Shopee's second-quarter performance increased, and the next stage will be to develop advertising business

According to foreign media reports, Southeast Asian Internet company Sea released its second quarter 2021 financial report, pointing out the next stage of development goals in the report. According to GAAP principles, the share of Sea's subsidiary e-commerce company-Shopee's revenue in the gross merchandise value (GMV) expanded from 7.2% in the first quarter of 2021 to 7.7%.

Sea chairman and CEO Forrest Li said this was "the result of customers investing in advertising and operations on Shopee. As far as Sea is concerned, its business model 'is still in a very early stage for us.'"

In recent years, the market share of cross-border e-commerce in the advertising sector has increased year by year, and has gradually approached the old social companies. Take Amazon and Alibaba as examples. According to Asia Technology, Amazon's global digital advertising market share is expected to increase ninefold, from 0.8% in 2016 to 7.1% in 2023. Some advertisers said that the net return on investment (ROI) brought by advertising on Amazon ranks second, second only to Google.

According to data provided by Asia Tech, Shopee's advertising sector has great growth potential. In addition, compared with other e-commerce companies, Shopee's advertising business has some "unique" advantages, namely Sea's Garena gaming company, which also has great advertising potential. Garena has 725 million active users per quarter, which undoubtedly provides a user base for the expansion of advertising business.

HotPlay CEO Nithinan Boonyawattanapisut (Jessie) said Garena can provide in-game advertising solutions. Currently, Sea is developing a new plan for Garena: to use it as a social platform for users to interact in games. All these intentions give Shopee a competitive advantage in attracting higher-value advertising brands.

Tech in Asia predicts that Shopee’s share of digital advertising spending could grow to 13% by 2025, or $900 million in advertising revenue. However, Tech in Asia’s analysis only considers the Southeast Asian market, and does not include Shopee’s potential in other markets, such as Latin America and India and Poland in Europe, where Shopee is preparing to expand recently.

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