What’s Shopee’s strategy for 2026?

and thoughts on Sea Limited 2025Q4 Earnings, there will be a separate piece for Monee and Garena.

Preface

In 2025, Shopee served more than 400M buyers. Conservatively speaking, Shopee now has over half of Southeast Asians and one-third of Brazilians as active buyers.

These numbers look even more impressive if you consider that ~18% of the Southeast Asian population still has no access to the internet and only ~70% of the population is over 18 years old.

I think it’s pretty safe to say Shopee has already penetrated 70%+ of the addressable population and has nearly hit the ceiling in terms of “traditional” active buyers. Now Shopee’s job in most markets has shifted from acquiring new users to boosting buying frequency.

This is exactly what Shopee is doing with the Shopee VIP membership program: buyers who join see their average spend rise by 30~40%. But this program does come with a cost.

This post won’t be a detailed financial analysis of the quarterly business. (I think there are already quite a lot of people who write good reviews from this angle.) Instead, I will focus more on the business logic itself.

There are still a lot more details behind Shopee’s management team’s thinking. Let’s start with some short bullet points on my thoughts on 25Q4 earnings.

TL;DR

• Shopee fundamentals are solid, but profitability is suffering from the Shopee VIP program’s success. This success is what hinders 2026 profitability.

• The 25% GMV guidance is good. We can now expect GMV growth to reach 30% in 2026. With take rate still improving, overall Shopee revenue growth should be sustained at 35%+.

• Monee’s credit business passed its inflection point in 24H2, and it should continue to grow rapidly in 2026.

• The increase in Monee’s Sales & Marketing spending is mainly tied to expansion into new categories. The revenue contribution will show up with a lag in later quarters, so I don’t think this is something to worry about.

• Garena didn’t perform well in 25Q4, but it’s also a symptom of the huge success in Q3 driven by Free Fire’s IP collaboration with Squid Game and NARUTO SHIPPUDEN Chapter 2.

Shopee & The Two Ways to Boost GMV

There are two ways for Shopee to boost GMV. First, acquire new users. Second, increase purchase frequency among existing buyers.

Acquiring New Users Through Discovery-Based Shopping

Shopee has become a household name in Southeast Asia a long time ago, and had already saturated most of its addressable population when its monthly active users surpassed 300M in 2023.

The marginal population that hasn’t tried Shopee is the ones that don’t have the strong intention of using search-based eCommerce in general. Pouring in more marketing dollars won’t do the work. What Shopee needs is to build a new set of products to satisfy these users.

Shopee is targeting people who are active on social media but not on eCommerce sites. They are the population that relies on passive recommendations instead of strong search intent. Lots of the older and younger population falls into this category.

Older users are accustomed to traditional shopping habits, while younger users may not yet have developed strong shopping habits at all. They will only try eCommerce when they see something very tempting but they can’t access it through traditional channels.

This is the population Shopee is capturing right now. Shopee began an aggressive push into content in 2023, and now more than 20% of orders are attributed to content. Shopee’s collaboration with YouTube in 2024 is another step further in this equation. Shopee is actively acquiring the users and monetizing the content that doesn’t even originate on Shopee.

The collaboration with YouTube was a huge success. Orders attributed to YouTube have more than tripled year-over-year. The new collaboration with Meta, which was launched last October, is also growing explosively.

Driving Buyer Frequency

Increasing buyer frequency is basically the most effective way to further boost Shopee’s GMV growth, and I believe it will basically be the main theme going forward.

E-commerce is a retail business. Just like physical stores specialize in different categories, e-commerce works the same way. Different products require vastly different service levels, sourcing capabilities, and cost structures.

Shopee still has meaningful gaps across several areas. For instance, most products on Shopee still have delivery times of over 24 hours, which means it cannot serve products with urgent needs. It also lacks the right sourcing and service levels in many verticals, including home appliances, furniture, electronics, motor parts, and fresh and frozen products. If Shopee can improve in these verticals, customers will use the platform much more frequently.

Cost to Serve

Another part of the equation is the cost-to-serve. Cost to serve is mainly made up of logistics costs and payment processing fees. Although shipping fees are usually quite affordable, most people are still unwilling to pay them for low-value items.

With lower cost to serve and faster shipping speed, Shopee can unlock a lot more use cases and compete more directly with supermarkets. Shopee’s VIP membership program and its new fulfillment push are both initiatives to address these issues.

Shopee VIP Program

The Shopee VIP program is Shopee’s flagship membership program. Members who pay a subscription fee of $1 to $3 USD, depending on the country, receive lower shipping thresholds, additional discounts, and some partner benefits from external providers (e.g. ChatGPT Go subscriptions, bike sharing subscriptions, etc.)

The program is designed to boost user loyalty and increase spending. So far, the program has been a success. Members who subscribe spend 30%~40% more on average, on an absolute GMV basis. The subscriber base is also growing exponentially, from 1M in 25Q1 to 7M in 25Q4, roughly doubling every quarter.

But the success comes at a cost. The lower free shipping thresholds and discounts that Shopee gives out materially hurt Shopee’s profitability. They contributed meaningfully to the 3% drop in gross margin and a spike in sales and marketing expense in 25Q4 compared to the last quarter.

Note: Sea Limited used to mix Shopee & Monee’s gross profits together and started to disclose them separately this quarter)

Note2: In my database, “EC & Others” includes the Provision of Credit Loss.

Is this the first time Shopee has done it? What’s the benefit?

This kind of investment cycle isn’t new; Shopee has done it multiple times before. The most notable example was 23Q2 when they re-started a huge cycle of investments. This time is similar but probably on a much smaller scale.

The main idea of another free shipping push is to pull forward order volume and further reduce logistics costs. We know that logistics is a volume game, and shipping costs still account for over 50% of Shopee’s marketplace revenue. The most effective way of reducing shipping costs is simply to increase order volume.

Building a durable moat

In my opinion, Shopee’s move is both offensive and defensive against TikTok Shop and other players such as Lazada, and in my view, Shopee’s move is correct. Now is a critical time for Shopee to build a durable moat.

In my post “The Biggest Myth of eCommerce Logistics” I have mentioned when logistics turns into a durable moat:

The durable moat basically boils down to the scale of the logistics network, but most importantly thing is than boil down to the eCommerce platform’s “parcel” share in the market.

Logistics incurs huge fixed cost, it’s one of the two main cost of operating an eCommerce platform. If the vertical logistics network can process a lot more parcels than the second biggest logistics player, than the eCommerce platform will enjoy a much lower cost to serve in the long term.

Now with TikTok Shop growing really fast in the region (I’m expecting mid-double-digit GMV growth), and with its main logistics partner J&T Express growing parcel volumes by 73%, Shopee is at a critical point in building a more differentiated logistics solution.

J&T Express now processes about 26.5M parcels per day in Southeast Asia. SPX, on the other hand, processes 30M+ parcels daily (including Taiwan and Brazil parcels).

The hidden benefits of subscriptions

The benefits of Shopee VIP go beyond logistics. It also serves as a tool for customer price discrimination and a less visible way to avoid direct price comparison across platforms. Once Shopee VIP reaches sufficient penetration, Shopee can begin off-load promotional discounts to qualified merchants in exchange for higher traffic exposure. I believe the off-load process will begin this year. This would slightly diminish the sales and marketing costs that Shopee is bearing.

What size can Shopee VIP become?

By the end of 2025, the program had reached 7M subscribers, which is less than 1.75% of the total 400M+ active buyers. The number of paying subscribers is now growing super fast. At the end of 25Q3, the subscriber count was merely 3.5M, meaning it roughly doubled in 25Q4.

In the markets where VIP services were launched earlier, VIP members now contribute more than 15% of market GMV. But what can Shopee VIP become? To answer that, let me lay out the differences between e-commerce subscription programs. These programs broadly fall into two buckets: one is centered on free shipping, while the other is built around extra perks.

Amazon Prime / Coupang WOW (Free Shipping oriented)

Both Coupang WOW and Amazon Prime are paid membership programs for reduced shipping fees. On these two platforms, the subscription works somewhat like a Costco membership: the paid membership is effectively required to shop on the platform smoothly.

In both Amazon U.S. and Coupang South Korea, paid subscribers contribute 90%+ of the overall GMV. In other words, paid subscription is an integral part of the experience. In the U.S., 80%+ of Amazon’s active buyers are paid subscribers. In South Korea, although only about 70% of Coupang buyers subscribe, a subscriber spends 800% more than a non-subscriber.

(I know both Amazon Prime and Coupang WOW provide services other than free shipping, but most people subscribe to Prime or WOW for free shipping, not for other perks. Amazon and Coupang bundle those extra services into the membership package mainly to reduce churn.)

Alibaba 88VIP / JD Plus (Extra perks oriented)

On the other hand, Alibaba 88VIP or JD Plus isn’t a service centered around reducing shipping fees; instead, it’s for extra perks. Customers subscribe for special discounts and extra services such as VIP customer service hotlines, electronics repair coverage, and streaming subscriptions.

This is because in China, free-shipping thresholds are usually easy to meet, or platforms already build free shipping into most products. Even when customers don’t subscribe, the experience is still really, really good. The membership functions more like a loyalty program than a core part of the shopping experience.

88VIP and JD Plus both have paid subscriber penetration of roughly 5–7% of the active user base, and they are estimated to contribute about 25% and 35% of Alibaba and JD’s GMV, respectively. A paid member spends 5x as much as an average non-paying user.

Shopee VIP

Shopee VIP isn’t like any of those subscriptions. It sits somewhere between the two categories. Shopee without membership is still really compelling; free-shipping thresholds aren’t as low as those of Chinese e-commerce platforms, but they are still rather easy to meet. It’s also not as unusable as Amazon or Coupang without a subscription.

From my perspective, the VIP subscription isn’t essential, but rather something nice to have. Take Shopee Taiwan as an example: with membership, the free-shipping threshold has dropped from $6.5 to $1.6. With the subscription, it does unlock access to a decent amount of low-value items.

Shopee VIP’s discounts are also quite generous, and the subscription can pay for itself after a few orders. I think most regular customers can get a decent amount of value out of the Shopee VIP program. And with lower friction and lower prices for products, customers will definitely spend a lot more money.

Since the membership value proposition sits between these two buckets, I believe the membership penetration rate should be at least 7% and have the potential to hit 25% of overall active users. I’m now modeling 28M paid subscribers by year-end 2026, which implies average quarterly growth of 40%–50%.

The bear case for Shopee Profitability in 2026

The bear case for Shopee profitability is basically that Shopee VIP is too big of a success. Shopee VIP may be so successful that it becomes a drag on profitability. Shopee added only 3.5M members in Q4 2025, and it might have contributed meaningfully to the 3% gross margin drop. If Shopee can’t reduce the cost-to-serve and offload the burden to merchants fast enough, Shopee profits might suffer from its own success in the VIP program.

Note: To be clear, I don’t think the entire 3% gross margin decline was caused by the VIP program. I believe the pursuit of faster shipping, which I discuss in the next section, also contributed to the gross margin drop. That said, I do think the VIP program accounted for a very meaningful portion of the decline.

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Shopee Road to Increase Service Levels

Increasing service levels is what Shopee is now focusing on. Instead of being a pure marketplace that sells commodity products, Shopee is actively increasing service levels in order to differentiate itself from other players.

One of the more critical differentiators in the buying experience is shipping speed. This is what Shopee is actively pursuing.

Like what I mentioned in “Are Amazon, Coupang and MELI logistics the same? The 4 kind of eCommerce logistics” :

The most important factor in delivery speed is where the underlying inventory is stored. The fewer steps and the less that the parcel changes hands, the faster the delivery experience.

Besides routing parcels in small batches, Shopee is increasing delivery speed in three main ways. All of these strategies focus on removing unnecessary steps and bringing inventory closer to customers.

First, Shopee is making greater use of gig workers from its ShopeeFood operation. It has expanded its partnerships with supermarkets to fulfill groceries within one hour. For normal products on the platform, when the seller’s inventory is stored in urban locations or in suburban warehouses near customers, customers can now choose to let ShopeeFood workers pick up the products from the warehouses and deliver them directly.

The results have been very positive. In major metropolitan areas such as Bangkok and Jakarta, buyers using faster delivery services accounted for a double-digit share of order volume. By the end of 2025, buyers who adopted instant and same-day delivery were also spending around 15% more on average.

Second, Shopee is expanding its fulfillment network across all of its markets, especially in Brazil. As noted in the 25Q4 earnings call:

With our delivery capability well scaled, we started to roll out fulfillment service in various markets across 2025. We are seeing encouraging adoption trends from both buyers and sellers with double-digit order penetration in some markets. In 2026, we plan to expand fulfillment further across all our markets and aim to double our fulfillment order penetration by the end of the year.

Fulfillment brings tangible benefits when it comes to serving small sellers that do not have their own 24/7 facilities, and it is a very natural extension of Shopee’s C2C logistics network. Shopee is doing the equivalent of FBA (Fulfillment by Amazon).

As I mentioned in my earlier piece, one of the main advantages of Amazon’s fulfillment network is its built-in demand forecasting system. With Shopee managing the inventory, it can eliminate the need for merchants to send out packages themselves and move inventory closer to customers through cheaper delivery methods before an order is even placed. This reduces the need for last-minute expedited shipping and, in turn, lowers delivery costs.

Third, my suspicion is that Shopee is increasing its first-party offerings to gain more control over the product journey and to address the insufficient supply of low-value daily essentials in the marketplace. In Taiwan, we can see a very clear trend over the past eight months that Shopee is driving up the visibility of its own first-party offerings.

I think Shopee’s increase in the share of first-party offerings makes perfect sense. As I have mentioned in my old piece, the mid-sized warehouses that Shopee is now deploying work best with a combination of first-party offerings. In the China quick commerce war article, I had also mentioned that Meituan and other quick commerce operators are actively supplying first-party offerings in order to build up supply in the quick commerce marketplace.

I think the pursuit of first-party products has started to reflect in 25Q4 earnings. First-party sales grew 24% QoQ, and there was also an increase in the gross margin of first-party sales in 25Q4.

Note: Before the first-party daily essentials push, its first-party product mix likely consisted mostly of very low-margin branded consumer electronics. And for products like the iPhone, it was often used to attract more high-quality buyers, so the margin was extremely thin.

Note2: There is a major difference between Shopee’s fulfillment model and those of Amazon and MELI. The logic of Shopee’s marketplace is that each seller operates independently, and so Shopee fulfillment services work like an outsourcing facility that helps hold and send their own inventory. Products from different sellers are not mixed in the same box, whereas on Amazon and MELI they can be.

Note3: I don’t think the penetration of fulfillment will become too high in Southeast Asia, but it will be quite high in Brazil since its logistics ecosystem is still rather nascent.

Service level besides fast delivery

Faster delivery is one of the many components of a good service-level eCommerce platform. But there are still a lot more areas to improve. I believe this part is a secondary focus for Shopee but will probably become the first priority after it has done enough to build up a fast-delivery fleet.

These parts are specialized services for premium brands and other vertical categories. This is one of the key ways Tmall differentiates itself from Taobao. For instance, when shopping for medicine online, platforms should be equipped with pharmacists or doctors to help customers make the right decisions. When shopping for alcohol, the platform needs to verify product authenticity and enforce age restrictions for buyers. When buying electronics, platforms need to have trustworthy guarantees and also reliable trade-in policies, and when shopping for furniture and major home appliances, platforms need to provide seamless installation and maintenance.

Shopee currently offers only the most basic guarantees through Shopee Mall. There is still a lot more for Shopee to differentiate itself through high-quality services.

I believe those specialized and vertical services are the true long-term differentiator. I see fast delivery still more like a commodity; it’s something competitors can rather easily copy. Category-specific service quality is likely to become the more important long-term differentiator.

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Closing thoughts on Shopee

I think Shopee executed well in 2025; things are basically all on the right track. Although I did expect 25Q4 GMV growth to be ~30%, 28.3% growth is still acceptable. Unfortunately, the market obviously hated Shopee doing the right thing with the idea of reinvesting amid uncertainty.

For the folks who ask about TikTok Shop, I personally believe TikTok Shop is a third-generation eCommerce platform that is more advanced than Shopee’s second-generation model.

I think TikTok might become the leader in some of the smaller Southeast Asian markets where Shopee is less aggressive. But I believe Shopee will be able to maintain its dominance in Indonesia, which accounts for about 40% of the SEA eCommerce market. I also believe Shopee will be able to maintain its overall leadership in SEA over the long term.

One of the critical differences between China and Southeast Asia is that in China, there are only a few traffic sites, and nearly all of them run eCommerce themselves. But in Southeast Asia, TikTok is just one of the five major traffic sites.

Now Shopee has become the default partner of Google and Meta. I believe the overall traffic of YouTube and Meta combined is larger than TikTok’s. But it will take some time for Shopee to ramp up and monetize its collaborative content business.

Social commerce isn’t just adding a link to content for audiences to shop. It’s about nurturing and creating engaging content designed for shopping, commonly known as Shoppertainment. This kind of content is still really scarce on both platforms.

Now the orders that are attributed to YouTube have more than tripled year-over-year, and the collaboration with Meta has also been ramping up. I believe social commerce / Shoppertainment will be a huge incremental market for Shopee in the future.

Overall, I think Shopee is on the right path to success.

Growth Rate & Agent Commerce

Some of my audience are also asking about my thoughts on Brazil and agent commerce.

My view on 2025 GMV growth is that Brazil is growing somewhere around 60%, Taiwan is growing in the low teens, and Southeast Asia is growing in the mid-to-low twenties.

I think this trend will continue in 2026, with Brazil’s growth slightly moderating and Southeast Asia’s growth slightly accelerating.

About agent commerce, I think it will be quite positive for Shopee, especially because TikTok already has its own chat product (Doubao), which is actively competing with Gemini and ChatGPT. Even setting aside that agent commerce benefits the long tail of products, this will still benefit Shopee in general when it comes to the agent-driven competitive landscape.

Also, I personally think the search intent of ChatGPT/agent commerce won’t be too disruptive to Shopee for the next few years. It will probably first disrupt the platforms with fewer SKUs and higher price points. The GPT shopping interface is still not too pleasant of an experience; the UI is simply not there yet.

That said, I do think it is already quite good at clarifying user intent when the intention is still vague. Because of that, I think it could be a bit more disruptive for OTAs and food delivery, where users often need to scroll through reviews and where AOVs are higher.

That’s all for Shopee. In the next post, I’ll share my thoughts on Monee and Garena.

Thank you for reading!

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