#34. Singapore's Shopee expands while Facebook international presence is shaken
A Sea Group profile, the Facebook outage impact in Emerging Markets and a source for startups in the Middle East and North Africa region.
Welcome! Have you ever wondered:
Who is the company behind the e-commerce Shopee? 🇸🇬🚀
What did the Facebook outage mean for Emerging Markets? ⚡️🔌
Where to read the most relevant startup news in the MENA region? 🌙📰
If so, keep reading…
If you wonder what Emerging Markets explorer 🧭 is about, start here.
Sea Group Profile - the company behind Shopee
I had Sea Group as a company under my radar to eventually write a profile on. Then, I saw Tech in Asia publish that Shopee is expanding into Spain. I took that as my cue.
Sea Group is a Singapore-based Internet giant. It calls itself a global consumer Internet company. Sea was founded in 2009 by Forrest Li, Gang Ye, and David Chen back in a time when the VC ecosystem in Singapore was smaller.
They have already raised $7.1BN, are backed by Tencent, and are publicly listed on NYSE as $SE.
Sea Group has three main offerings:
Garena for online games development and publishing. Sea Group started off with Garena and grew from the cash it provided. They have made popular games, such as Free Fire which succeeded in Brazil.
Shopee for e-commerce. It launched in 2015 and is the leader in Southeast Asia and Taiwan.
SeaMoney for financial services. Established in 2014, they operate in Southeast Asia. They provide mobile wallet services, payment processing, credit, and more.
Shopee, its e-commerce arm, has been expanding internationally quite aggressively these days. Shopee entered the Brazilian market in 2019, transforming into a competitor of MercadoLibre. They hired influencers to promote their products as an entry strategy. It became the 9th most downloaded App in Brazil in early 2021.
More recently, in Latin America, they launched Shopee in Mexico, Chile, and Colombia. In Europe, they launched in Poland and now they seem to be aiming to launch in Spain.
This aggressive expansion, however, is not yielding profits yet: they had a net loss of $433M in Q2 of 2021. Investors remain optimistic about its growth potential, and its share price has risen by 75% in 2021.
Failure story: the Facebook outage
Last week, on October 4th, 2021, Facebook, Instagram, and WhatsApp suffered an outage for 6 hours.
What probably annoyed us all, had a considerable effect on Emerging Markets: except in China, in most countries, the Facebook suite Apps are the most used.
A business layer is added on top of this: in many emerging economies, these apps have spurred the rise of social commerce. Social commerce is e-commerce that involves these Social Media Apps to support business in some way, for social interaction and even payment infrastructure.
Part of the value proposition in social commerce is the ease of setup: there is a minimum complexity for these businesses to sign up, and this is incentivized by a large adoption of those Apps. There are even integrations with payment processing. However, these cannot be assumed to be used by merchants in emerging markets as they add an additional layer of complexity: their clients need to be banked, and the business needs a license to accept payments.
An ingredient in favor of social commerce in Africa is the high adoption of social media, where social commerce accounts for most e-commerce activities in countries like Equatorial Guinea, and the case of Kenya where 92% of SMEs use social commerce to carry out business.
It is difficult to quantify the monetary impact of the Facebook outage due to the direct and indirect costs for business of it being off for many hours. But it will for sure not be forgotten and might open the doors for local social media players to gain more relevance.
Source recommendation: Wamda
Wamda is an investment vehicle for startups in the Middle East and North Africa region. Among their actions to support the local ecosystem, they publish the most relevant startup news on their site and send a free weekly newsletter.
The entrepreneurial ecosystem in the MENA region is quite unique, and they report news about it in its uniqueness. In some countries, the Sovereign Investment Funds are large and wealthy, and they invest large sums in some of the major local startup players, challenging foreign competitors, as was the case for the e-commerce Noon.
You can read their pieces here: https://www.wamda.com/en