Here’s an interesting back story on Mercadolibre that also covers the arrival of SEA into Latin America.
I found the read on Sea in Latin America to be quite enlightening so I thought it might be useful to some if it were imported here.
During its twenty-two years of operations, Meli has managed to see off all comers to become the largest e-commerce company in Latin America. It has done so with almost consummate ease. But no beast, even the mighty Meli, is unslayable. As competition looks heats up, the company will need to avoid complacency and ensure no rival plays the role of “redeemer.”
Though Amazon first landed in the continent in 2012 and Alibaba in 2015, the last 18 months suggest Shopee may be the most likely candidate.
Owned by Sea Group, Shopee represents a uniquely terrifying proposition: bankrolled by a money-spinning game conglomerate, thrilled to burn money to buy share, and engineered to within an inch of its life to draw attention and keep it.
As it has expanded, the Singaporean company has dialed in an effective playbook, one very different from Meli’s own. Mobile by default, Shopee attracts users through a mix of gaming and social features. For example, “Shopee Farm,” which rewards users with “Shopee Coins” to visit the app and tend to a virtual freehold, incentivizing multiple opens per day. Leveraging Sea’s gaming subsidiary, Garena, Shopee also offers rewards through vehicles like Free Fire, a popular game in Brazil. Livestreaming shopping events is another approach that brings its own appeal.
While Shopee positions itself as locally sensitive, in the mold of Meli, its model is predicated on a different approach. Rather than onboarding SMEs in Brazil, for example, Shopee advertises excess inventory for sale in Brazil. The outcome is that the platform doesn’t lift Latin American merchants but exposes Asian sellers to a new audience. Only after finding a foothold does Shopee court native merchants.
Where Shopee does tailor its approach is when it comes to marketing. The company hires local celebrities and influencers to promote its products. This is coupled with generous discounting and shipping subsidies.
It has worked. In a blink of an eye, Shopee has jumped to the 9th most downloaded app in Brazil, according to App Annie. Data from earlier this year suggests the company surpassed Amazon and Alibaba in terms of traffic in the country. Revealingly, Shopee’s local presence has expanded significantly, surpassing a 250-person headcount. The company has shuffled influential lieutenants from Asia to focus on the new market while also sniping talent from Meli. Earlier this year, Shopee announced the launch of its app in Mexico. True to form, it is beginning by offering only cross-border products.
If Shopee is Brazil’s new kid on the block, Magazine Luiza is the old rival. Founded in 1957 as a chain of retail stores, “Magalu” successfully transitioned to an omnichannel strategy, adding online buying to its footprint. In some respects, Magalu and Meli have spent the last ten years moving in opposite directions, the former bolstering its virtual position as the latter strengthens its physical one. With $5.5 billion in 2020 net revenues, Magalu outstrips Meli, even if it operates with a more asset-heavy model. (Intriguingly, Magalu advertises with the help of virtual influencer “Lu,” the Lil’ Miquela of Brazilian e-commerce. That’s helped Luiza reach 5.2 million Instagram followers, while Mercado Libre’s local account has just 2.9 million.)
FWIW I thought the comparison with The garden of forking paths" was a bit much. Its a strange and deep story. Not so MELI.