SEA challenging MercadoLibre’s dominance in Latin America Regional giants battling it out

SEA challenging MercadoLibre’s dominance in Latin America


  • The market for e-commerce is growing in Latin America
  • SEA might look to capitalize on its mobile game Free Fire, through its subsidiary Garena to drive more user acquisitions
  • MercadoLibre will likely maintain its dominance of the market
  • There is enough space in the Latin American market for SEA to carve out a niche

The Players

SEA is the holding company of its subsidiaries Garena in digital entertainment, Shopee in e-commerce, and SeaMoney in digital financial services. It is the dominant market player in the South East Asian market, specifically in the e-commerce and gaming ecosystem.

Mercado Libre on the other hand hosts the largest online commerce and payments ecosystem, Mercado Pago in Latin America, with a presence in 18 countries including: Argentina, Brazil, Mexico, Colombia, Chile, Venezuela and Peru.

At a glance, both companies are very similar in terms of having an e-commerce and payments arm, and being regional leaders in their own right. Moreover, both Southeast Asia and Latin America have approximately the same population size of over 585 million people and 605 million people respectively.

Current Climate

SEA recently ventured into Latin America through its Garena and Shopee arm of the business.

Shopee first conducted a pilot study in Brazil before making its move in 2020, and has since expanded into Mexico in 2021. Garena on the other hand has a huge presence in the Latin America ecosystem, specifically through its free to play battle royale game Free Fire – the highest-grossing mobile game in the region, according to App Annie.

Free Fire’s popularity boosted SEA’s Latin American revenue 218% year over year to US$507 million in the first nine months of 2020.

It is with this background that SEA is looking to play its expansion card into the Latin American market, that is predominantly dominated by Mercado Libre.

SEA’s subsidiary Shopee can leverage on its unique selling points such as quick sales, running sales campaigns, cheap products, aggressively subsidizing purchases, and locking users into its payment ecosystem – aspects which Mercado Libre employs as well.

However, Shopee has an ace up its sleeve as it provides cross-border purchases from Asia. This has allowed Shopee to usurp Amazon in the Brazilian market, by having more monthly active users than its American competitor.

But to combat Mercado Libre, Shopee would have to do much more.

This is because Mercado Libre currently occupies about half the e-commerce market in the region with up to 320.6 million registered users in 2019, with an average of 12 million sellers and 55 million active buyers signing up per year. The company also has 6800+ official stores who sign up on the platform on a yearly basis with more than 4.2 million total average Mercado Pago transactions per day.

Mercado Libre had also seen off the challenge of Amazon, which have been unable to displace Mercado Libre as the kingmaker of the e-commerce market in Latin America despite its popularity elsewhere around the world.

However, the following factors may work in SEA’s favor. According to Statista, the region is expected to reach e-commerce sales of up to US$116 billion by 2023 with e-commerce sales accounting for only about 3% of Latin America’s total retail sales.

As such, the potential for future growth is high, especially considering the impetus provided by the Covid-19 pandemic which resulted in an increase in the use of e-commerce vs traditional retail sales.

Given that the current internet user penetration rate in the region is at 57%, there is space for SEA to expand into. This is because the market has not reached a saturation point where competitors have nowhere to compete.


The region is expected to witness increased e-commerce growth and internet penetration rates are expected to grow, we predict that the market is ripe for competitors such as SEA to make its move.

Given that SEA currently occupies a very small percentage share of the market as compared to Mercado Libre, it will be able to leverage on its Garena arm of the business which Mercado Libre lacks to create a headway into the Latin American markets. Eventually expanding its reach into the region through its e-commerce, payments, and gaming ecosystem.

However, Mercado Libre would remain as the de-facto e-commerce king of Latin America given that it enjoyed a first mover advantage and had already consolidated its power over various merchants.

Mercado Libre has also locked in established users with its Mercado Pago platform which makes it even more difficult to pry these users away.

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