The Latin American ecommerce market has a new suitor from Southeast Asia . Shopee, the application owned by Sea, whose largest shareholder is the Chinese technology group Tencent, has proposed to replicate in this market, valued at 105,000 million dollars, the dominance that it enjoys in its native region. To do this, it will have to overthrow MercadoLibre, the current market leader.
Launched in 2015, in just four years it managed to dethrone Lazada, owned by Alibaba, as the main e-commerce platform in Southeast Asia and has been the most downloaded application in Google Play, and the second in Apple and Android, in the second quarter of 2021, according to App Annie data collected by The Motley Fool .
Shopee is still in an early phase of monetization. Thus, despite having doubled its income compared to the previous year, the platform recorded losses that make it still not profitable . However, it has great financial backing. As published by the Financial Times , although they have also registered losses, the shares of its owner have skyrocketed on the New York Stock Exchange by 680% since the beginning of 2020, giving it a market value of almost 170,000 million dollars.
Now, the online commerce retailer is expanding rapidly in Latin America, the region with the highest growth in sales since the start of the pandemic . In less than two years, Shopee has become the most popular shopping app in Brazil, with more than twice the number of downloads than its main competitor, MercadoLibre. In his quarterly update, corporate director Yanjun Wang said that the company’s expansion in Brazil is still in its early stages.
Advantages and obstacles
Shopee’s strategy is characterized by low-priced products and rates . According to a recent report by Goldman Sachs, the app offers sellers the lowest commissions for certain items compared to other leading platforms in Brazil.
However, not everything is an advantage for the company. In the case of Brazil, it will have to deal with a crippling bureaucracy, a very complex tax system, and poor transportation infrastructure.
Currently, Shopee’s biggest obstacle is the lack of a powerful logistics network that allows it to respond to the growing demand. While the app depends on the Brazilian postal service to make its deliveries, its main rival in the region, MercadoLibre, has a logistics network that includes warehouses that covers around 90% of its deliveries in Brazil.