Shopee will fight back if Temu takes aggressive action in Southeast Asia
Goslin 18 Feb 2025 12:02EN
According to a recent report by Maybank, Temu may increase its presence in Southeast Asia to counter the challenges posed by the removal of the "de minimis" exemption in the US market.
For nearly a decade, these companies have used the "de minimis" exemption to ship large quantities of low-priced goods to the US duty-free. However, with the removal of this exemption, Temu may have to adjust its business model and increase its business expansion in the Southeast Asian market.
Maybank believes that if Temu adopts this strategy, Shopee, currently the largest e-commerce platform in Southeast Asia, may fight back strongly, triggering fierce market competition.
Shopee has made it clear that its goal is to maintain an adjusted earnings before interest, tax, depreciation and fixed assets (EBITDA) to gross merchandise value (GMV) ratio of 2-3%, lower than the global average of 5%.
Shopee can easily exceed this target by increasing discount rates, promoting advertising and optimizing operations. However, Shopee still maintains a low profit margin to prevent the entry of new competitors or aggressive behavior of existing competitors.
For nearly a decade, these companies have used the "de minimis" exemption to ship large quantities of low-priced goods to the US duty-free. However, with the removal of this exemption, Temu may have to adjust its business model and increase its business expansion in the Southeast Asian market.
Maybank believes that if Temu adopts this strategy, Shopee, currently the largest e-commerce platform in Southeast Asia, may fight back strongly, triggering fierce market competition.
Shopee has made it clear that its goal is to maintain an adjusted earnings before interest, tax, depreciation and fixed assets (EBITDA) to gross merchandise value (GMV) ratio of 2-3%, lower than the global average of 5%.
Shopee can easily exceed this target by increasing discount rates, promoting advertising and optimizing operations. However, Shopee still maintains a low profit margin to prevent the entry of new competitors or aggressive behavior of existing competitors.
