Amazon has a Rival in Southeast Asia
Sea's multi-dimensional strategy positions them to capture a significant portion of Southeast Asia and Taiwan's emerging e-commerce, virtual financial services, and video game market share. This region has a population of about 600 million people, and its' GDP per capita is growing faster than other comparable economies due to its blossoming internet technology.
Sea's e-commerce division, Shopee, resembles Amazon with a growing active user base across Indonesia, Taiwan, Vietnam, Thailand, the Philippines, Malaysia, and Singapore. In these countries, Shopee is the largest e-commerce company in terms of total orders and market share. Between 2015 and 2018, Shopee's revenue grew from $10 million to $270 million. Shopee's domestic expertise allows them to prioritize product categories that have higher realization rates and profitability.
Sea incorporates various fees to monetize Shopee such as pay-per-click advertisements, transaction fees, and other value-added services. These services enable Shopee to establish long-term relationships with sellers; for example, Shopee University is an e-learning service where individuals can learn how to grow their business organically. Additionally, Sea provides companies with logistics support to improve smaller businesses' supply chain.
Garena, the company's gaming segment, allows users to meet, chat, play games, and stream games online. This digital entertainment platform is leading the region's online gaming market in terms of revenue. Garena's games are free, but in-game purchases (character customization, game expansion packages, etc.) cost money. This "freemium" model encourages more customers to download games and increases the number of transactions compared to a one-time payment model. Garena Live is similar to Amazon's Twitch; however, many of the games streamed on Garena Live are made or exclusively provided by Sea.
Sea ties Shopee and Garena together by allowing users to pay with Sea's virtual financial service provider: Airpay. Sea's strategy and marketing campaign have allowed the company to develop relationships with residential and commercial customers across Southeast Asia and Taiwan. Although Sea operates in a region that is at the early stages of internet penetration, the company has created a brand that caters to the communities around them
Written by Matthew Durborow & James Mueller, Edited by Alexander Fleiss
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