Business

Mercado Libre is not acquisitions' target, says company's president

The statement comes after years of speculation about whether Mercado Libre is being eyed by global giants like Amazon and Alibaba

Executive President of Mercado Libre, Marcos Galperin. Photo: REUTERS/Ginnette Riquelme
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  • After years of accelerated growth in markets ranging from Mexico to Argentina and consolidating its leadership in the region with the e-commerce boom due to COVID-19, Mercado Libre surpassed in the third-quarter $1 billion in net revenue;
  • The company is doubling its capacity in Brazil, its largest market, with the opening of five new logistics centers.

Mercado Libre is not being probed for acquisition by global rivals in the sector and this should not happen anytime soon, according to the executive president of Latin America’s e-commerce giant.

“So far it hasn’t happened and I don’t think it will happen in the short term,” said Marcos Galperin in an interview with Reuters.

The statement, in the wake of the announcement that the company is doubling its capacity in Brazil with the opening of five new logistics centers, comes after years of speculation about whether the Mercado Libre was being eyed by global giants such as Amazon and Alibaba.

READ ALSO: Mercado Libre reportedly in talks with Brazilian government over Correios privatization: Valor

After years of accelerated growth in markets ranging from Mexico to Argentina and consolidating its leadership in the region with the e-commerce boom due to COVID-19, Mercado Libre surpassed in the third-quarter $1 billion in net revenue.

In the last few months, Mercado Libre has started to invest more strongly in services and partnerships, such as the one with Disney+, and in the inclusion of basic care products to increase the recurrence of use by customers, a movement that recalls the one made by Amazon when buying Whole Foods in 2017.

“We will continue to make investments in this category,” said Galperin, referring to supermarkets.

READ ALSO: Mercado Libre buys a stake of Brazilian logistics startup Kangu to boost e-commerce

And like Alibaba’s financial arm, Ant, Mercado Libre has in its financial arm, Mercado Pago, a bet as big or even bigger than that of e-commerce itself, since it has been a vector to bank tens of millions of people from Latin America.

From July to September, payments processed by Mercado Pago jumped 92% in dollars in the annual comparison, to $14.5 billion.

Initially used only to make payments, the business added services such as credit, investments, and insurance. The trend should now be accelerated in Brazil, a source of 55% of the group’s revenues, where Mercado Libre obtained a license from the Brazilian Central Bank last week to become a financial institution.

This offensive may increase the headache of traditional large banks, already dealing with the Brazilian Central Bank regulatory agenda designed to increase competition in the financial sector, with news such as instant payment and open banking, a system that will give customers the power to share their Bank data.

“We will have lower funding costs and we will work with more profitable financial services,” said Galperin.

READ ALSO: AliExpress and Mercado Libre generated $6.1 billion in e-commerce sales in Chile last year

Mercado Libre’s offensive has not gone unnoticed by the financial market. In the last 12 months alone, the company’s share in Nasdaq has appreciated by more than 160%, reaching a stock market value of $65 billion, more than any other Brazilian company listed, including the commodity giants Petrobras and Vale.

For Galperin, co-founder of Mercado Livre at the beginning of the century, the explosion of e-commerce and digital banking in Latin America is still the beginning of history.

“We are still far from the e-commerce levels seen in places like China, for example. And, in the financial service, I think we will see the end of cash in Latin America in 10 years.”

(Translated by LABS)