Sea Group’s Surprising Q2 and the Next Battleground for E-Commerce

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Sea Group’s Surprising Q2 and the Next Battleground for E-Commerce

If you had asked investors two years ago whether Sea Group — parent of Shopee, Garena, and SeaMoney — would bounce back this strongly, many would have shrugged. The company was under siege: slowing gaming revenues, surging e-commerce competition, and worries about cash burn. Yet, the Q2 2024 results show a different story.

Net income grew nearly fivefold year-on-year. The market didn’t take long to react: Sea’s stock price spiked 19% in a single trading day, its sharpest rally in years. What’s driving this rebound? And where does Sea go from here, especially with global competitors circling?

Let’s unpack the numbers, the strategy behind them, and what they signal for the future of e-commerce and fintech in Southeast Asia and beyond.

Much of the spotlight on Sea Group still lands on Shopee, but the fintech arm, SeaMoney, may be the real star of this quarter.

The loan book has crossed $1 billion each in Malaysia, Indonesia, and Thailand. Altogether, loans outstanding reached $6.9 billion, and because most are short-term, annual disbursement volume is three to four times that — roughly $25 billion a year. That’s about 30% of Shopee’s GMV.

For a business that started off facilitating e-wallet payments, this scale is impressive. More importantly, it hasn’t come at the expense of credit quality. Non-performing loans stand at 1%, down from 1.3%. That’s remarkable given how often rapid fintech expansion ends in ballooning defaults.

This suggests SeaMoney is building disciplined underwriting capabilities — something many fintech players, including big names in India and Indonesia, have struggled with. It also hints at a flywheel effect: Shopee provides the merchant and consumer base, SeaMoney monetizes it through credit, and strong repayment performance keeps regulators comfortable.

Shopee: A Calmer Battlefield

If SeaMoney is the dark horse, Shopee is still the headline act. The e-commerce platform’s take rate — the cut it keeps from transactions — rose from 12.3% to 12.6%. A small change on paper, but at Shopee’s scale, it translates into significant revenue.

This improvement comes in part because competition has cooled. Two years ago, Shopee was locked in brutal subsidy wars with Lazada and TikTok Shop. Today, TikTok Shop remains aggressive, but its strategy looks more measured and long-term. The worst of the “burn to grow” battles may be behind Shopee, at least in Southeast Asia.

That said, investors should resist complacency. E-commerce has no permanent winners. Competitive dynamics shift quickly, often shaped by new entrants or new formats — just as TikTok itself reshaped the industry by embedding commerce into social feeds.

Logistics: From Back-End to Growth Driver

Behind every Shopee order is a logistics machine that few consumers notice but investors should pay attention to: SPX Express, formerly Shopee Xpress.

SPX now delivers not only Shopee parcels but also third-party shipments. Bloomberg recently profiled its community-based approach, where local “aunties” and neighborhood figures manage collection points. Meanwhile, parcel lockers are mushrooming across Singapore — even in condominiums traditionally resistant to such installations.

According to Momentum Works data, SPX and J&T together handle over half of Southeast Asia’s e-commerce logistics volume. At one point last year, SPX even overtook J&T as the region’s largest parcel player. Meanwhile, J&T’s growth remains blistering — 3.2 billion parcels in H1 2024, up 58% year-on-year, largely fueled by TikTok Shop.

This logistics race matters because fulfillment speed and cost increasingly drive consumer loyalty. Whoever controls the last mile, controls customer stickiness. SPX’s evolution from a cost center into a revenue-generating logistics platform is a development worth watching.

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Brazil: The New E-Commerce Battleground

Interestingly, during Sea Group’s earnings call, analysts asked almost nothing about TikTok. Instead, the bulk of questions centered on Brazil, where Shopee has quietly built a commanding presence.

Shopee claims to be the #1 platform by order volume in Brazil, ahead of local giant Mercado Livre. But competition is heating up fast. Shein and Temu are doubling down. TikTok Shop entered Brazil in May, and Mercado Livre is aggressively defending turf — offering free shipping and scaling up its China sourcing operations.

Brazil is attractive for several reasons:

• Higher purchasing power than much of Southeast Asia.

• A developed consumer credit market, with players like NuBank already shaping habits.

• E-commerce penetration that still has room to grow.

In other words, it looks like Southeast Asia did in 2018 — just larger, richer, and potentially more rewarding. But the crowding of global players makes this a risky, high-stakes contest. For Shopee, winning Brazil could offset slowing growth in Southeast Asia; losing it could limit long-term upside.

What Investors Should Watch

Sea Group’s Q2 shows a company firing on multiple cylinders:

• Shopee delivering steady monetization gains.

• SeaMoney scaling into a genuine fintech powerhouse.

• SPX evolving into a competitive logistics player.

But the bigger story lies in the markets where tomorrow’s growth will come from. Southeast Asia, while still expanding, is no longer a greenfield. Brazil, and potentially other emerging markets, represent the next frontier.

Competition is intensifying — not just from regional rivals like Lazada or J&T, but from global heavyweights like Shein, Temu, and TikTok. Each brings deep pockets, Chinese supply chain ties, and different strengths in marketing, logistics, or consumer engagement.

The lesson from Sea’s Q2 is that the company can execute well when conditions align. The challenge will be whether it can sustain that execution when new battlegrounds open and subsidy wars flare up again.

The Bottom Line

Sea Group’s rebound is real, but it is not guaranteed to last. SeaMoney is proving that fintech, when done responsibly, can be more than just hype. Shopee is showing discipline in monetization. SPX is strengthening the infrastructure moat.

Yet, Brazil looms large — both as an opportunity and as a risk. If Sea can replicate its Southeast Asia playbook there, it could secure years of growth. If not, the company may once again find itself squeezed between global giants.

For investors, the takeaway is clear: watch beyond the quarterly numbers. The long-term story will be written not in Singapore or Jakarta, but in São Paulo.

Interested in learning more about Shopee? Check out our previous coverage here:

• Is Meesho going the Shopee way in India?

• Is Shopee’s flywheel still flying?

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Peeyush and Mohit

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