MercadoLibre's chief financial officer, Pedro Arnt, said the second quarter of 2016 was one of its strongest ever. We look at three reasons why the online marketplace is one to watch in Latin America.
1. Consistently strong results
Often referred to as the Latin American eBay (eBay is actually a major shareholder) MercadoLibre posted a 29% increase in net revenues, year-on-year, for the second quarter of 2016. This followed a 6.4% increase in Q1 and 17% growth for the full year 2015. It is on the way to surpassing the number of items sold in 2015 (128.4m) achieving 82m already in 2016.
2. Wide and growing presence
MercadoLibre operates across 18 Latin American markets and one European (Portugal). It has two main services: the MercadoLibre marketplace is an online trading platform for businesses and individuals, while MercadoPago is a complementary online payment solution. MercadoLibre continues to grow. It is investing ARS1,500m (around USD99.8m) over the next five years to expand in Argentina, and acquired Axado, a Brazilian shipping and logistics technology company, in 2016.
3. Growing links with retailers and suppliers as business model changes
Marina Diaz, country manager of MercadoLibre Chile, has said that the company's business model has changed over the last three years. It is moving from a model focused more on buying and selling used products, to one where 95% of the stock consists of new items.
Some retailers and suppliers in Latin America already have links with the site, creating opportunities to reach a wider audience. In Argentina, for example, Walmart trades on MercadoLibre while confectionery supplier Arcor set up an official site in August 2016.
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|Catherine Ellwood is an analyst at IGD. She is primarily responsible for research into Latin American FMCG markets and retailers.|
Gavin Rothwell is retail insight manager at IGD, sharing insights across key channels, retailers and markets worldwide.