Mercado Libre buys delivery platform Kangu to increase capillarity

Ecommerce giant plans to expand its geographic reach and reduce delivery deadline

24.Aug.2021 18:54 BRT
UPDATED 19:56 BRT

Created in 2018, Kangu uses small neighborhood stores as collection and delivery points for parcels;
Mercado Libre plans to invest BRL 10 billion in 2021 and also announced earlier this month two new distribution centers in Brazil.

Mercado Libre announced this Tuesday the purchase of 100% of the Kangu parcel delivery platform, expanding its commitment to its own logistics as a differential in Latin America, one of the regions where e-commerce is growing the most in the world.

The transaction, for an undisclosed amount, takes into the Mercado Libre the structure of around 5,000 Kangu points spread across 700 cities in Brazil, in addition to Mexico and Colombia.

Created in 2018, Kangu uses small neighborhood stores as collection and delivery points for parcels, which expands the logistics network without the need to depend on third parties, such as the Post Office. Since last year, it has had Mercado Libre as a partner, whose demand for e-commerce has grown strongly since 2020, given the isolation imposed by the pandemic.

The acquisition comes after Mercado Libre announced earlier this month two new distribution centers in Brazil, one in Greater São Paulo, the other in Belo Horizonte (MG), using part of the investment planned for 2021, of BRL 10 billion, to expand its geographic reach and reduce delivery times.

Other large e-commerce companies in the region, such as Magazine Luiza and Cloudshop, also announced robust investments in logistics in Latin America, a region that could quadruple online sales in the coming years, reaching percentages similar to those in China, where they represent almost 50% of total retail sales, down from less than 10% here.

In the specific case of Kangu, Mercado Libre tries to close some gaps that became more evident with the explosion of e-commerce, such as the delivery of packages at alternative points, which can also be used for collection to serve a growing number of local sellers.

“Furthermore, these points can be used to return products, without customers having to queue up at the Post Office,” Renato Pereira, New Business Director of the Free Market, told Reuters.

Kangu will continue to be led by the co-founders and current co-presidents, Marcelo Guarnieri and Ricardo Araújo, and will continue to serve other partners in addition to Mercado Libre.

“Our goal now is to increase the number of delivery and collection points, from the current 2,600 to 3,500 in Brazil by the end of the year,” said Guarnieri.

Translated by LABS