SPOTLIGHTShopee's revenue surges, but margin pressure intensifies  Shopee posted a gross merchandise value (GMV) of US$37.3 billion for Q1 2026, up 30% year on year. This drove its revenue up 44% to US$4.5 billion during the quarter. However, its adjusted EBITDA declined 15% compared to the same quarter last year. The drop in adjusted EBITDA despite strong revenue growth indicates that margins are compressing. Seller fees do not appear to be the issue, considering core marketplace revenue rose 61%. Shopee has also gradually increased its fees across Southeast Asia over the past few years. Shopee's thinner margins partly reflect a more aggressive push on promotions and shipping subsidies. Revenue from logistics services fell 8.1% year on year as the company booked higher net-offs tied to shipping subsidies. At the same time, Shopee increased cost of revenue by 54% and sales and marketing expenses by 40% during the quarter, likely to defend its position against TikTok Shop, which has steadily gained market share across Southeast Asia. Shopee indeed has reason to be cautious. In 2025, TikTok Shop recorded a GMV of US$45 billion, beginning to catch up to Shopee's US$83 billion for 2025. Shopee's efforts to improve margins are also visible in its decision to increase the free shipping costs borne by sellers starting May 2. TikTok Shop also implemented logistics fees for sellers starting May 1. Another potential concern is regulatory pressure. Thailand wants to cut ecommerce commission fees from around 30% to roughly 10%-15% to ease the burden on local SMEs, while Indonesia is also considering caps on such fees. Those moves could further complicate ecommerce platforms' efforts to improve margins going forward. |
