SEA (Shopee) vs Mercadolibe in Brazil

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Building on Cedric’s useful post…

https://discussion.fool.com/sea-shopee-vs-alibaba-lazada-3479172…

I recently came across some initial analysis on how Shopee’s foray into South America is going.

I have to say I was pretty stunned. It looks as though Shopee could pull off a smash and grab raid in Brazil on Mercadolibre’s home turf, (akin to Afterpay’s overtaking of Affirm in the US).

Headline differences between the two businesses:

Shopee goes for massive product discounting and blockbuster endorsement driven advertising, Mercadolibre has invested in distribution and uses free delivery as its customer acquisition investment strategy.

SEA has wallet, payments and also digital banking (Sea Money in SE Asia), although only the payments side sits within Shopee, Mercadolibre has not just payments on and off the platform but also online banking and fund management. SEA also has a gaming arm.

In any case as a holder of both MELI and SE I was concerned/anxious on how this head on competition would play out. I want SEA to succeed but I don’t want MELI to fail.

Here’s some early data on progress to-date, (focusing on the last 12 months).

Specifically I found this 18 month progress chart on monthly App users interesting within this Seeking Alpha article…

https://twitter.com/jamesjho_/status/1368954100822384642

https://seekingalpha.com/article/4419367-sea-limited-closest…

This prompted me to run a search on google search terms which whilst wasn’t as conclusive as the app usage data did show how much progress SEA has achieved in Brazil against incumbents…

https://trends.google.com/trends/explore?geo=BR&q=%2Fm%2…

Clearly whatever way you cut it, Shopee is making an impact in Brazil with or without the benefit of pre-existing supply chain!

Ant

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Great post.

If you go deep into the Twitter thread it says that SEA sells different items from MELI? Can anyone on here confirm that selection is different between the two? There are also posts in that thread that claim SEA’s Shopee app has better app store optimization and appears in more searches in Brazil. This claim seems hard to confirm, but it’s a safe assumption that SEA is superior in a mobile first. MELI is an older company and has a legacy web-based system that they need to support in addition to apps.

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I remember I once read something from Sea’s CEO about his point of view of the Brazil business, maybe from their latest earning report. As far as I understand, LATAM is not going to be a priority for them anytime soon. The brazil launch is just a test of market, because they already successfully operated their gaming service in LATAM and have some level of experience in that market. However, the CEO was not sure whether Shopee was going to succeed in Brazil when he was asked by an analyst. It does not feel to me that LATAM is going to be a priority for Shopee any time soon. In terms of competition, the market is big enough to have multiple players. Being able to enter LATAM does not mean Shopee will threaten MELI. Amazon has been operating in LATAM as well, but it’s apparently not preferred by the local customers.

So I’d not worry about either of the company from competition perspective.

Cheers,
Lufy

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I have been in Brazil since October 2020. Whenever I asked the people about Shopee, nobody has heard of them. Everyone here is using MELI or Magazine Luiza.

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