$SE

People often call themselves LT investors, but how many truly think LT?

Let’s talk about Shopee, e-commerce and how the space will look like in 10 years from a first-principles perspective.

*As usual, this is my opinion only and you are welcome to form your own.*

E-commerce has changed over the years, and while it differs slightly from region to region, the underlying customer objective has remained the same:

People want goods delivered to them as quickly and as cheaply as possible.

It therefore means that the winners will be players who can offer:

1. Speed

2. Quality

3. Variety

4. Savings

Different businesses prioritise different things. However, when we really look deep into it, and what forms a moat in allowing businesses to sustain their advantage in e-commerce…

It really comes down to 3 things:

1. Logistics capabilities

Logistics is the hardest, most capital-intensive, and least replicable layer of e-commerce.

Owning a logistics network enables e-commerce players to control the customer experience through faster delivery times, higher service reliability and better returns handling.

It also enables lower per-order costs at scale.

This is why asset-heavy investment early often leads to asset-light dominance later.

Once the network is built, incremental volume is extremely high margin.

2. Scale-driven cost advantages

At scale, e-commerce economics bend sharply in favour of the largest players.

Warehousing utilisation improves, delivery routes get denser and last mile costs fall. Smaller competitors can copy/steal features but they cannot mimic unit economics.

This is why e-commerce is a winner-takes-most industry over long time frames, even if competition looks intense in the short term.

3. Ecosystem integration and behavioural lock-in

Over the long-term, the strongest e-commerce platforms stop being “apps” and start becoming default consumption infrastructure.

Crucially, this is only possible when the ecosystem is well integrated. Payments have to be native, logistics have to be almost invisible but well knit, and returns must be frictionless.

This is where Shopee has the upper-hand in comparison to competitors. It has the 2nd largest logistics network in SEA, only behind J&T, which is a pure logistics provider, and has a massive and fast-growing payments business.