How Mercado Libre became the most valuable firm in Latin America

Mercado Libre, Argentina's e-commerce company, became the most valuable firm in Latin America after overtaking Brazilian mining company Vale, according to the latest report by consulting firm Economatica.

One of the most valuable firms in Latin America is Mercado Libre
One of the most valuable firms in Latin America is Mercado Libre

Mercado Libre was valued at US$59.352 billion, making it the most valuable company in Latin America, according to data recently released by the capital markets consulting firm Economatica.

The Argentine e-commerce company surpassed Brazilian mining company Vale S.A., which registered a market capitalization of almost US$2.2 billion less than Mercado Libre. Brazil's Petrobras ranked third with a market value of US$55.534 billion.

Mercado Libre was born in 1999 and currently operates in 18 countries in the region. "In a few years we managed to become the seventh-largest e-commerce platform in the world," the company points out.

"The pandemic generated significant changes in consumer behavior, which translated into a new milestone in the penetration of e-commerce and digital payments in the region," said Jaime Ramírez, director of the Andean Region of the Mercado Libre.

In fact, the region's largest e-commerce platform was the only Latin American company included in a list of 100 companies that have prospered during the pandemic, compiled by the British newspaper Financial Times.

According to the firm Kantar, for example, during the months of isolation, e-commerce in the region has grown by 300%.

How much did Mercado Libre grow?

Mercado Libre recorded net profits in the second quarter that shot up by 245%, from US$16.2 million in 2019 to US$55.9 million. Gross profit was US$427.2 million, while in the same period it closed with a profit, before taxes, of US$89.3 million.

The company's net income for the second quarter reached US$878.4 million, with a growth of 123.4% in constant currency, driven by a 101% increase in sales, represented by 178.5 million items sold.

"We continue to focus on the well-being of our teams and were able to deliver uninterrupted operation of our e-commerce and fintech solutions during the second quarter," complemented Jaime Ramirez.

The company also recorded over 100% growth in demand for its products and services this year, compared to 2019, in Colombia, Chile, and Mexico between February and May. In Argentina, the increase was 52%, while in Brazil it was 39%.

Meanwhile, Mercado Libre registered, in the same period, an increase of up to 5 million new users in Latin America. Meanwhile, the active single user base during the quarter increased by 45.2% to 51.5 million.

What decisions did it make?

The company reported that as of mid-March, all of the Mercado Libre teams continued to work remotely, except for the shipping staff because it was indispensable for maintaining operations.

In addition, to respond to the atypical context derived from the pandemic, they temporarily added employees from organizations such as Le Pain Quotidien in Argentina and signed an alliance with Alsea, the operator of Burger King Argentina and Starbucks Argentina and Uruguay.

They also established an alliance with Arcos Dorados, a McDonald's licensee in Argentina, to add part of their employee team to the customer service and shipping area. These collaborative initiatives were extended to be applied not only in Argentina, but in several Latin American countries.

In terms of e-commerce, shipping, and fintech services, the company noted that they were able to maintain operations during the quarter, which made it easier for sellers and buyers to obtain their products or services on time despite the restrictions caused by the economic situation.

In this sense, Mercado Libre launched integral support and training platforms for thousands of SMEs and entrepreneurs in Latin America with the aim of strengthening the digital transformation in the region.

Curious Facts About Mercado Libre

In 1999 its first office was in a garage in the Saavedra neighborhood, north of Buenos Aires, and in the same 1999 began to operate Mercado Libre in Uruguay, Brazil, and Mexico.

The company is present in 18 countries: Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Ecuador, Guatemala, Mexico, Nicaragua, Panama, Peru, Paraguay, El Salvador, Dominican Republic, Uruguay, Honduras, and Venezuela.

On the 20th anniversary of the country's and Latin America's largest online shopping hub, here are 20 curious facts you may not have known:

There are more than 20 million products published in Mercado Libre Mexico and more than two million sellers. In Latin America, there are 11 million sellers.

One of the most sold products in Mercado Libre Mexico in 1999 was the CD Todo está bien by Juan Gabriel. "For me to save myself from the end of the world," wrote one of the buyers.

There are more than 270 million registered Free Market users in Latin America and more than 30 million in Mexico. 80% of current registrations are done through smartphones.

Mercado Libre has more than eight thousand employees in the region (25% entered in 2018) and more than 220 in Mexico. In global figures, 60% are men and 40% women, but in Mexico, the proportion is 51-49.

Mercado Libre is registered in Mexico under the name DeRemate.com of Mexico, as can be seen at the bottom of the platform. In 2008, and after a decade of a dispute over online sales, Mercado Libre bought De Remate for 40 million dollars.

In the Hot Sale 2019, Mercado Libre sold more than three products per second and received 11 million visits a day.

In the category of books, the most sought-after is Baldor's Algebra and in the category of music, the albums of Mötley Crüe and Caifanes.

The record of purchases is held by a user in Mexico City with a total of $172,000 dollars (more than $3.2 million pesos) in transactions within the platform and more than 3,200 purchases.

Mercado Libre almost disappeared in early 2000 with the bursting of the dotcom bubble. It took the company six years to overcome the crisis.

In 2001, eBay (Marcos Galperin's inspiration) bought 19.5% of the shares of Mercado Libre. In 2016, eBay sold it back. They maintain a collaborative relationship and Mercado Libre sells eBay products within its platform through an official store.

Mercado Libre became the first technology company in Latin America to make its IPO on the Nasdaq in 2007. The New York Stock Exchange (NYSE) listed it under the name MELI.

To celebrate its 20 years, Mercado Libre launched a special category of Sustainable Products. "We celebrate by looking ahead," Galperin said. Responsible sales and purchases are trends.

Mercado Libre Mexico sells more than 100,000 products a day. Throughout the region, there are more than one million daily sales (11 per second) and six thousand searches per second.

Mercado Libre is a millennial company: 70% of its more than eight thousand employees are less than 30 years old.

Mexico is the third market with more sales in the region, after Brazil and Argentina. In a number of employees, however, it is below these two and also Uruguay and Colombia.

Mercado Libre has invested in three Mexican startups: Ibushak, an e-commerce solution for sales; Liftit, a cargo delivery platform; and Sirena, an omnichannel platform that connects customers and vendors in B2C businesses.

Mercado Libre opened two distribution centers in the State of Mexico with an area of 130 thousand square meters, allowing it to store more products and deliver thousands of them in less than 24 hours.

The top five searches in the entire platform is led by Bluetooth headphones, tennis, smartwatch, laptops and cell phones.