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Argentina’s most successful digital platform MercadoLibre to invest record USD1.8 billion in Brazil

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Latin American e-commerce powerhouse MercadoLibre Inc. is more than doubling its Brazilian investment this year, planning to deploy in 2021 the same amount it spent in the past four years combined.

Latin American e-commerce powerhouse MercadoLibre Inc. is more than doubling its Brazilian investment this year, planning to deploy in 2021 the same amount it spent in the past four years combined.

The firm plans to pour a record 10 billion reais (US$1.8 billion) into Brazil in 2021, up from four billion reais last year, to be spent mostly on expanding its logistics network, said Commerce President Stelleo Tolda in an interview with Bloomberg News.

Investments in other Latin American markets should also grow, he added, without providing a full figure for the region.

The Buenos Aires-based company has already announced new distribution centres in Brazil and a dedicated aircraft operated by existing cargo carries. Ongoing efforts to shorten delivery time continued to bear fruits as the number of new users keeps rising, Tolda said.

“Feedback from clients on our logistics network has been quite positive and that is a key point of our investment strategy,” he said.

The company’s net revenue totalled US$1.3 billion in the fourth quarter, slightly above Bloomberg consensus estimates of US$1.2 billion. Gross merchandise volume and total payment volume also beat consensus estimates. MercadoLibre also posted an loss per share of US$1.02.

The strong numbers follow a year in which the coronavirus pandemic pushed Latin Americans to buy more online and increasingly turn to digital payment options. In some countries, public policy also aided the boost, as in the case of Brazil, where a government stipend to those who were hardest hit helped maintain strong volumes, he said.

Tolda acknowledged that now the challenge will be to maintain the momentum of the past year.

“The bar for us will be higher from April onward,” said Tolda. “But growth potential for e-commerce and financial services is still huge.”

Other highlights from the 4Q earnings call:

– Items sold grew by triple digits across all major markets
– Slight deceleration in growth rates due to reopening of physical retail after pandemic lockdowns, but less than expected
– Mexico overtook Argentina as the second-largest market, passing the US$1-billion mark in quarterly gross merchandise volume
– Reduced average lead times by 30 percent
– MercadoPago payment volume reached almost US$16 billion across all markets
– Transactions in 4Q reached US$659 million, growth of 131 percent year/year
– Focus in consumer packaged goods continues to be around dry goods rather than fresh foods
– The company has a pilot project to offer a credit card in Brazil
– Chile and Colombia other notable growing markets, with Chile showing fastest growth in any market, followed by Colombia.

Source: Bloomberg

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