Brazil could become Shopee’s biggest market, beating even Indonesia

Recent analyst calls with Sea have involved a bit of a cat-and-mouse game over Shopee’s expansion into Brazil and other Latin American countries.

Analysts are hungry for more information on Shopee’s strategies for the region and its views on the ecommerce opportunities there.

In response, Sea either reiterates what we already know – scaling into Brazil was initiated by its team to offer more markets to cross-border sellers – or declines to go into specifics, as the market is still at a “very early stage.”

Why is there this mismatch between what analysts want to know and what Sea is willing to divulge?

Brazil could become Shopees’s biggest market

To be fair, Sea is right to say that its Latin American business is still at a very early stage of development. It has been less than 2 years since Shopee entered Brazil in late 2019. It also released an app for Mexico in February this year, followed by launching its website in Chile and Colombia in June.

However, analysts are definitely onto something. While the numbers in Mexico, Chile, and Colombia are still too small to matter, Brazil is shaping up to be a huge market for the ecommerce giant.

Brazil could already be Shopee’s biggest market by monthly active users (MAU), exceeding even Indonesia, according to investment firm Bernstein.

No, that isn’t a typo. But this should be taken with a huge grain of salt, as other estimates we’ve found dispute this. That said, it’s clear that Shopee is seeing user adoption grow at lightning speed in Brazil.

This would explain the level of interest that analysts are showing in Shopee’s operations there as well as the company’s plans for the wider Latin American market.

Seen through this lens, Sea’s reluctance to divulge too much on the subject might be a strategic move.

Back in 1990, Deng Xiaoping, China’s former paramount leader, reportedly urged his country to “hide your strength and bide your time.” This could sum up Sea’s approach to discussing its booming ecommerce business in Brazil.

The Latin America opportunity is massive

On Sea’s Q4 2020 earnings call, Citi analyst Alicia Yap asked management for its views on the similarities and differences between Latin America and Southeast Asia.

Yanjun Wang, Sea’s group chief corporate officer, was circumspect in her response: “I think these are very different markets, and we wouldn’t presume that we know those [Latin American] markets very well at this point…we will…explore it more and see how that goes.”

Shopee is fast narrowing the gap with Mercado Libre in Brazil

A more profitable market than Southeast Asia?

Other players are rushing into Latin America too