Mercado Libre to disperse US$27.1 million for new distribution hub in Mexico

Contxto – Latin America’s biggest marketplace continues to lay down its logistics infrastructure.

It was recently unveiled that Mercado Libre plans to disperse US$27.1 million for a new warehouse and distribution center in the state of Jalisco, Mexico.

The project will lead to creating 3,500 direct jobs at a time where unemployment is rising. It also bodes well for speedier deliveries for the 5,000 Mercado Libre vendors in the region.

The first phase of the project will be completed by November of this year. By then, Mercado Libre expects to have 60,000 square meters (~197,000 square feet) of space set up to store goods. 

• Related article: Mercado Libre to disperse US$420 million in Mexico, targets rival Amazon and fintechs

The parties agreed that if the project plays out favorably, the new distribution center may be expanded to up to 80,000 square meters (~262,000 square feet).

It’s all about location with Mercado Libre

Key competitor, Amazon, already has three distribution centers in Mexico but they’re all around the Mexico City area. Now, Mercado Libre is catching up with this third logistics hub in the country. 

Nonetheless, it is the first time it launches one outside of central Mexico.

Through this location in the western Bajio region, the marketplace giant places a permanent stake in the country’s e-commerce market. But it also had other geostrategic considerations in mind with this new project.

The area where the distribution center will be set up is close to the airport and the general region constitutes 21 percent of Mercado Libre’s sales in Mexico.

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Competing for the customer experience

Since it’s founding, Amazon has claimed its obsession with the “customer experience” as the keystone to its success.

So to expedite deliveries and make more happy e-shoppers, it’s spent years (and millions) on building distribution hubs—or “fulfillment centers” as its marketing team call it—around the world.

And it would appear Mercado Libre is ripping a page out of Amazon’s book.

Correspondingly, it’s tagged funds to open its own logistics centers all across Latin America.

Commentary by Mercado Libre’s Country Manager in Mexico, David Geisen, evidences this:

“We’ve added over one million buyers onto the platform in Mexico, among which 100,000 are from Jalisco,” said Geisen. “To satisfy this demand, we’ve decided to increase our funding in our logistics operations to guarantee delivery times.”

In any case, Mercado Libre has the advantage it beat Amazon to the Latam market, now it wants to keep its crown.

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-ML