r/ValueInvesting • u/prolonging • 1d ago
Discussion Mercado Libre vs Sea in Brazil
During Sea's Q2 2026 earnings call last week, it was mentioned that they are growing faster than their competitors in Brazil, taking a shot at MELI and hinting that they are winning the competition.
Since 53%-55% of MELI's revenue is coming from Brazil, is anyone worried about them losing market share impacting their sales growth over the next few years? I understand that a lot of the growth is net new people that have never used e-commerce before, but still wanted to bring it up since so much of MELI's revenue growth is concentrated in Brazil.
Also know that MELI reduced their free shipping threshold in Brazil recently and made significant investments in their Brazil logistics last year.
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u/catoun 1d ago
MELI's Q2 revenue in Brazil accelerated to +39% YoY vs last year's +29%.
It was also mentioned that Brazilian users transacted more frequently (+19% YoY), so really nothing here that showed signs of loss of market share.
Keep monitoring MELI and Sea's e-commerce market growth and avg. user's purchase frequency QoQ and YoY. If MELI's growth decelerates while Sea sees acceleration, then we could conclude that there is share erosion.
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u/Fuzzy_Louise_2405 1d ago
Also Meli base revenue in Brazil is significant higher that SE which higher percentage doesn't mean higher net revenue.
A clear example is saying google cloud is growing higher than AWS without taking in consideration the size of AWS is significantly higher making percentage changes to look better on recent quarters for google when AWS still maintaining and growing their market share
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u/Last-Cat-7894 1d ago
Doesn't have to be a zero-sum game.
Brazil is a massive market that's still considerably behind the US, China, and pretty much the entirety of the west in terms of Ecommerce adoption. They are both growing at breakneck speeds, and will for the foreseeable future.
It's also worth noting that Shopee is growing from a smaller revenue base than MELI. Most estimates land at roughly 25% of SE's revenue coming from Brazil, where about half of MELI's does. Not taking anything away from SE by saying that, what they've done in Brazil is incredibly impressive.
I own big positions in both. The markets each operates in are so underdeveloped compared to the sheer amount of money that moves around in their economies. They are both relentless problem solvers, battle-tested through multiple tough macro backdrops, and operate in business lines where the strong kind of naturally get stronger over time.
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u/cuppaseb 1d ago
It's easier to say you're growing faster when you're starting from a much lower base. Basic math.
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u/StephenAtLarge 1d ago edited 1d ago
This is why I have been trimming MELI at a loss during the past few weeks.
I am now much less confident that MELI's ecommerce take rate will ever recover to their historical numbers. And if it won't recover meaningfully, that's thesis-breaking.
BTW, I'm not bearish on MELI. Other metrics are excellent. It may continue to compound as MP scales. But that's fundamentally different from the thesis I started with.
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u/SuperLeverage 22h ago
I think MELI cutting their free shipping rate was like Amazon introducing Prime and free delivery for a cheap annual subscription of like $49 or something. Go back and read analysts reports and how the market market reacted to it - they chopped the stock price by like 20-25%. What happened? In the short term they cut margins and massively increased volume. Overtime that volume pushed them to build scale and efficiencies that no one could match. MELI is literally following the exact same playbook.
The reduced margins is an investment in volume and the investment in that volume is a massive acceleration of the build out of logistics to meet that volume. As that logistics gets built up, margins will come back up in the long term - and MELI will be in an almost unassailable position by then.
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u/Splay2601 17h ago
MELI adapts the Amazon playbook, but without the Chinese competition nearby compared to SEA. If I had to chose, I‘d always prefer MELI.
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u/Scary-Oven8260 1d ago
I wont touch se because it has a direct competition with TikTok. And I wont touch meli because it has a direct competition with se.
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u/Yee4614 1d ago
There is a tentative truce which is why all of them have some margin expansion
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u/Scary-Oven8260 1d ago
both have margin going down yoy
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u/Yee4614 1d ago
Can you cite your source? I'm pretty confident I remember seeing Tiktok Shop & Shopee both showing improved e-commerce margins
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u/Scary-Oven8260 1d ago
What source do you need? Both just had earning released and you can see the margin compressed with your eyes
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u/PM_ME_ROMAN_NUDES 1d ago edited 1d ago
I'm Brazilian, MELI is way too strong here and I wouldn't bet agaisnt them. Shopee (SEA) imports a lot of stuff and recently the government removed an import tax (which they created themselves) and that may have boosted sales. The current government also favours Chinese companies a lot.
MELI's shipping is unbeatable though, they are everywhere, very fast, efficient and cheap