$Sea(SE.US)$'s e-commerce arm Shopee is said to be executing layoffs across multiple markets in the region as it seeks to rationalise its e-commerce business, DealStreetAsia has learnt.

The layoffs have affected employees across several of the company's Southeast Asian markets including Indonesia, Thailand and Vietnam, several sources told DealStreetAsia. The company is said to have sent an email communication to employees affected by the layoffs, the sources mentioned above added.

Shopee's payments arm ShopeePay and food delivery business ShopeeFood are also said to be facing cuts. A town hall meeting was also reportedly held on Monday to address the job cuts with Shopee employees.

The extent of the job cuts and the number of employees impacted by the layoffs could not be ascertained at the time of publishing this article. DealStreetAsia has reached out to Shopee for comment.

Two sources aware of the matter said nearly half of Shopee Thailand's payment and food delivery teams have been impacted by the downsizing move. One of the sources mentioned above said the communication to affected employees was said to be managed in an off-handed manner, with the company asking staff members to return home and await an email indicating their termination.

A separate source told DealStreetAsia that Shopee has, of late, been on a hiring freeze, with several offers to regional roles being rolled back by the company.

While Sea Group's business continues to show signs of improvement in its overall profitability, most of its revenue continues to come from its gaming arm Garena. Sea Group's Q1 2022 financials reflected a 64.4% YoY increase in GAAP revenue at $2.9 billion, with gross profits soaring 81.3% to $1.2 billion over the same period.

Shopee's business, while still loss-making, has also reflected improvements, with a 71.3% YoY increase in orders to $1.9 billion in Q1 2022 while the GMV rose 38.7% to $17.4 billion. Importantly, Shopee's gross profit margin for e-commerce increased YoY, with faster growth in transaction-based fees and advertising income-generating higher margins versus other value-added services.

Shopee, however, continues to face several macro headwinds including rising inflation and interest rates that may dampen retail and consumption sectors.

The firm also appears to be facing setbacks on some of its ambitious internationalisation plans including its forays into Europe and Latin America. Shopee, which has operations in Poland and Spain, decided to pull out of France after only five months as it was not meeting expectations.

In March this year, Sea Limited ended its e-commerce foray in India, about six months after it entered the country, and just a month after it pulled out of France. The move led to the axing of some 300 Shopee jobs in the south Asian country. An Indian government clampdown had already banned Garena's Free Fire in the country.

Meanwhile, Shopee's competition at home continues to remain with $Grab Holdings(GRAB.US)$, GoTo and others still vying for an ever-larger share of the e-commerce pie. Apart from Southeast Asia, Shopee is also present in China Taiwan, Brazil, Mexico, Chile, and Colombia.

Apart from Shopee, several other Southeast Asian startups have also undertaken similar job cut exercises as they seek to preserve cash in the midst of the global downturn. In Indonesia, venture-backed startups like Lummo, LinkAja, JD.ID, Pahamify and Zenius have laid off hundreds of employees in order to slash their operating burn.