In only two years, Sea Ltd’s Shopee has now topped Brazil’s e-commerce sector as the most downloaded shopping app in the country. Though, the company still have some issues that need to be fixed, such as its courier service.
From Southeast Asia to Brazil, Shopee shows its dominance in global e-commerce
Shopee’s success in Brazil is pushed by its low-cost marketplace. Another secret behind Shopee’s success lies in its in-app mini-games that offer coupons.
Shopee’s way to generate sales in Brazil is quite unusual: by combining online shopping and the gaming nous from its separate mobile game arm Garena. According to analysts’ estimates, Shopee’s sales are almost a third of local champion Magazine Luiza SA.
Shopee itself managed to rank first as Southeast Asia’s most visited e-commerce website. The company’s achievement overtakes its competitors, Lazada and Tokopedia.
Quoted from Reuters, analyst Jianggan Li from advisory firm Momentum Works commented, “Shopee has a track record in Southeast Asia of coming into the market late, looking at how others have solved existing problems and then building a system to leapfrog those issues”.
To be sure, the startup’s timing was fortuitous, launching in Brazil just as the COVID-19 pandemic drove consumers away from physical stores, pushing up 2020 e-commerce sales by 44% to $42 billion, showed data from Brazilian payments company EBANX.
Shopee – akin to Alibaba’s AliExpress, carrying Chinese-made knick-knacks – emerged as Brazil’s top app by downloads and time spent in use, showed data from analytics platform App Annie.
Yet, in pursuit of growth, Shopee is still losing money, propped up by Sea’s profitable gaming division. In the second quarter of this year, Garena posted an adjusted earnings before interest, tax, depreciation and amortization (EBITDA) of $740.9 million even as the e-commerce arm lost $579.8 million.
“Money being generated by one side of the business, which is a cash cow, is being reinvested aggressively in Brazilian e-commerce – with success,” said Itau BBA analyst Thiago Macruz.
Shopee: some things to fix
Sea’s biggest challenge for Shopee Brazil is delivery in such a vast country. It reduced its reliance on the local postal system this year in favor of private carriers, but is still competing against rivals with proprietary delivery services.
Shopee aims to have one main logistics partner per country in the region, a company source told Reuters.
The company itself expects e-commerce growth in the region to spawn more delivery partnerships, as happened in Southeast Asia, Sea executives told analysts on a call this month.