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Asian e-commerce giant Shopee now has eight distribution centers in Brazil

Shopee's distribution center in Santana do Parnaíba, state of São Paulo — the Asian company now has eight such warehouses in Brazil. Photo: Shopee.

Shopee announced that it has opened two more distribution centers in northeastern Brazil, in Salvador and Recife, measuring 6,000 and 10,000 square meters, respectively. The two facilities will serve as fast transit points for the redistribution of goods in the cross-docking model — by which goods collected from local sellers by logistics partners in first-mile hubs are reorganized and sent to last-mile hubs, before reaching the end consumer.

In Brazil, Shopee reached the milestone of 3 million local sellers on its marketplace in March this year, which is why the cross-docking model is so important. Although the company does not quantify how much of its sales are made through them, the growth of this army of partner sellers is essential for the company to achieve profitability in Brazil and reduce its exposure to the government’s regulatory and fiscal tightening on cross-border platform sales in Asia.

In September last year, a few months after reaching 2 million local sellers in its marketplace, the company announced a 2 percent increase in its take rate, with standard sellers being charged with a 14 percent commission, while premium account holders would have to pay transaction fees of 20 percent.

Both distribution centers and hubs are spaces rented by the company and operated by Shopee’s logistics employees and third-party partners. However, the company does not say how much it has invested in the facilities.

In its 2022 earnings release, Sea — a Singapore-based group that owns Shopee and Garena, responsible for popular video game Free Fire — reported that its loss per sale fell 54 percent in one year to USD 0.47. Forrest Li, CEO of Sea, did not say precisely when he intends to break even in Brazil, but that the company will focus on “driving the business towards profitability to capture the significant opportunity in this new market.”

With the two new warehouses, Shopee now has eight centers nationwide — the other six are located in Rio de Janeiro, São Paulo, Minas Gerais, and Paraná — and more than 60 secondary hubs, all capable of delivering 1.5 million packages daily.

Although it says that the new structure will increase the number of cities served by 40 percent and reduce the average delivery time in Brazil’s Northeast, Shopee did not disclose to The Brazilian Report how many cities its logistics structure currently covers, nor which are partners of the Brazilian operation. The website only informs consumers that international orders can take up to 50 days, while those coming from local sellers take up to 25 days.

Fabiane Ziolla Menezes

Former editor-in-chief of LABS (Latin America Business Stories), Fabiane has more than 15 years of experience reporting on business, finance, innovation, and cities in Brazil. The latter recently took her back to the classroom and made her a Master in Urban Management from PUCPR. At TBR, she keeps an eye on economic policy, game-changing businesses, and people driving innovation in Latin America.