Contxto – In mid-February, e-commerce giant, Mercado Libre announced it would disperse R$4 billion (around US$920.5 million) in Brazil throughout 2020. Before the month was over it went on to announce its plans for Latin America’s second-largest market, Mexico, for which it anticipates dispersing US$420 million this year.
That’s a 40 percent jump from the US$300 million it tagged last year. Moreover, it’s the largest amount it’s ever vested into its operations in the country since its arrival back in 1999.
According to the recent announcement made by David Geisen, Mercado Libre’s Country Manager in Mexico, these funds are to be divided into three projects:
- Expanding its offering of products
- Optimizing its logistics network with new warehouses
- “Increasing convenience for the consumer”
No doubt its logistics and warehouse strategy is part of Mercado Libre’s goal to get a bigger slice of the e-commerce market in the face of Amazon.
As for the first point in expanding its products… I have a theory.
Related article: Mercado Libre tags R$4 billion for e-commerce operations in Brazil
Mercado wants financial finesse
In December of last year, Goldman Sachs procured a big financing deal for Mercado Libre to dish out loans to small and medium-sized enterprises (SMEs).
Then there’s the partnership that it forged with Paypal and that was announced at the end of 2019. More recently, it acquired Argentine software startup, Lagash, that has a forte in financial and banking solutions.
These events, alongside its US$420 million tagged for Mexico to expand its product offerings which may include financial solutions and services, point to one thing: it not only wants to be #1 in e-commerce trade. It also aspires to be a one-stop-shop in fintech needs for the Mexican market both for individuals and businesses.
So it’s not only going head-to-head with Amazon. It’s also competing with the multiple fintechs scattered throughout Mexico.
No doubt its biggest advantages are its deep, deep, deep pockets. Plus, the fact that it’s a brand that’s already well-known and positioned among the general population.
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