Until recently, Sea Limited and MercadoLibre (NASDAQ: MELI) have continued to serve their home areas. But in the last several years, a Southeast Asia e-commerce and game operator started e-commerce activity in Brazil. That seems like a bold move. Will the head of Latin America’s e-commerce respond and set foot in Sea Limited’s backyard? Air a Amadan Beò episode scheduled for March 12th, Stupid partners Brian Stoffel and Brian Withers talk about the Sea Limited move and why MercadoLibre is likely to stay focused on its home area.
Brian Withers: [Reading a viewer question] Sea Limited is actively expanding their markets to the land of MercadoLibre in South America. Is MercadoLibre also the crime in Southeast Asia? If so, how do they access the backyard of Sea Limited?
Just to be clear, Sea Limited started game operations in Brazil, which is a very small proportion of their revenue. Sea Limited likes to get in for a game industry first where they don’t have to have a physical footprint in the country. The idea is, they are going to learn a little bit about the market, learn a little bit about doing business there, and then they can expand into e-commerce work over time. I am pretty sure Sea Limited has e-commerce activity in Brazil. You know who else has e-commerce activity in Brazil? Yeah, great Amazon. They have been there, I want to say at least two decades. Amazon has been in the backyard of MercadoLibre for a long time.
Back to Matt ‘s question, does MercadoLibre also play in Southeast Asia? No, and I don’t think so. They are very focused on their area. There is plenty of growth. There are three countries in MercadoLibre, Brazil, Argentina, and Mexico that make up 95 percent of the revenue. They serve 18 countries in the region and only three make up 90 percent more of the revenue. There is plenty of room for continued expansion in South America. Is there anything you want to add to that, Brian?
Brian Stoffel: No, I think you covered it. I mean, I think if they move into gaming in Brazil, that’s fine. What you have to remember with e-commerce is that e-commerce is not tech, e-commerce is accomplishing. I want to say that again because there are so many things. I am a SaaS investor, software as a SaaS investor, where you issue code. That’s the thing, you put out code. Look, e-commerce is probably one of the biggest real businesses in the world that is the big growth industries because it’s about delivery trucks, it’s about shipping, it’s about planes, it’s about buildings where you get things shipped to the next good place. It is not easy to move into new areas with such material.
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