For those who have been holding shares of Latin American e-commerce and fintech business MercadoLibre (MELI 1.51%) over the last five years: Congratulations, it's been an enriching ride. The stock is up roughly 200% during that time as its business has boomed.

MercadoLibre stock is up because the business has grown substantially. In the first quarter of 2019, the company's e-commerce platform had 18.8 million active buyers and merchandise volume of $3 billion. Five years later in the first quarter of 2024, it had 53 million active buyers and merchandise volume of over $11 billion.

There have been multiple catalysts for MercadoLibre in recent years, but one can't overlook how much more compelling the e-commerce platform is today compared to years past.

In Q1 2019, less than half of the items on the company's platform could be delivered in 48 hours or less. Now it even offers same-day shipping in certain cases with 52% of Q1 2024 shipments arriving on the same day or next day.

In short, it's far easier to convince consumers to try MercadoLibre's e-commerce platform when the speed of its service has dramatically increased and is better than many of its rivals.

As a bonus, MercdoLibre's e-commerce growth has lifted its fintech services too. Mercado Pago now boasts over $40 billion in payment volume quarterly, and there's even a growing credit portfolio of $4 billion contributing to the business.

MercadoLibre methodically improved its shipping logistics, which drove e-commerce and fintech adoption. The stock has consequently soared as a result. And now, I see Singapore's Sea Limited (SE 0.55%) on a very similar path.

Sea's big move in e-commerce

Sea has been investing in Shopee Express, or SPX Express. CEO Forrest Li said SPX Express is "one of the fastest and most extensive logistics operators" in its markets. In Q1 2024, 70% of SPX Express orders were delivered within three days -- not as fast as MercadoLibre's service but a milestone nonetheless.

SPX Express also provides a guaranteed delivery time in some markets. This is important in driving e-commerce. Consider that in 2022, Shopify introduced its Shop Promise badge to offer guaranteed timing for its deliveries. The idea is that consumers are more likely to buy when they have a promise for when merchandise will arrive.

The investment in SPX Express could already be paying off for Sea. Last quarter, Shopee had 2.6 billion orders, which was up a very strong 57% year over year. In general, users tended to make smaller orders during the quarter, as evidenced by just 36% growth in merchandise volume (the total dollar value of sales). This suggests Sea's e-commerce buyers are using Shopee for more frequent, smaller orders, which is a good sign for platform adoption.

Investing in SPX Express could be paying off in another way for Sea -- the company's shipping expenses dropped last quarter too. In Brazil, the cost per order fell 23%. And in Asia, it fell 15%.

Getting Shopee more profitable is a high priority for Sea. The company reported Q1 adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of over $400 million. But that came entirely from the fintech and video game divisions. By contrast, e-commerce had an adjusted EBITDA loss of $22 million. Reducing Shopee's expenses through its infrastructure investments will help it be consistently profitable.

The big-picture takeaway is that Sea seems to be getting better in shipping logistics. MercadoLibre has shown investors that this can be a catalyst for growth, and it appears to be in the early days of helping Sea as well. Thinking long term, Sea stock can be a promising investment opportunity as this trend plays out.