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Mercado Libre will face battle come what may

Don't worry, we speak : Español (Spanish), too!

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Contxto –  The Argentinian e-commerce giant, Mercado Libre, has been flush with news of late.

Last month its founder, Marcos Galperín, quit the leadership of the company—and the country—after over two decades at its helm. He will be replaced by Juan Martín De La Serna, the hitherto President of Mercado Libre’s Argentina operation.

Galperín will be moving to Uruguay, leading many to question the timing of his departure; right on the cusp of the arrival of a new government that has replaced a regime that the e-commerce ex-CEO was reportedly rather close to.

The current government thinks perhaps too close, after the federal attorney, Guillermo Marijuan, accused Gaplerín and the rest of Mercado Libre’s board of tax evasion. They were also accused of “crimes against financial and economic order”, which is, you’ll be surprised to find, not a term from Orwell’s 1984.

Bigger threats to the north

However, beyond the rough start to the year, Mercado Libre has bigger fish to fry—Amazonian fish.

On paper—actually the company’s own paper reporting on growth in the past—, the company is on solid ground. It has been doubling its size in markets like Mexico, Brazil, Argentina, Chile, and Uruguay every two years.

Nevertheless, it would feel that this backslapping about local victories obscures a darker fate that may await Mercado Libre beyond its own national fiefdom.

Further north, movements by the e-commerce giant, Amazon seem to be making Mercado Libre uncomfortable. 

Indeed, after Amazon lapped Mercado Libre for the first time in Mexican ecommerce sales last year, the Argentinian scaleup has been pulling out all the stops. Last month, the company launched Mercado Envíos to cut out delivery middlemen like FedEx and DHL in Mexico. 

And yet, after an all-time peak on February 21, the company’s stock (MELIN) has lost a quarter of its value—2.5 percent of it just yesterday after global stocks plummeted.

Mercado Libre is certainly the David versus Amazon’s Goliath in this game of e-commerce thrones in an increasingly unfriendly global macroeconomic environment.

Beyond the firewall

Yet, this final point brings us to the bigger issue.

Beyond all the politicking between the new Argentinian government and Mercado Libre’s CEO; beyond the threat Amazon may pose to this local contender, a simple truth is emerging:

Coronavirus and an incoming global recession may make smallfry out of all of this.

Just this week, both Amazon and Mercado Libre have been struggling with crazy fluctuations in demand. There has been a 1,100 percent increase from December in searches for surgical masks, for instance. 

Both companies are also hurting on the supply side as overdemand and cuts to global production chains start to bite.

In the current climate of panic and crisis, consumers tend to shoot the messenger. Mercado Libre may look back to these early days of 2020 as happier times…

Related articles: Tech and startups from Argentina!

-AG

Alejandro González Ormerod
Historian, writer, and editor from Mexico City. He was a book publisher, academic, and cheesemonger before joining Contxto. Still deciding on which Latin American country to visit next; food and fun are the main criteria.

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