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E-Commerce Powerhouse MercadoLibre Eyes Record Brazil Investment

E-Commerce Powerhouse MercadoLibre Eyes Record Brazil Investment

E-commerce retailer MercadoLibre Inc. is boosting its bet on Latin America’s largest economy, with plans to invest record amounts in 2021.

The region’s most valuable company, which is investing a record 4 billion reais ($716 million) this year in Brazil, plans to beat that number in 2021, said Fernando Yunes, the firm’s country manager for Brazil. The move is part of a wider logistics push as the coronavirus pandemic drives sales and stirs competition.

E-Commerce Powerhouse MercadoLibre Eyes Record Brazil Investment

“We’ve just started planning investments for 2021 and we want them to be higher than this year,” Yunes said in an interview. “There has been a structural change in the market and customers’ behavior is unlikely to go back to what it was before the pandemic.”

The Buenos Aires-based company’s market value has jumped this year, reaching a record $61 billion and beating both regional peers -- like ore giant Vale SA, with a $60 billion valuation -- and companies in the sector such as EBay Inc., with a $40 billion valuation.

E-Commerce Powerhouse MercadoLibre Eyes Record Brazil Investment

In Brazil, which accounted for 53% of its total revenue in the second quarter, MercadoLibre’s weekly sales average jumped 74% this year compared to 2019 levels, Yunes said. Daily visits to its marketplace reached a record of as much as 41 million, above the 32.8 million mark seen during last year’s Black Friday, a sales event held in November.

“We would like to achieve triple-digit growth at the upcoming Black Friday, as we’re investing three times last year’s amount,” Yunes said. To meet this goal, he added, the retailer is bolstering logistics to deliver about 75% of all in-house stored goods through its fulfillment services within 48 hours after the order is placed, up from about 55% during 2019’s Black Friday.

Brazil Growth

MercadoLibre has also kicked off weekend deliveries and is trying to further reduce its reliance on the Brazilian postal service Correios, which made up about 50% of total deliveries before the most recent strike by postal workers.

Just a few months after opening its third distribution center in Brazil’s northeastern state of Bahia, the company is in talks to set up a fourth one in the south of the country as it expands fulfillment operations and the assortment of items available for sale. The company also plans to expand its product offering even further.

“We will soon add two of Brazil’s largest pharmacy chains to the platform,” Yunes said, declining to name them.

MercadoLibre’s push to play on the coronavirus-driven boom and retain leadership in Brazil comes as home-grown players Magazine Luiza SA, B2W Cia Digital and Via Varejo SA are pouring money into online retailing to catch up, either organically or through acquisitions.

“We’re not prospecting M&A opportunities, but that does not mean it cannot happen,” Yunes said.

©2020 Bloomberg L.P.