June 4, 2019 / 2:58 PM / 20 days ago

MercadoLibre to build 3 e-commerce distribution centers in LatAm

SAO PAULO, June 4 (Reuters) - Online marketplace MercadoLibre Inc is investing heavily in logistics in Latin America, opening three new distribution centers in Argentina, Brazil and Mexico this year to speed up deliveries in the face of stiff competition.

The Argentina-based company, which is listed on Nasdaq, is expected to open a new 100,000-square-meter distribution center in Mexico this month, after inaugurating its first in Argentina in February and a second in Brazil in March.

“A fast delivery really contributes to e-commerce growth, so our plan is to open more distribution centers like these,” Chief Operating Officer Stelleo Tolda said in an interview last week.

MercadoLibre has partnered with German logistics group DHL to set up an 111,000-square-meter warehouse in the municipality of Cajamar, just outside of Sao Paulo, where U.S. rival Amazon.com Inc installed its long-awaited in-house fulfillment and delivery center in Brazil.

The new MercadoLibre facility more than doubles its logistics capacity in Brazil, which already includes the 51,000-square-meter warehouse in Louveira, also in Sao Paulo.

Tolda said the next big launch will be in Mexico, where the company is set to open a 100,000-square-meter fulfillment center in the city of Tepotzotlán, more than three times the size of its first Mexican warehouse in Cuautitlán. Both required an investment of $100 million.

The company invested $2 billion across Latin America last year, with about a quarter of that focused on logistics.

This year, MercadoLibre plans to boost capital spending in Brazil to 3 billion reais ($770 million), from 2 billion reais last year.

Brazil is still the company’s biggest market, representing 60% of total revenue, but growth in Mexico has been accelerating and the country may soon pass Argentina to become the No.2 market, Tolda said.

Founded in 1999, MercadoLibre has over 274 million users and more than 12 million sellers in 18 countries in Latin America, with no plans to enter new markets for the moment.

“E-commerce potential has not been fully explored in the countries where we are present and our focus is to grow in these markets”, he added.

Beyond logistics, MercadoLibre is also betting on payments arm MercadoPago and plans to introduce new products for its digital wallet, which already offers loans to both sellers and buyers, along with payments via QR code.

“We now have an account paying interest, but our mid-term plan is to offer more sophisticated products like insurance and investment funds,” said Tolda, without giving details.

$1 = 3.8941 reais Reporting by Gabriela Mello; Editing by David Gregorio

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