$SE Shopee 🛍 + its path to profitability ➡️ a thread🧵
1️⃣ Shopee 🛍 headline EBITDA losses (between $250m and $310m in each of the past several Qs) at a business level are, in isolation, misleading ➡️ they do not tell the full picture 🖼
Here's why ➡️
2️⃣ It is important instead to 👀 unit economics ➡️ at order level. As its comp position has 💪 in recent Qs – it was ranked no. 1 🥇in key download and engagement metrics in Q2 20 ➡️ EBITDA loss per order has continued to narrow Q on Q, from $2.07 in Q4 16 to $0.50 in Q2 20. $SE
3️⃣ Shopee 🛍 has increased its take-rate over the past 3 years from 0.1% (Q1 17) to 6.3% in (Q2 20)
🔹This number is "inflated" by the inclusion of VAS (logistics services to cross-border sellers) and handling fees
1️⃣ While the narrative in 🇺🇸 and other dev markets switches to a potential COVID vaccine, the reality for many emerging markets (EMs) including 🇮🇩 + 🇧🇷 is the wait may be significantly longer. Consumers and sellers are adapting to a new normal.
2️⃣ The longer this period of uncertainty persists, the more entrenched digital consumer preferences will become, the more sellers (both small and large) will shift their focus to online marketplaces and distribution channels.
3️⃣ Consumers in EMs are not just spending more online as forecasted in 2019, they're also buying into more categories online, including previously underpenetrated areas such as 🍎🌽🥕🥔(online and fresh) and non-alcoholic beverages.
- some takeaways from the Q2’20 con call: 1. “profound structural shift” across all markets which will be “long-lasting” 2. nearly 50m paying users / above 10% of total users (500m) for 🎮 3. Free Fire 🔥: peak DAUs of 100m + top grossing game in 🇧🇷 and 🇮🇩
4. partnering with Netflix/Money Heist for “in game takeover” 5. Acceleration in July for 🎮 - bodes well for Q3 6. 🛍 accelerating growth in all markets v Q1. More global and local brands joined. 7. Monetization ramped 📈 despite SMB support program
8. “Shopee Stories” launched for sellers 9. DFS 💳 - 50% growth v Q1, more adoption by Shopee users (45% of total orders in 🇮🇩) 10. Full year guidance: confident of “out performance” (🎮) but no change yet. 11. 🇹🇼 / 🇻🇳 growth in 🛍 high despite no lockdown
some takeaways from Q2: 1. DBNER at 183% 😳 2. Pricing model means the co grows with dev clients - eg Scener has grown 100x since March 3. 300+ use cases 4. Usage in 🇨🇳 remained high after lockdown ended 5. Int’l expansion continues - LatAm mentioned
6. <20% bump in usage attributable to COVID + user pref for live video tools permanent 7. GM impacted by 🌎 expansion + infrastructure costs. Regional pricing to be rolled out. LT GM will 📈 8. Educ remains most promising use case + exam invigilation emerging
9. Re 🇺🇸 + 🇨🇳 tensions: no impact currently / can’t control 10. No +10% customers this Q 11. New platform tool roll out soon: “XRA” - measures performance/quality of platform. 12. S&M expense as % of revenue dropped significantly. Trend will continue
what’s the current state of play in Indonesia’s crowded fintech/e-payments sector? “According to Sea Group’s quarterly report, Shopee Indonesia registered more than 185 million orders in the first three months of this year, or a daily average of over 2 million orders....
.... , and more than 40% of Shopee’s gross orders in Indonesia were paid for through ShopeePay. That means ShopeePay has been able to gain high traction through e-commerce transactions alone.”
...like all other platforms, ShopeePay aims to rapidly expand its suite of online and offline third-party use cases and partnerships too. Today, you can easily find ShopeePay’s promotional banners in shopping malls throughout Jakarta, side by side with GoPay and Ovo’s own.....
Shopee Live! is an in-app feature which is available in some SEA markets. Began as a livestream feature allowing sellers to interact with, show and sell products to consumers....How is the service evolving during Covid-19....?
....it’s now a portal for live music performances(k-pop etc), cooking lessons, celebrity interactive chats, sessions with doctors, games and more....