It took Singapore’s Shopee, owned by Sea Ltd, just two years to become the shopping app in Brazil with the highest number of downloads as the platform attracted consumers with its low cost offers and its unique approach to e-commerce – use of mini-games in the app with winners being offered coupons for shopping,
The strategy of combining online shopping and the appeal of the gaming aspect in its separate mobile game arm Garena – creator of “Free Fire”, which is Brazil’s most-downloaded title for eight consecutive quarters, was a very successful one as it transformed into sales which, according to estimates of analysts, was about one third of the local leader Magazine Luiza SA.
In its home market of Singapore, it took Shopee only five years to be named the most-visited e-commerce website in Southeast Asia, surpassing names such as Lazada, supported by China’s Alibaba Group Holding Ltd, and Tokopedia, whch has the backing of Japan’s SoftBank Group Corp.
“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,” said analyst Jianggan Li at advisory firm Momentum Works.
The online shopping space in Brazil was once dominated by regional firms like Magazine Luiza and Argentina’s MercadoLibre Inc and the very fast popularity growth of Shopee highlights the growth opportunities for foreign companies in the sector.
Furthermore, the time period for the growth of the Singapore firm in Brazil happened in an opportune times – it launch in Brazil coincided with onset of the Covid-19 pandemic, restricting consumers to their homes and pushing them towards online platforms and away from physical stores. That resulted in 44 per cent growth in e-commerce in 2020 to $42 billion, according to data from the Brazilian payments company EBANX.
Data from analytics platform App Annie showed that Shopee was the top app in Brazil in terms of downloads and time spent in. the app is similar to Alibaba’s AliExpress as it carries Chinese-made knick-knacks.
Shopee is however still making a loss in pursuit of growth, supported by the profitable gaming division of Sea. Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) of $740.9 was posted by Garena in the second quarter of this year, even though a loss of $579.8 million was reported for its e-commerce arm.
“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.
The Brazil venture of Sea is part of its broader strategy of global expansion. Investing in startups in Latin America and beyond is also being considered by the investment arm of the company – Sea Capital, said reports quoting source with knowledge of the matter.
Shopee has also been launched in Chile, Colombia and Mexico where the company does not have locally based staff, like in Brazil, and has chosen to partner with social media influencers for enhancing brand awareness, said reports quoting sources.
(Adapted from Reuters.com)