Maybank Investment Bank has foreseen limited risk for Singapore-based technology giant Sea amid Mercado Libre’s (MELI)’ competitive ante.

The research house said in a note on last Friday that while MELI’s recent shipping discount is a clear attempt to penetrate Sea’s e-commerce arm Shopee’s mass-market stronghold, it viewed it as a measured escalation rather than an aggressive shift.

“Importantly, Shopee’s value proposition remains highly competitive, especially on two key metrics: total product cost and seller take-rate,” it added.

It is noted that MELI new free‑shipping campaign in Brazil slashed the minimum order threshold from BRL79 to BRL19 ($3.40).

Simultaneously, it cut seller shipping fees by up to 40 percent, with MELI shouldering the cost.

The expanded shipping discount by MELI strategically targets the low-to mid price segment, where Shopee has been gaining strong traction.

Maybank comparison showed that products on Shopee are, on average, 11 percent cheaper than on MELI, with faster delivery timelines.

In addition, Shopee sellers face lower take-rates, particularly on low-ticket items, even after factoring in shipping subsidies.

“While MELI’s new strategy narrows the gap, Shopee still holds a distinct edge in affordability and seller economics — key pillars in winning and retaining value-conscious consumers in Brazil’s e-commerce market，” said Maybank.

While the research house does not value Shopee Brazil separately, it estimated its value at $10 billion, contributing 9 percent to Sea’s sum-of-the-parts (SoTP).

In a downside case where MELI’s pricing move erodes Shopee’s market share and triggers an aggressive response leading to losses, it applies a 0.5 percent enterprise value (EV)/sales multiple to Shopee Brazil — Shopee’s trough valuation in late 2023.

This would cut Shopee Brazil’s value by 87 percent to $1.3 billion, reducing its SoTP by 8 percent, from $192 to $176.

According to Maybank, Shopee is ramping up in Brazil with 11 distribution centers and a new logistics hub in Goiás.

Its first fully managed fulfilment center in São Paulo enables faster delivery and supports bulkier items and will help it to grow in higher-value categories like electronics.

Shopee is also moving upmarket by on-boarding 800+ major brands, steadily lifting its average order value, it added.

Sea’s revenue jumps 29.6 percent amid strong e-commerce sales