Mercado Livre invests R$ 10 bilhões in Brazil, this year
By Leda Cavalcanti
The operation in Brazil represents 54% of the company’s total net revenue, having reached US$ 720.5 million, growth of 68% in dollars and 120% in reais, year over year. In 2021, it will invest R$ 10 billion here in the country, continuing the plan to expand its own logistics network, composed of trucks, vans, airplanes and electric cars.
“We believe that Mercado Livre is the mirror of the success of the entire technology sector for e-commerce and financial services in Latin America”, says Fernando Yunes, the company’s leader in Brazil, in this exclusive interview with Eletrolar News magazine.
How has the company evolved since its creation as an auction site? Fernando Yunes – In the beginning, it was an auction site and dial-up internet, but it soon started to act as a marketplace. Today, Mercado Livre is the leading technology company for e-commerce and financial services in Latin America. It offers solutions for people and companies to buy, sell, pay, advertise and send products and services through the internet. The company’s founders knew that the advent of the internet would transform in scale and proportion this basic principle of supply and demand.
In addition to the e-commerce platform and fintech Mercado Pago, the company has the following business areas: Mercado Envios, Mercado Livre VIS (Vehicles, Real Estate and Services), Mercado Ads and Mercado Shops.
Our headquarters are still in Argentina, but the operation in Brazil represents 54% of the company’s total net revenue, having reached US$ 720.5 million, growth of 68% in dollars and 120% in reais, year over year.
What strategies led Mercado Livre to be one of the largest retail sites?FY – Over the years, we have developed and improved products and services with the user experience at the heart of our business. We pursue excellence in the buying and selling experience and we invest in technology and innovation daily. Innovation is part of the company’s values and is the main strategy, it is in our DNA. Every day we analyze the multiple possibilities within our ecosystem, which works in synergy to increasingly offer the best experience to users.
A good example of using these services is the cycle of our small entrepreneur. It uses the Mercado Livre platform to sell, in addition to the logistics services of Mercado Envios; receives the money from its sales in their Mercado Pago account and from there makes the purchase of goods or can also take the credit to expand business.
This set of products and services was put to the test during the pandemic and did very well: we continue to operate, supplying people in their homes, supporting entrepreneurs and being able to carry out our purpose, which is to contribute to the democratization of trade and of the money.
How does the company evaluate its performance in the market?
FY – We believe that mercado Livre is the mirror of the success of the entire technology sector for e-commerce and financial services in Latin America, not only due to the company’s market value on the North American Nasdaq exchange, where it is considered among the most valuable in Latin America, but across the chain of millions of entrepreneurs, small businesses, large retail chains and logistics companies that we have a positive impact on.
What are the main changes that the company has had in recent times?FY – Our first move was to guarantee the safety of our people. In a few days, approximately 90% of our employees in Latin America started to work from home, and for the teams that follow our logistics centers, preventive measures were reinforced to the maximum.
We anticipated the launch of our supermarket area in April, which was scheduled for the second half of 2020, with the goal of keeping people safe at home, stocked with essential items. Over the months, we quickly expanded the offerings and facilitated access to essential items, delivered safely, and in a very short time.
69,8 million active users and more than 12 million salespeople, including major brands, reaching 23 sales per second
In the Mercado Envios area, there was an optimization of processes in our own logistics to supply the high demand, with improvement in shipping terms and penetration in the national territory. Surprisingly, in addition to the exponential increase in delivery volumes, we achieved record results of NPS (Net Promoter Score), an indicator that measures the level of customer satisfaction.
What is the number of users?
FY – Largest and most complete marketplace in Latin America, mercadolivre.com has 69,8 million active users and more than 12 million salespeople, including major brands, reaching 23 sales per second. Mercado Pago, with over 60 million active payers, offers a complete financial technology platform with free account, payment and credit solutions. Mercado Livre is the only company in Latin America among the 10 Best Companies to Work for in the World, according to GPTW 2020.
How many employees does Mercado Livre have? What is the number in Brazil? Is there a forecast for expanding the team?
FY – We are present in 18 countries, including Brazil, Argentina, Mexico, Colombia, Peru, Uruguay and Chile. There are 17,072 employees in Latin America, 5,461 out of them in Brazil.
We recently announced an ambitious hiring plan in Latin America. We will double our staff in 2021. There will be more than 16 thousand new direct jobs across the region – 7,200 of them in Brazil. Along this line, the company seeks to expand its logistics network and strengthen the areas of IT, financial services and products that generate technological solutions for its entire ecosystem. The expectation is to close the year with more than 31 thousand employees, an increase of 100% in relation to 2020.
The plan involves almost quadrupling the number of people working in the logistics area and adding almost 4 thousand new jobs in the IT area. The number of employees dedicated to Mercado Pago, e-commerce, prevention and security, marketing and various administrative areas of the company will also be expanded.
Is there a high demand for appliances and electronics?
FY – Mercado Livre is the marketplace with the largest assortment in Brazil and Latin America. Recently, Mercado Ads – the Mercado Livre business unit dedicated to advertising – carried out a survey for Mother’s Day. In the results, internal data pointed out some growing categories and important for the date, with household appliances being one of them.
This survey considered the months of April and May 2019 and 2020 (periods prior to shopping for Mother’s Day). In addition, the results showed that small appliances had an 81% growth in revenue in the period evaluated. As well as washing machines (75%) and oven and stoves (57%).
Is Brazil a good market for the company? What do Brazilians buy the most?
FY – The 18 countries in which we operate in Latin America are important to us. Each with its specificities, sizes and behavior. To understand our consumers, we conducted a survey that points out the evolution of the purchasing behavior of marketplace users in 2020.
Some categories that were not among the most sought after in e-commerce have become essential to consumers who made purchases during the quarantine period. Products related to health and prevention of the new coronavirus were some of the highest priorities of buyers and led the ranking of best sellers. In March 2020, purchases of masks and alcohol gels skyrocketed in all countries analyzed.In Brazil, as well as throughout Latin America, technologicalproducts had a strong presence in sales.
During several months, we noticed that the most purchased item in Brazil was an electronic one, often for entertainment. The data shows how a large part of consumers considered their leisure to be important in this period of social isolation.
Throughout Latin America, technological and entertainment products were among the best sellers. In the case of Mexico, for example, the card game UNO was the best seller during the month of April, while Google Chromecast and cell phones stood out in Brazil and Colombia. In Argentina, Board and Card Games was one of the subcategories with the highest growth in sales.
What led the company to create exclusive services for its users?
FY – We believe in the power of our ecosystem of products and services. They are tools that enhance the buying and selling experiences on our platform. We analyzed the multiple possibilities within our ecosystem, which works in synergy to offer the best day-to-day experience for users, both for consumers, with the fastest delivery efficiency in Brazil guaranteed by Mercado Envios, as well as for sellers, who have a complete pool of services at their disposal. In addition to the Mercado Livre e-commerce platform and financial services, Mercado Pago, we have the Classified ads, which include vehicles, real estate and services. Mercado Ads is our vertical of digital advertising, which makes the platform a media channel, and Mercado Shops allows entrepreneurs to create their virtual store inside and outside it.
How does it act in the fulfillment modality, in which the company manages the sellers’ inventory? What are the benefits?
FY – In recent years, Mercado Livre has constantly invested in its logistic arm, Mercado Envios, and in the expansion of its own logistics network, in order to offer the best possible experience to its user with the most efficient delivery in Brazil and in shorter time.
Among the logistical solutions offered to our users, I highlight fulfillment here. The ‘full’ is a model of logistical solution in which Mercado Livre is responsible for the entire logistics process of the marketplace vendor, from the stock of products to delivery to the final consumer.
How many distribution centers (DC) does the company have in Brazil?FY – There are currently five fulfillment DCs in operation: 1 Louveira (SP), 2 in Cajamar (SP), 1 in Lauro de Freitas (BA) and 1 in Governador Celso Ramos (SC). By the middle of 2021, two more will be opened: 1 in Cajamar (SP) and 1 in Extrema (MG). In relation to cross-docking DCs, a warehouse where Mercado Livre collects orders prepared by the sellers themselves and delivers them to buyers, we have 17 warehouses.
Will 2021 be an investment year? Which ones are forecasted?
FY – Absolutely. This year, mercado Livre will invest R$ 10 billion in Brazil. We will continue with the expansion plan of our logistics network. We believe that its consistent and robust expansion is decisive for maintaining the excellence of service and satisfaction of more than 74 million active users on our platform throughout Latin America.
The same will happen with the Mercado Pago account and the competitive strength of our marketplace, in addition to social and environmental impact initiatives. The investment amount is equivalent to the amount contributed by the company in the country in the sum of the last four years. Therefore, we reaffirm our commitment to the democratization and professionalization of trade and financial services in Brazil. We want, together with our users, to be part of the collective reconstruction.
What are the advantages of the company having a fleet of airplanes?
FY – The investment in a 100% aircraft fleet dedicated to the company aims to reduce the delivery times for packages in Brazil, in addition to increasing the delivery capacity for the next day in the purchase of products stored in our fulfillment distribution centers.
Our fleet, with four dedicated aircraft, seven days a week, from different airlines, started flying at the end of last year.
The inclusion of aircraft came to improve the frequency and capacity of deliveries in different regions of Brazil, in addition to expanding and strengthening our own logistics network, composed of trucks, vans and electric cars, added in December to complete the last section of deliveries.
How does Mercado Livre see the coexistence between e-commerce and the physical store?
FY – We believe that we will overcome this period of health crisis matured and aware of the benefits of buying online, from different points of view: from the offer and assortment to safety and convenience.
We hope that these new participants to the marketplace, whether buyer or seller, will have satisfactory experiences to continue enjoying the technology after overcoming the pandemic. Moreover, we believe that we have room to grow beyond the approximately 10% that e-commerce currently represents of total retail purchases in Latin America. Before the pandemic, this index was around 6%.
Physical and online retail will coexist.
What is your analysis of the competition in the Brazilian market, since large retail chains are also in e-commerce?
FY – Competition is part of the business. It is healthy and will always exist. At Mercado Livre, we focus on always offering the best experience to our users, regardless of the competition. It is this obsession that makes us a leader in e-commerce and financial services in Brazil and Latin America.
How does Mercado Livre prepare itself to face the challenges of e-commerce in the near future?
FY – We believe that there is still a long way to go in e-commerce, with incredible possibilities. We have the challenge of advancing even further in categories such as supermarket, automotive and fashion, including express deliveries to more and more regions of the country, and not only to major centers. E-commerce tends to further foster the virtuous cycle that moves from small producers and micro-delivery companies to major brands and logistics distributors on a national scale, connecting everyone to the consumer public. The future is bright.
The beginning of everything
The history of Mercado Livre began in 1999, at Stanford University, when Marcos Galperin, an MBA student at the University, joined a team of entrepreneurs, among them the Brazilian Stelleo Tolda – currently president of Commerce of Mercado Livre Latin America – in search of the dream of revolutionizing e-commerce in the region. With more passion than resources, the group worked to launch the entrepreneur’s plan: to create an e-commerce site that would allow anyone to advertise and buy products, inspired by Ebay – an e-commerce company born in the United States in 1995.
Back in the day, they heard from many colleagues that the Latin American consumer would not accept buying a product without first seeing or touching it. But they never doubted the power of the business, which through technology sought to democratize trade in Brazil and Latin America. It was there that Mercado Libre was born, in Argentina. And two months later, they opened the headquarters of Mercado Livre in Brazil, under the command of Tolda. Almost 22 years later, that idea proved to be not only feasible, but a force.
Eletrolar News Magazine 142
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