Maybank Investment Bank has foreseen slight concerns for Singapore-based technology conglomerate Sea Ltd‘s e-commerce arm Shopee in Brazil amid MercadoLibre (MELI)’s several competitive moves.

Maybank said in a note on Tuesday that MELI is strategically leveraging lower pricing, free shipping, and broader selection to attack Shopee’s stronghold in low-ticket categories.

“Early indicators from MELI’s results suggest its push into the low-value segment is gaining strong traction — with items sold in Brazil rising 12 percent month on month in June, well above the typical 2 percent run rate,

“While management attributes this momentum to improving logistics scale and growing offline-to-online adoption, we believe this strategic expansion directly challenges Shopee in its core territory and could exert pressure on its growth in Brazil,” said Maybank.

According to the research house, MELI made several competitive moves in the second quarter to solidify its dominance in Brazil’s e-commerce market, particularly in the low average selling price (ASP) segment where Shopee has a stronghold.

Its key initiatives included a about 40 percent fee cut for items priced between BRL79 ($14.35)–BRL200 and a drop in the free shipping threshold from BRL79 to BRL19.

These changes, combined with a 47 percent year on year increase in sales and marketing spend across Brazil, Mexico, and Argentina, drove a sharp increase in buyer activity — with items sold in Brazil growing to 34 percent year on year in June versus around 22 percent in April-May 2025.

However, these growth initiatives came at a near-term cost, with the firm’s second quarter earnings falling 2 percent year on year and missing street expectations by 14 percent, as MELI prioritized user growth and platform engagement over profitability.

“Despite that we believe Shopee’s value proposition in Brazil remains highly competitive, especially on 2 key metrics: total product cost and seller take-rate,

“Our comparison shows that products on Shopee are, on average, 11 percent cheaper than on MELI, with faster delivery timelines,” Maybank noted.

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

While MELI is expanding into Shopee’s core low-value segment, Maybank opined that Shopee is simultaneously moving upmarket by onboarding over 800 major brands and increasing investments in logistics and fulfillment.

“Although the Brazil business is currently earnings before interest, taxes, depreciation, and amortization (EBITDA)-positive, we wouldn’t be surprised to see it return to losses as management continues to prioritize growth over profitability,

“That said, we estimate the downside risk is limited to around 8 percent in a worst-case scenario, given Shopee Brazil accounts for just about 9 percent of Sea’s SOTP valuation,

“Moreover, we see Shopee’s Asia business, fintech and gaming, remains in a much stronger shape and potentially offset Brazil risks,” Maybank concluded.

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