Mercado Libre buys 100% of Kangu delivery platform

RIO DE JANEIRO, BRAZIL – Mercado Libre on Tuesday (24) announced the purchase of 100% of Kangu parcel delivery platform, expanding the stake in its own logistics division as a differential in Latin America, one of the regions where e-commerce is growing fastest in the world.

The transaction, for an undisclosed amount, incorporates Kangu’s 5,000 delivery points spread over 700 cities in Brazil, Mexico and Colombia into Mercado Libre.

Founded in 2018, Kangu uses small neighborhood stores as order pickup and delivery points, which expands the logistics network without the need to rely on third parties, such as Correios (Brazilian Post). It has partnered with Mercado Libre since last year, with e-commerce demand sharply increasing since 2020 in light of the isolation imposed by the pandemic.

The acquisition comes after Mercado Libre announced earlier this month 2 new distribution centers in Brazil, one in Greater São Paulo and the other in Belo Horizonte, using part of its planned R$10 (US$1.9) billion investment for 2021 to expand its geographic reach and reduce delivery times.

Other large e-commerce players in the region, such as Magazine Luiza and Nuvemshop have also announced robust investments in logistics in Latin America, a region that could quadruple online sales in the coming years to reach similar percentages as China, where they account for almost 50% of total retail sales, compared to less than 10% in Brazil.

In the specific case of Kangu, Mercado Libre is trying to bridge a number of gaps that became more evident with the explosion of e-commerce, such as the delivery of orders at alternative points, which can also be used for pick-up to serve a growing number of local sellers.

“In addition, these points can be used to return products, without customers having to stand in lines at the post office,” said Mercado Libre’s director of new business Renato Pereira.

Kangu will continue to be run by co-founders and current co-chairmen Marcelo Guarnieri and Ricardo Araújo, and will continue to serve partners other than Mercado Libre. “Our goal now is to increase the number of delivery and pickup points from the current 2,600 to 3,500 in Brazil by the end of the year,” Guarnieri said.