This is Hamamoto from TIMEWELL
This is Hamamoto from TIMEWELL.
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Good Evening
Good evening. This is Ryu from ONE X. Today I want to share my personal thoughts on SEA Limited, which has become the king of Southeast Asia. Since it's not very well known in Japan, I'll explain in some detail for those who don't know what SEA Limited is! In short, it's a super-growth company that has overtaken entrenched e-commerce players one after another. Read on for the details! Let's dive in!
The CEO of this company is Forrest Li. He was born in China but graduated from Shanghai Jiao Tong University and Stanford Graduate School of Business, moved to Singapore, and has also obtained Singaporean citizenship. Forrest Li has a close relationship with Yuxin Ren, who served as COO of Tencent (腾讯) and led the development of the company's platform, content group, and interactive entertainment group, and Ren also serves on SEA Limited's board of directors.
Also, the CEO of Shopee under SEA Limited is a person named Chris, a skilled executive who has driven growth at Zalora (a Singapore-based fashion-focused e-commerce site) and Lazada (Alibaba-affiliated Southeast Asian major e-commerce platform — Shopee now has the higher market share, haha). These three are undoubtedly the key figures at SEA Limited. Apologies if any of this information is outdated. (Laughs)
◉ What Kind of Company Is SEA Limited?!
First, let's look at SEA's mission.
Our Mission Is to Better the Lives
Our mission is to better the lives of consumers and small businesses with technology.
That's what it says. In Japanese, it might be something like:
"To improve the lives of consumers and small businesses through technology."
The explicit mention of small businesses is distinctive. Their businesses can be structured into three main segments.
Structuring them further, you get a map like this. The model is: build customer satisfaction and retention through the gaming business, increase purchasing experiences for consumers and small retailers through the e-commerce business, and promote online payments and lending for small businesses through the financial business.
I Think There Are Four Main Sources of Their Competitiveness
I think there are four main sources of their competitiveness:
❶ Introducing gamification cultivated in the gaming business into the buying experience
❷ Designing locally rooted UX that pleases businesses in each region
❸ Designing and carefully managing social communities for both consumers and businesses
In some ways, the e-commerce business is like a model that blends Amazon's and Shopify's business models in equal parts. What is clearly different from Amazon and Shopify is that by generating overwhelming DAU (Daily Active Users) from the gaming business and driving those users into e-commerce, they are generating an extraordinary number of purchase touchpoints. Amazon differentiates through things like the Prime membership program, but customer loyalty there is completely different from that of gaming. I've started talking about the gaming business, so let me go into more detail on that.
The Gaming Platform
On Garena, the gaming platform, a huge amount of game content developed in the Asian region is being created. Garena's developer platform is becoming one of the largest in the world.
Also, FreeFire, SEA's original game, reached 200 million downloads in 2020 alone, making it the 3rd most downloaded app in the world by download count. That's incredible. It beats PUBG and Roblox. There are FPS (social shooting games) like Fortnite, Apex, and Knives Out, but what's the reason for their overwhelming win over these? Actually, FreeFire lowered its resolution compared to other apps so that users in Southeast Asia, where connectivity can be a bit poor, can use it easily. By keeping the app itself lightweight so that users' experience runs smoothly, they have established their position as #1 in Asia. The most recent user count is said to be 500–600 million. Looking forward to the earnings numbers. (Laughs)
https://blog.apptopia.com/worldwide-us-download-leaders-2020
◉ What Is the E-Commerce Platform Shopee?!
This is also an e-commerce platform unfamiliar in Japan, but it's a miraculous e-commerce service that has expanded aggressively into Singapore of course, as well as India, Indonesia, Brazil, and more, overtaking existing e-commerce platforms. It ranks #2 in the world shopping app download ranking after Amazon. 140 million downloads. Growing at a breakneck pace.
"Isn't Go-jek More Famous for Southeast Asia?"
"Isn't Go-jek more famous when it comes to Southeast Asia?"
I can almost hear that question, but Go-jek has been struggling with its ride-sharing and other businesses due to the impact of COVID, and in that opening, SEA's Shopee has been overtaking them at an overwhelming speed. Backed by funding from Tencent, they are providing localized UX design (experience design adapted to each region) around the world, leaving competitors far behind.
"For e-commerce, isn't it Amazon, and for small retailers, isn't it Shopify?"
I can hear that question too, so I made a comparison diagram of Shopee, Amazon, and Shopify. A bit hard to read? Sorry.
Amazon had been a company that placed overwhelming importance on "Customer Experience (CX)" internally. Combined with Jeff Bezos's high level of financial literacy, they created the strongest business model and became the world's #1 e-commerce platform.
Shopify is also called "anti-Amazon." By providing e-commerce site building packages that allow small retailers to easily launch their own e-commerce sites, they have accelerated business expansion. In Japan, BASE runs a similar business.
So what is Shopee's business model? Simply put, it's a model that's like a hybrid of Shopify and Amazon. Shopee:
❶ Builds UX/UI design tailored to regional characteristics (machine learning for regional optimization)
❷ Builds a comprehensive support program for businesses (including lending)
❸ Both buyers and businesses have their own communities for exchanging purchase information
The Above Three Features
These are the three distinctive features. Amazon's approach has been: first, list small businesses' products on the e-commerce site, but for things that seem to have high profit margins, launch private-label products and provide buyers with the cheapest and most convenient option. This might be good for buyers, but it's a threat to small businesses, isn't it?
So Shopee has created a system where small businesses compete against each other so that the best products reach buyers. Also, Shopee has engineered ways to always provide the best deal for buyers through gamification-style point awards and level design, so that buyers can always experience the most advantageous purchasing experience. As a result, it has become an e-commerce platform rivaling Amazon. There is an e-commerce platform called MercadoLibre in South America that runs a business similar to Amazon, but I think Shopee might even overtake them. I'm looking forward to that competition going forward.
◉ Payment & Lending Platform SeaMoney
The last one to introduce is SeaMoney. You might have heard the name Airpay. This is operated by SEA. SeaMoney also provides C2C services like Square's CashApp, as well as store payment services similar to Square.
Recently, the Monetary Authority of Singapore granted SEA a digital banking license. This allows them to engage in lending as well. Going forward, I think they will promote lending to small businesses that are also Shopee partners. As I wrote about Square, since they control the payment platform, SEA can perform credit assessment based on payment history, enabling more accurate lending. Square is now facing challenges in its Southeast Asia expansion because of this.
https://thebridge.jp/2020/12/g
https://onexblog.onexxxx.com/entry/2021/01/10/042254
I can almost hear objections to that, but there was an announcement that KonsultaMD had partnered with Shopee to start a service providing immediate, 24/7 access to licensed doctors.
KonsultaMD and Shopee will also jointly hold an event called ShopeeMomDays to raise awareness about telemedicine.
$SE the telemedicine 👩🏻⚕️ push continues 🤫
"KonsultaMD Partners with Shopee"
"KonsultaMD partners with Shopee to provide immediate, 24/7 access to licensed doctors. KonsultaMD and Shopee are also launching Shopee MomDays, a show which will spread awareness about telemedicine" 🇲🇾 https://t.co/ApJYYkBASC https://t.co/vb2RvpDFHj
— james booth 🇾🇪🚴🏻♂️ (@EMparadigmshift) January 19, 2021
This is still awaiting more detailed announcements, so looking forward to what comes next. SEA's market cap is approximately ¥12 trillion. Some are asking whether it can go even higher, but considering their obvious competitive advantages and the speed of business investment & market development, I think they could become a company on par with Amazon. Long ago, SoftBank's Masayoshi Son said something like "whoever controls gaming controls finance," and this company is exactly trying to realize that. A truly formidable company. Personally, I consider them the top candidate for the NEXT GAFAM. Finally — this is entirely my personal opinion, so invest at your own risk. Use it as a reference for business development. In the meantime, if you could click the star and subscribe, that would make me happy!
I've also written a business & investment summary article here, so feel free to check out any articles that interest you!
https://onexblog.onexxxx.com/entry/2021/01/20/202812
This AI column is produced by the online assistant service "TIMEWELL."
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