Broker: Maybank Research Pte Ltd
Date of Report: June 13, 2025

Sea Ltd vs. Mercado Libre: E-Commerce Titans Battle for Brazil’s Mass Market

Executive Summary

Sea Ltd (SE US), a leading internet company with businesses spanning e-commerce, gaming, and digital financial services, is facing new competition in Brazil’s booming e-commerce market. Mercado Libre (MELI), the region’s e-commerce heavyweight, has slashed its free-shipping threshold and shipping fees in Brazil in a bid to challenge Shopee’s dominance in the mass-market segment. Despite this escalation, Shopee maintains a clear edge on key metrics such as product affordability and seller take-rates, reinforcing its stronghold in Brazil’s value-conscious consumer segment.

Mercado Libre Fires a Shot: Free Shipping Shake-Up in Brazil

Mercado Libre has strategically lowered its free-shipping minimum order value in Brazil from BRL79 to BRL19 (USD3.40), making nearly all items eligible for free shipping. Simultaneously, seller shipping fees have been cut by up to 40%, with MELI absorbing the cost. The initiative targets the lower- to mid-price segment—precisely Shopee’s core market—where Shopee’s average order value (AOV) is about one-third of MELI’s.
Key points on MELI’s new shipping policy:

• Nearly all items now qualify for free shipping (threshold at BRL19).
• Delivery for free shipping items is 6–7 days, compared to 2–3 days for standard (paid) shipping.
• Seller shipping fees reduced by up to 40%.

Shopee’s Competitive Advantages: Price, Speed, and Seller Economics

Shopee’s value proposition remains compelling, especially on two crucial metrics:

• Total Product Cost: Products on Shopee are, on average, 11–12% cheaper than on MELI, even after factoring in MELI’s recent discounts.
• Delivery Speed: Shopee offers faster shipping on average—median delivery time is 3.5 days vs. MELI’s 7 days under the new free shipping program.
• Seller Take-Rates: Sellers on Shopee face lower take-rates, particularly for low-ticket items, even after considering shipping subsidies.

Brazil E-Commerce Market Key Metrics

Product Price Comparison: MELI vs. Shopee

• Simple average price premium: MELI 12% higher than Shopee
• Median delivery days: MELI 7.0 vs. Shopee 3.5

Seller Fee Comparison: MELI vs. Shopee

• MELI (Premium Listing, products below BRL79): 30–41% total fee
• Shopee (Free Shipping Program): 26–30% total fee
• MELI (products above BRL79): 16.5% fee vs. Shopee: 24% fee
• For higher-ticket Shopee sellers, free shipping vouchers are available without joining the free shipping program.

Strategic Movements: Shopee’s Response and Growth Plans

Shopee continues to invest heavily in logistics and infrastructure to maintain its edge:

• 11 distribution centers in Brazil, including a new logistics node in Goiás (Central-West region).
• First fully managed fulfilment center in Greater São Paulo, enabling same-day and next-day delivery, especially for bulky items and higher-value categories like electronics and automotive parts.
• Steady movement upmarket: onboarding 800+ major brands (Disney, Lego, Havaianas, L’Oréal), lifting average order value (AOV), and expanding into higher-ticket categories such as home appliances.

Worst-Case Scenario: Quantifying the Risks for Shopee

While Shopee Brazil is not valued separately, its estimated value is ~USD10 billion, contributing 9% to Sea Ltd’s sum-of-the-parts (SoTP) valuation. In a downside scenario, if MELI’s aggressive pricing erodes Shopee’s market share and triggers an aggressive price war, Shopee Brazil’s value could fall to USD1.3 billion (0.5x EV/sales, equivalent to the company’s trough valuation in late 2023). This would reduce Sea Ltd’s SoTP valuation by 8%, from USD192 to USD176 per share.

SoTP Impact Table: Base Case vs. Worst Case

Brazil’s E-Commerce Landscape: Market Share and Competitive Dynamics

Brazil’s e-commerce market is valued at USD50–55 billion GMV, with over six players. As of 1Q25, Shopee’s annualized GMV is estimated at USD15 billion, surpassing Magazine Luiza. Both MELI and Shopee are growing market share, often at the expense of smaller competitors like Amazon and Magazine Luiza. TikTok Shop has yet to make a major impact, and Temu’s cross-border model is less competitive due to higher taxes.

Shopee’s Global Value Proposition and Financial Performance

• Sea Ltd is a Singapore-based internet company with dominant e-commerce market share in ASEAN and Taiwan, and a significant presence in Brazil.
• The company benefits from digitalization in underpenetrated ASEAN e-commerce markets (2-3x lower penetration than developed markets).
• Logistics infrastructure and a strong balance sheet are key moats. TikTok’s competitive threat is receding in ASEAN, while cross-border competitors face weak unit economics in the region.
• Garena (gaming) remains a defensive franchise, especially in emerging markets, but is highly reliant on Free Fire.

Financial Highlights: FY23–FY27

Shareholder Structure and Price Performance

• Major Shareholders: Tencent (18.6%), Li Xiaodong (17.1%), Gang Ye (6.1%)
• 52-week high/low: USD170.90 / USD59.82
• Market capitalization: USD87.4 billion
• Issued shares: 570 million

ESG and Corporate Social Responsibility

• Social responsibility is integral to Shopee’s platform sustainability: 57% of MSMEs in Indonesia report higher profits on Shopee than other marketplaces.
• Sea Ltd promotes diversity—46% of over 30,000 employees are female, including 46% in middle/senior management roles, across 50+ nationalities.
• Shopee provided over USD35 million in COVID-19 Seller Support Packages and USD510,000 in donations during the pandemic.
• Data security, local law compliance, and carbon emissions from server operations are recognized as key ESG issues.

Risks and Swing Factors

• Potential downside if consumer spending weakens or competition intensifies in ASEAN and Brazil.
• Credit risks in SeaMoney if economic growth slows.
• Upside if user growth and market share gains exceed expectations, especially if competitors like GoTo focus on profitability over growth.
• Exposure to new entrants in Southeast Asia’s e-commerce market, including TikTok Shop and Temu.

Conclusion: Shopee Remains Resilient Amid Competitive Escalation

Mercado Libre’s move to lower its free shipping threshold in Brazil is a clear challenge to Shopee’s mass-market dominance but remains a measured escalation. Shopee continues to lead in affordability and seller economics, and is advancing upmarket with logistics and brand partnerships. While the risk of an aggressive pricing war exists, Shopee’s robust value proposition and ongoing investments position it well for both growth and resilience in Brazil’s rapidly evolving e-commerce landscape.

Other Companies Mentioned

• Mercado Libre (MELI US): Regional e-commerce leader, recent initiator of aggressive shipping promotions in Brazil.
• Amazon (AMZN US): Competing in Brazil but losing share to MELI and Shopee.
• Magazine Luiza (MGLU3 BZ): Brazilian mass-market e-commerce player, recently overtaken by Shopee in GMV.