Shopee, Asian online retail giant, calls itself Brazilian

​Water polo player since adolescence, former member of the Paineiras do Morumby team, Felipe Piringer, 34, needs to be fast in the water. By the rules of the game, each team has only 30 seconds to make a move in order to score a goal.

This agility had to be put to the test ahead of Shopee’s operation in Brazil. Director of marketing and strategy for the company in the country, he was responsible for nationalizing the operation from July 2020, ten months after the Singapore procurement platform arrived in Brazil.

That meant making deals with local sellers – so-called “sellers”, who showcase their products on the Shopee marketplace, for a commission on sales. In practice, they are the virtual version of shopkeepers who pay rent for a shopping center.

Now, in April, Shopee has just reached 2 million of those local virtual merchants, tells Sheet Piringer. The company does not report the total number of sellers, including foreigners.

By way of comparison, Magazine Luiza, one of the largest e-commerce sites in the country, brings together 160,000 local online sellers. Americanas, another large online operation, has 122,000. The Argentine Mercado Livre has 9 million sellers, considering its operations throughout Latin America.

Shopee became the country’s most-downloaded shopping app last year, with more than 100 million downloads, according to data from software development and market analysis firm EmizenTech.

“Today, 87% of our sales come from local salespeople,” says Piringer, a mechanical engineer who fell in love with the profession when he worked as a lathe worker in Switzerland. “Our operation is Brazilian, it is not a translation of a foreign site”, he says.

The distinction is important at a time when the company, controlled by Singapore’s Sea group, has come under IRS scrutiny, alongside other overseas-based e-commerce operations such as China’s Shein and Aliexpress. As reported by SheetAsian websites already attract two-thirds of Brazilians who shop online, mainly in search of low prices.

The vertiginous advance already bothers part of the national retailers. For them, these sites take advantage of a loophole in the legislation that authorizes an individual to send foreign goods to another individual in Brazil without paying taxes, as long as the value of the merchandise is below US$50.

Piringer says that Shopee is just a marketplace, that is, a digital platform that sells third-party products, and doesn’t import anything directly. Sellers register and pay a percentage on sales.

Even so, he says, if there is an MP (Provisional Measure) by the Federal Revenue to increase taxes on purchases of foreign products, the measure will have a reduced impact on the operation, since only 13% of sales come from imported products. . And all are formalized, with an invoice, he says.

“Shopee has a CNPJ since 2019. Our headquarters are in the city of São Paulo, where we pay taxes, we didn’t go looking for a cheaper city in the surroundings (laughs)”, says Piringer, who spoke to Sheet at the company’s headquarters, in the south zone of the capital of São Paulo. Shopee occupies three floors of a building on Avenida Brigadeiro Faria Lima and currently employs 1,500 people directly. “We are growing fast and hiring more people”, he says.

Here are the main points to understand the online retailer’s strategy:

International expansion from Brazil

Shopee launched in 2015 in seven Southeast Asian countries at the same time. Headquartered in Singapore, its international expansion began in Brazil in September 2019. Today the company is also in Europe and other Latin American countries –Argentina, Colombia, Chile and Mexico.

The company claims to no longer be a foreign site (“cross border”), as it has the proposal to build a “local ecosystem”, linking Brazilian entrepreneurs (the “sellers”) to Brazilian consumers. “Our team does not translate foreign sites, we have a team that builds the Brazilian operation”, says Piringer.

Shopee’s controller is the Sea group, which in 2021 earned US$ 9.95 billion (R$ 46.8 billion). In addition to e-commerce, the group operates in the financial market (with the fintech SeaMoney) and in entertainment (with Garena, owner of Free Fire, one of the most popular mobile games in the world).

Launching marketing campaigns with local influencers

A survey by the consultancy NielsenIQ|ebit pointed out that the percentage of Shopee consumers on the Brazilian internet jumped from 8% to 56% last year. According to the company, the success is due to the construction of the local operation, which has already generated 1,500 direct jobs, ranging from customer service to local marketing campaigns.

The company promoted campaigns with influencers such as actress Larissa Manoela and the forró band Barões da Pisadinha. He has also released films with Chinese martial arts star Jackie Chan speaking in Portuguese.

Building a national base of “sellers”

The company started selling in the country in September 2019 with 100% foreign products. But today only 13% of the site’s sales are imported. They were 15% last year and the slice has been falling, according to the company. National products began to be offered on the website in July 2020 – this is the date that Shopee considers its official arrival in Brazil. Today the company has 2 million Brazilian “sellers” on its platform; in October of last year, there were 1 million.​

The commission that Shopee charges sellers who display their products on the site is 12%. THE Sheet found that, among the main competitors, this percentage varies from 11% to 20%. The company does not charge a commission on canceled purchases, as some competitors do.

Shopee also offers the Salesperson Education Center: a virtual learning environment, with videoconferences and professionalization courses in areas such as marketing, basics for sending orders, business expansion and sales with analytical data.

Using gamification to attract consumers

To retain consumers’ attention on its app, which accounts for 95% of sales, the company uses gamification (virtual games with “real world” rewards).

“Shopee coins”, which guarantee discounts on purchases, are offered when a consumer makes a purchase, when they play games or when they review a product. If the product arrived earlier and the consumer notifies the site, they also earn Shopee coins, which work as a “cashback” (return of a percentage of the purchase amount).

The company also claims to ensure that the customer receives the goods: the seller’s payment is withheld until the transaction is completed, after delivery of the product. Other attractions are free shipping, promotions on double dates (such as 04/04) and a strong presence on social networks. Today the site has more than 7 million followers on Instagram and 2.8 million on TikTok.

​ Varied assortment of products and various logistical partners

Shopee does not tell you how many SKUs (items) it sells on the site. But the list of most in-demand categories is eclectic: disposable masks, jelly beans, headphones and washing powder. The “top 10” of best-selling products in the last 12 months also included ring lights (accessory for lighting photos and videos), wallpaper and smartphones from brands such as Xiaomi and Huawei.

The company recognizes, however, that it needs to improve the logistics operation. Today, Shopee has only one cross docking facility in Barueri (SP), which helps in the separation of products: around 10 logistics partners, including Correios, take the items to the cross docking station, where the Shopee team separates them by CEP and dispatches them to logistical partners to deliver.

The company does not reveal if and when it intends to have a CD (distribution center) in Brazil. It doesn’t even tell you about the average delivery time.

X-RAY: Shopee Brazil

Foundation: 2015, in Singapore

Employees: 1,500

registered sellers: more than 2 million

Revenue*: $70 million

Number of orders*: 140 million

Mainly competitors: Mercado Livre, Americanas, Aliexpress

* Data referring to the 4th quarter of 2021