load balancing. For
example, Amazon Web Services (AWS) and Google Cloud offer auto-scaling services that
can automatically adjust server capacity based on demand (Nambiar, 2020). Shopee could
implement these services to ensure its platform performs optimally during peak traffic periods,
thus improving user satisfaction and minimizing downtime.

Additionally, Shopee should invest in a robust content delivery network (CDN) to improve
loading times for users across various geographic regions. This would decrease latency and
enhance the overall performance of the site.

Evidence-Based Support: A study by Chui et al. (2020) on e-commerce platforms suggests

that businesses that optimize their cloud infrastructure experience improved scalability and
reduced downtime during high-demand periods.

2. Improve Integration of Enterprise Systems (CRM, ERP, HRMS)

Problem: Inefficiencies in Shopee’s CRM, ERP, and HRMS have led to poor customer
experience, operational disruptions, and HR management issues. Problems such as inventory
discrepancies, delayed order updates, and payroll inefficiencies indicate weaknesses in
Shopee’s system integration and functionality.

Recommendation:

●​ CRM: Shopee should integrate its CRM system more effectively with its customer
service and logistics platforms. Implementing artificial intelligence (AI)-driven chatbots
and real-time order tracking systems could enhance customer engagement and
provide instant resolutions. Research by Liu et al. (2020) shows that integrating
AI-powered chatbots in CRM systems can improve customer satisfaction by providing
faster and more personalized responses.
●​ ERP: Shopee should enhance the integration of its ERP system with its supply chain
and inventory management systems. Shopee could use real-time inventory tracking
systems, powered by Internet of Things (IoT) technology, to reduce discrepancies
and ensure that the data between different systems is synchronized. This would
minimize stockouts and improve the efficiency of the supply chain. A report by the
World Economic Forum (2019) highlights how IoT can improve supply chain accuracy
by providing real-time visibility into inventory levels.
●​ HRMS: Shopee should adopt a more centralized HRMS platform to streamline payroll
management, employee data, and performance monitoring. The integration of
machine learning algorithms into the HRMS could also assist in talent acquisition by
identifying high-potential candidates based on predictive analytics. This would

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improve the company's human resource management and enhance employee

satisfaction (Dube & Kumar, 2021).

Evidence-Based Support: A case study by Zhang et al. (2020) found that companies that
successfully integrate their CRM, ERP, and HRMS systems experience better operational
efficiency, reduced errors, and improved customer satisfaction.

3. Enhance IT Governance and Data Privacy Compliance

Problem: Shopee’s IT governance framework has shown weaknesses, particularly in data

privacy and regulatory compliance. These issues became apparent during the data privacy
concerns raised in 2020, where Shopee was accused of collecting excessive personal
information without proper consent.

Recommendation: Shopee must strengthen its IT governance by establishing a dedicated

data privacy and compliance team to ensure compliance with local and international data
protection regulations such as the General Data Protection Regulation (GDPR) and the
Personal Data Protection Act (PDPA). This team should also conduct regular audits and risk
assessments to identify potential gaps in data security practices.

Shopee should also adopt a data minimization approach, where only the essential customer
data is collected and used for processing. Data should be encrypted both at rest and in
transit, and customer consent should be obtained for every data collection activity.
Additionally, Shopee should implement a clear data retention policy, ensuring that data is kept
only for as long as necessary for business operations and compliance.

Evidence-Based Support: A study by Agrawal et al. (2021) suggests that a robust IT

governance framework, focusing on compliance and risk management, helps organizations
avoid legal repercussions and enhances their reputation with customers. Companies that
maintain transparent data practices are more likely to build trust with their users and comply
with data privacy laws.

4. Strengthen IT Security Measures

Problem: Shopee faces vulnerabilities in IT security, particularly regarding data breaches,

phishing attacks, and inadequate user authentication systems. The 2020 breach and
subsequent phishing incidents have highlighted these security gaps.

Recommendation: Shopee should prioritize cybersecurity by implementing multi-factor

authentication (MFA) across its platform for both customers and internal employees. MFA
would enhance account security by requiring users to provide two or more verification factors
to access their accounts, making it more difficult for attackers to gain unauthorized access
(Luo & Xu, 2020).

Additionally, Shopee should invest in a comprehensive cybersecurity program, including

regular penetration testing, vulnerability assessments, and employee training on cybersecurity
best practices. Shopee can also collaborate with cybersecurity experts and institutions to stay

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ahead of emerging cyber threats and implement advanced security measures, such as
intrusion detection systems (IDS) and encryption.

Shopee should also implement a dedicated security incident response team (SIRT) to quickly
respond to any security breaches, minimize damage, and communicate with affected users.
This would demonstrate Shopee’s commitment to protecting user data and restoring customer
confidence.

Evidence-Based Support: Research by Alasmary et al. (2020) indicates that implementing

MFA and regular security training significantly reduces the risk of cyberattacks and improves
organizational resilience against data breaches.

5. Address Ethical Issues in IT

Problem: Shopee has faced ethical issues related to its data privacy practices, algorithmic
bias, and the ethical sourcing of products. These challenges can harm the company’s
reputation and trustworthiness.

Recommendation: Shopee should adopt a transparent approach to its data collection

practices, clearly informing customers about what data is being collected, how it will be used,
and obtaining explicit consent. Shopee should also ensure that users have control over their
data, providing easy-to-use mechanisms for customers to opt out of data collection or delete
their accounts.

Shopee could address algorithmic bias by ensuring that its recommendation systems are
regularly audited for fairness. This could involve using bias detection algorithms and
conducting regular assessments of the algorithms to ensure they do not disproportionately
promote certain products based on skewed data or biased inputs.

Furthermore, Shopee should implement a code of conduct for sellers that ensures the ethical
sourcing of products. This code should include guidelines for product quality, fair labor
practices, and environmental sustainability. Shopee should also invest in a monitoring system
to track seller compliance with these ethical standards, and suspend or remove sellers who
violate these terms.

Evidence-Based Support: Research by Binns (2021) suggests that businesses that prioritize
data transparency, fairness in algorithms, and ethical sourcing are better able to foster
customer trust and loyalty, thus contributing to long-term success.

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REFERENCES:

Alasmary, W., Ghosh, D., & Li, X. (2020). Multi-factor authentication in e-commerce
platforms: Enhancing security in the digital age. Journal of Digital Security.
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Bersales, C. (2020). Shopee faces technical difficulties during 11.11 sale. The Manila Times.
Retrieved from https://www.manilatimes.net

Binns, R. (2021). Ethical AI and the future of e-commerce. Technology and Ethics Review.
https://www.techandethicsreview.com

Chia, S. (2021). Shopee’s growth in Southeast Asia: The road to global expansion. Southeast
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Chui, M., Dewhurst, M., & Osborn, A. (2020). Cloud strategies for the e-commerce industry:
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Lau, M. (2021). ShopeePay: The rise of digital payments in Southeast Asia. Digital Payments
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