$SE · The Intrinsic Value Podcast · 2026-11-07

You want to see Caspy's payment volumes, it's there. And I know because we pulled these metrics for our podcasts on Uber and Caspie.

>> Well, I think we're agreed on that. So, let me ask you about just the competitive front. I mean you also own C Limited as we talked about and I take it to you believe that Shopppee which is the subsidiary of C Limited can be successful in its expansion in Brazil and South America too.

(21:57) Is that right? Well again I bought C in the7s per share. So I thought at that point it was just an incredibly cheap stock. So I don't think you need Brazil to succeed in a way that they would actually replace Melly as the number one.

I think that's definitely not my base case. It's not actually my bullcase for C limited or shopppee at least not in Brazil.

So the good thing is I'm saying this somewhat jokingly that this is also an emotional hedge for me where Mellie is a much larger position. So while I want C to perform well if it doesn't at least in Brazil that means at least a competitor struggling.

So jokes aside I I feel like C Limited keeps performing well fundamentally and I do believe that the South American e-commerce market and this is what we said in our original pitch is probably big enough for two or three players.

So for anyone who missed our C limited episode that we also did, the short version is C Limited has three businesses. So they have Garina which is a gaming company and they have this one massive hit which is called Freefire and that's an evergreen game that is their cash engine and also their engine to expanding into different and global markets.

Then you have Shopppee which as you just alluded to is the e-commerce marketplace of C Limited which is especially dominant in Southeast Asia but it has also expanded successfully into Brazil.

And then you have money which is their fintech arm. So they basically compete with Melly in Brazil in e-commerce fintech and also in lending.

>> The really impressive part is that they built a substantial logistics business and delivery network in Brazil in just a couple of years. And since Amazon, we've always had this belief that logistics is a huge moat.

But C really showed that hey with perfect execution and some investment, it can actually be recreated and copied much faster than most people would have thought possible.

(25:24) A shopppee definitely outperformed all the expectations I had for them just a couple of years ago. Also, as I said, you didn't have the same infrastructure as NDS. So basically, you expected the mode to be an even bigger one for me because they had to build the logistics all by themselves.

And now you had a player coming in that is using a lot of third parties and is basically creating a pretty good experience itself.

And it's not easy to imagine how the two would coexist without constantly being a threat for each other. I hear a lot of mele boards somewhat neglecting Shopppee as a player for mainly the lower end of the market because of Mellie's GMV dominance.

You know, Mellie's GMV is still about two and a half times higher than Shopppee's GMV despite Shopppee now being on par and even slightly ahead when it comes to the total amount of items sold in Brazil.

And I don't think you can view Shopppee as a low-end commerce place. I think they have already been successful at expanding into higherend products in other markets through what they call shopppee mall and that's basically where they partner with these highquality brands in all kinds of industries and shopppee mall has more than doubled in the first quarter and is now about 15% of shopppee's Brazilian GMV and that obviously helped increase its average order value in Brazil too where Shopppee now signs deals with major electronic dealers in Brazil to (26:34) offer more electronics on its site which is a typical product as we also discussed with some of these other companies that we looked at in the e-commerce space.

It's a critical product to attract higher quality customers.

And just like Macado Libra, Shopppee expanded into pharmacy after Brazil's health regulator lifted a 2022 ban so licensed can now sell medicines on platforms like Shopee and Maui.

But uh Shopppee in its own right launched a loyalty program called Shopppee VIP and it's priced at exactly the price of Melliey's basic tier, but it offers free shipping on orders above 10 ryes while Melliey's free shipping starts at 19 ryes.

(27:24) (27:25) And so for context, 10 ryes conversion rate on that is about $2 US. So, it's a 5:1 ratio. And that's a pretty attractive offering, which is why it has already gained a million users in just the last six months.

(27:50) So, I expect the gap to remain pretty material going forward. I'm not too worried about it. I would be surprised if it closes meaningfully, but average order value is an important metric for me at least that I track to see whether Shopee will gain significant share among higherend customers in Brazil or better said whether customers will choose Shopee for those purchases in the future because many customers are already using both apps.

said whether customers will choose Shopee for those purchases in the future because many customers are already using both apps. (28:13) So they use Melly and they use Shopee and then Melly usually for the high quality and the high trust products and Shopee for the lower of the market.

But again, I don't think that's where Shopppee has to be for the entirety of their presence in Brazil.

and then sort of the innovator's dilemma where Shopppee can start on the low end and slowly build scale and move up market to better (28:41) challenge Marcato Libre.

It's definitely working. I mean, the Brazilian e-commerce market was estimated to be about hundred billion last year and Melly has about 43% share in that market and Shopppee has 18% and both actually grew three percentage points.

Choppies are taking share from Melly but mostly from legacy incumbents just like Melly is and they're not doing well at all.

So Shopppee had more monthly active app users in Brazil than Melly just a year ago which was about 120 million compared to Mellie's 150 million.

And so that's why it's also important for us to watch out for money spelled m o n e. And that is another subsidiary of C Limited. And if money were to grab share from Marcato Pago, I think that would be another warning sign.

>> Definitely. But I think that's another huge market where technically both can coexist for a while. (32:06) That said, I would probably see money gaining shares even more of a problem than Shopppee just because it would make the entrenchment theory much more difficult for me because by now a huge differentiator is that people can go to Shopee to buy some of these products.

Fortunately, for the time being, C Limited's money business is not really even close to rivaling Pago or Credito. And so, Shopppee hasn't launched a credit card in Brazil, even though they have the license to do so.

And its main credit product is still the Shopppee pay later, sort of the buy now pay later at checkout product, which accounts for about 10% of its Brazilian gross merchandise value.

And those loans have an average term of about 3 months and carry interest of almost 10% a month. And we're also starting to see delinquencies tick up. Last time you said you'd be very surprised if C could hold its non-performing loans at 1% of their total.

And so C's groupwide 90-day number is still 1% for now. But in Brazil specifically, the funds that hold Shoppee's loans show 90-day delinquencies up to about 3% in a little over a year.

And the more they expand that loan book, especially into categories outside of buy now, pay later, the more we should expect that number to go up. I'm pretty confident the trend will continue.

And it's more of a mechanical thing in the end. So, the loan book is growing so fast, just as it is for Mali, that some bet loans are simply not yet accounted for in the 90-day number. So, there's a time lag.

(33:41) once again between when they actually go bad and then when it shows up and C doesn't disclose 15 to 90day NPLs as Melly does. So you don't see that number going up anytime before the 90 days where we actually get the new number.

And we should emphasize again officially the NPLs of money are still at 1% not 3%.

But money is generally still more of a digital wallet whereas Pago has obviously evolved into much more than that. So that's why money has only an estimated 1 to2 million active credit users in Brazil whereas Melly has more than 22 million.

>> Do you have any updates on C's logistics network compared to Melly? Because I heard that SE had expanded its footprint quite significantly and they had something like 16 distribution centers at the start of this year but built another 10 in the last 12 months and five of those are fulfillment centers.

(34:31) Is that all sort of right and how does that frame the competition here? That's correct. And we should clarify that's Justin Brazil obviously and the C CFO said the goal is to eventually have a bigger fulfillment network than its competitors in absolute volume.

Obviously he's talking about Melly in that term and he said that might take a few years.

(34:49) I doubt they will get there but it definitely means they're not planning on stopping spending money. (35:06) So Melly pays about almost 100 million ryes a month in rent.

Shopppee about 33 million. So Mellie's network is still roughly 2 and 1/2 to three times bigger than Shoppies. And Melly will spend another 57 billion in Brazil this year alone, including 14 new fulfillment centers, which is why I'm saying I don't see the gap closing anytime soon.

And so Shopppee's delivery arm on the other handles most of its orders, but it does crowdsource drivers and its 4-hour service runs through basically these partner stores.

(43:53) you can actually have hundreds of millions of people find their way through social media, which clearly makes it easier to spawn an e-commerce business out of nothing, especially when that delivery infrastructure is already effectively in place, which I should say is only partly the case in South America.

and also a player like Shopppee who is catering to the lower end of the market. (45:27) But we don't see price wars happening where either one of them are really significantly cutting their take rates.

And actually, Shopppee has been raising seller fees for a while now.

(57:02) And we haven't seen those. And Shopppee, as we've mentioned, is raising seller fees. And that's not what happens in a price war.