Mercado Libre to invest R$10 billion in Brazil in 2021

RIO DE JANEIRO, BRAZIL – Buenos Aires-based Mercado Libre announced on Monday, March 1st, that it will invest R$10 (US$1.75) billion in Brazil in 2021 to make its mark in its main market, seeing Latin America as the fastest growing e-commerce region in the world.

The amount, equivalent to that invested by the company in the country over the past four years, was disclosed in the wake of explosive growth in operations in the fourth quarter and comes after announcements of rival billionaire investments, including from US-based Amazon in the country.

Mercado Libre’s revenues nearly doubled in the period, signaling that e-commerce continued to gain ground, despite the partial relaxation of isolation enforced to curb Covid-19. Net revenue totaled US$1.3 billion between October and December, an annual rise of 96.9% in dollars, despite the sharp depreciation in the exchange rate that affected all currencies in the region during this time, as a result of the crisis caused by the pandemic. If measured according to each country’s currency, revenue grew 148.5%. Brazil, which accounts for 54% of revenues, posted a 68% rise in dollars and a 120% increase in Brazilian reais.

Gross sales volume (GMV) in the quarter totaled US$6.6 billion, up 69.6% year-on-year in dollars and 109.7% in constant currency, with Mercado Libre reaping the rewards of higher investments, such as in logistics capacity and in the financial services shelf.

Mercado Libre and others like Amazon have announced billion-dollar investments in logistics in recent months to gain scale in Latin America, the region where e-commerce is growing the fastest in the world, according to data from e-Marketer consultancy.

The group’s logistics service network, Mercado Envios, reached a 79% penetration of total deliveries in Brazil in the fourth quarter compared to 68% year-on-year.

On another front, in Mercado Pago, the financial arm, the payment volume processed in the quarter reached US$15.9 billion, a year-on-year high of 83.9% in dollars and 134.4% in constant currency. And the segment’s credit portfolio reached US$479 million, more than double in one year.

With the preference to invest in business expansion rather than obtaining more immediate profitability, the group had a net loss of US$50.6 million in the quarter, compared to a loss of US$54 million the year before.

Source: Forbes Brasil