Shopee breaks 100 billion GMV, will sellers share in a 20% growth bonus?

Author: Guo Ran

Image source | pexels

Shopee's Gross Merchandise Volume Exceeds $100 Billion

On March 4, Shopee's parent company Sea announced its fourth quarter and full-year financial results for the year ending December 31, 2024, with overall performance exceeding expectations.

Sea's Chairman and CEO, Li Xiaodong, revealed at the press conference that the company's performance in 2024 was impressive, with all three core businesses showing strong double-digit growth, far exceeding initial expectations, and achieving annual profitability for the second consecutive year, with adjusted EBITDA for all three businesses turning positive.

Notably, in 2024, Shopee's Gross Merchandise Volume (GMV) saw a significant year-on-year increase of 28%, surpassing the $100 billion mark, achieving adjusted EBITDA profitability in both the Asian and Brazilian markets.

"We are confident in continuing to achieve profit growth in 2025, with Shopee's GMV expected to grow by about 20% for the full year 2025, and profitability will continue to improve," Li Xiaodong stated.

Image source: Sea Financial Report

Milestone Transformation in Profitability

In recent years, Shopee has emerged as the leader of Southeast Asia's e-commerce platforms, attracting a massive user base with its excellent services and diverse product offerings, becoming the core driving force and key growth engine in the development process of its parent company Sea.

According to the disclosed financial report, the most critical aspect is its milestone transformation in profitability achieved in 2024.

Behind this strong growth, core market revenue (transaction fees and advertising revenue) reached $2.4 billion in the fourth quarter of 2024, a year-on-year increase of 49.8%, thanks to improved user activity on the platform and optimized advertising effectiveness, with numerous brands and merchants increasing their advertising investments on Shopee to gain more traffic and sales opportunities.

Taking the Double Twelve shopping festival as an example, on the day of the promotion, products such as beauty, mobile phone and tablet accessories, fashion accessories, home living, and women's clothing were highly sought after, with cross-border strong categories seeing order volumes soar to ten times. Various cross-border sellers leveraged the logistics infrastructure and content ecosystem provided by the platform to stand out during the promotion.

Source: Shopee Cross-Border E-commerce

Snapcart data shows that among major e-commerce platforms, Shopee is rated by Indonesian sellers as the platform that brings the most sales profit, accounting for as much as 71%, far ahead of other e-commerce platforms. This also proves that a mutually beneficial partnership has formed between sellers and the platform.

2024 Q3 Quarter (left) 2024 Q4 Quarter (right)

Previously, the financial report for the third quarter of 2024 showed that the GAAP total revenue for the third quarter of 2023 was $3.3 billion, increasing to $4.3 billion in the third quarter of 2024, a year-on-year growth of 30.8%.

The GAAP total revenue for the fourth quarter of 2023 was $3.6 billion, rising to $5 billion in the fourth quarter of 2024, a year-on-year increase of 36.9%.

Moreover, the Q4 quarter coincides with a closely packed promotional period, where both order volume and traffic are "soaring," which may also be an important reason for Shopee's total merchandise transaction volume to exceed $100 billion in 2024.

Shopee's continued investment in logistics system construction has also brought significant results for its business development.

Revenue from value-added services (mainly logistics service revenue) reached $794.8 million in the fourth quarter of 2024, a year-on-year increase of 20.8%.

Last year, in the last-mile segment in Southeast Asia, Shopee established 50 new logistics hubs, expanded logistics distribution centers, and improved automation processing capabilities. By providing more efficient, flexible, and low-cost delivery services through its own local logistics SPX Express, SPX Express currently covers over 90%, with 60% of orders delivered within 3 days after Southeast Asian consumers place their orders.

Taking the Singapore site as an example, logistics efficiency has improved by 15% since 2024. The efficient logistics distribution system built by Shopee has greatly enhanced the user shopping experience and opened up new profit growth points, providing strong support for a diversified and continuously growing revenue structure, ensuring Shopee's sustainable development.

In terms of key profitability indicators, in the fourth quarter of 2024, Shopee's adjusted EBITDA was $152.2 million, successfully reversing the loss of $225.3 million in the same period of 2023; the annual adjusted EBITDA was $155.8 million, while the full year of 2023 was -$213.8 million. This transformation highlights Shopee's outstanding achievements in cost control, operational efficiency improvement, and business model optimization.

The improvement in profitability has greatly enhanced internal confidence within the company and conveyed positive signals to the market, attracting more investor attention and resource investment, providing solid financial support for the platform to further expand its business and enhance its competitiveness At the same time, shortly after the financial report was released, Sea's stock listed in the United States surged during trading on March 4, with data showing that Sea's stock price recently rose over 8% to $133.95.

Source: investors

Wedbush analyst Scott Devitt wrote after the report was released that the preliminary forecast was "far above our expectation of 14.9% and a year-on-year growth of 17.2%." Devitt rated Sea's stock as outperforming the market.

Venture capital and insights company Momentum Works believes that Shopee's "money-saving" brand image may be difficult for emerging competitors to surpass, and this advantage also helps it continue to progress in its profitability transformation process.

Bernstein pointed out in a February report that a pricing survey conducted in September 2024 on a sample of certain products showed that other e-commerce platforms continued to implement aggressive pricing strategies, while Shopee responded quickly by increasing the proportion of products priced lower than competitors through price reductions.

Over the past four months, Shopee has shown more regional differentiation in its overall pricing strategy compared to competing platforms.

Shopee has been more aggressive in major markets like Indonesia and Thailand, with price reductions reaching 5-6%; in smaller markets like Malaysia and the Philippines, it has slightly raised prices to balance growth and profitability. This indicates that Shopee's pricing strategy is more selective, with its "money-saving" image deeply ingrained, coupled with strategic adjustments in commission across multiple sites, helping it continue to advance in its profitability transformation.

When we focus on overseas market expansion, we find that Shopee's careful layout in the Brazilian market has also achieved breakthrough success.

The financial report shows that Shopee has successfully established a foothold in Brazil and achieved adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) profitability. It currently ranks second in the Brazilian e-commerce market, second only to Mercadolibre, and is expected to further expand its market share and improve profitability, becoming one of the important engines for Shopee's global profit growth.

Shopee's "money" landscape is double excellent, giving sellers strong confidence

Based on Shopee's good development trend in 2024 and its continuous efforts in market layout, user growth, and business expansion, Sea's chairman and CEO Li Xiaodong expects GMV to achieve approximately 20% growth in 2025.

With the continuous expansion of the global e-commerce market, especially the ongoing release of consumption potential in emerging markets, Shopee will further expand its market share by leveraging its leading position in core markets such as Asia and Brazil.

Of course, in the context of increasingly fierce competition in the Southeast Asian e-commerce market in recent years, Shopee still needs to remain vigilant to ensure the sustainability of its profitability As the business scale continues to expand, economies of scale will gradually become apparent, leading to more effective control over procurement costs, logistics costs, and more.

The improvement in profitability will provide a more solid financial foundation for Shopee's long-term development, while also greatly boosting sellers' confidence in operating on the platform. With the continuous growth of platform traffic, Shopee will also bring more potential customers to sellers, increasing product exposure and sales volume.

This gradually improving trend is also a reflection of the mutual achievement between the platform and sellers. As Shopee's "cake" gets bigger, it will attract more quality sellers to join the platform, forming a virtuous cycle.

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