That’s my dilemma with owning Mercado Libre, the elder, and Sea Limited, the younger one. Both have performed exceptionally well in their respective regions and for the portfolio, but are now competing head-to-head in Brazil.
Gemini generated picture
Yes, Sea is just 5 years old, and Meli is 20 years older, but Sea is no pushover.
I have reviewed Sea’s Q2’25 here. I was very impressed by its profitable growth in Brazil, given the ‘muscle mass’ difference.
Mercado Envios, Meli’s logistics network, plans to open 21 distribution centers in the country by the end of 2025. It delivers more than 95% of items sold, and processes 60% of items through its fulfillment network.
But Shopee in Q2’25 revealed how it has been outgrowing Meli in the past few quarters. And it has been reported to have become the largest e-commerce website in terms of the number of items sold.
In response, Meli had to slash the free shipping threshold to just 19 rais in Q2 (previously 39 and 79).
In this Meli’s business update, I will focus on the comparison of these two siblings.
As a reminder, the long-term development of my sleep well picks is much more important than quarterly fluctuation.
Mercado Libre remains the most consistent performer in a highly uncertain geopolitical environment. It is still growing at the same rate as 25years ago! Only Pinduoduo and Nvidia have outgrown Meli in the past 5 years.
Only Pinduoduo (PDD) and NVIDA (NVDA) has grown revenue faster in the past 5 years, among the large caps.
There's still so much to do, there's still so many opportunities, and the fact that we're willing to take risks and make big bets to continue growing and the fact that we're growing at the same rates that we were growing 25 years ago is amazing.
- Marcos Galperin, founder and CEO, added in his 25th anniversary podcast
However, Shopee’s speed and efficient execution are becoming a more significant issue and a challenge to Meli’s leadership.
Shopee has been growing profitably in the past few quarters, driven by above-market GMV growth and consistently improving logistic service quality (lower cost in faster time).
GMV: 25% growth, accelerated from 21% in Q1’25 (trend to continue to Q3), driven by expanding higher-valued items (added 100 brands), and strong growth in the number of sellers. Reportedly, the number one e-commerce site by items sold.
Number of sellers: 8 million (30% of active sellers sold online for the first time on Shopee, and 50% generate their primary income on Shopee)
Number of buyers: unknown
Logistics: 13 distribution centers, all leased (low-capex), and most investments focused on sorting machines. Cost per order down by 15% (16% in Q1) and delivery time down by 2 days YoY. Additionally, in the Greater São Paulo region, 25% were delivered the next day and 40% within 2 days, up from single-digit percentages in the same period last year.
In the meantime, on the surface, Mercado Libre underperformed compared to Shopee in Brazil.
GMV grew 18% YoY in Brazil, with revenue growing 25%. From a higher base at ~$2B per quarter. But growth is meaningfully slower than Shopee’s 25% rate in Q2.
Number of sellers: 100M as of 2024
Number of buyers: 70M
Logistics: the fastest and most extensive in LATAM. It is not known whether some lands and trucks are owned, but same-day and next-day shipment rates reached 52% (even with slow shipping), and 30 fulfillment centers delivered 57% of parcels (~50% in Q1'25 and 49% in Q4). In Brazil, I believe they have 10 fulfillment centers, with a target of opening 11 more by the end of 2025.
It looks like Shopee outperformed in Q2 and Q1 in Brazil in terms of growth numbers.
