SAO PAULO (Reuters) - Argentine online marketplace Mercadolibre Inc is diving into areas like lending and logistics management, which once belonged exclusively to large financial and retail groups, to increase market share in Brazil, a top executive said.
The company’s Brazil operations account for about half its business, Chief Operating Officer Stelleo Tolda said in an interview last week. He expects revenue at Mercadolibre to surpass B2W Cia de Varejo SA, Brazil’s largest e-commerce company, this year.
Tolda said the strategy aims at preventing money that reaches Mercadolibre sites from leaving. Through mercadolivre.com in Brazil, the company competes with B2W - which owns the Submarino, Americanas.com and Shoptime marketplaces.
After a decade of being listed on the Nasdaq stock exchange, Mercadolibre has become Latin America’s benchmark for e-commerce, providing technology infrastructure for small and large retailers to sell everything from candy to real estate online.
“We know we’re just at the beginning. E-commerce in Brazil amounts to only 4 percent of retail sales today,” Tolda said.
According to market research firm Ebit, Brazilian e-commerce is expected to take in about 50 billion reais ($15.36 billion) this year, 12 percent above 2016, despite a deep economic crisis.
That figure does not include Mercadolibre, which last year posted revenue of $844.4 million in the 18 countries where it operates across Latin America and Portugal, an increase of nearly 30 percent on an annual basis. “There is still a lot of room for everyone to grow in Brazil,” Tolda said. “Brazil is more like a cake that is getting bigger than a market where you have to steal slices from others in order to grow.”
Mercadolibre is initiating tests to offer goods pickup services for large customers that use the site to sell their products, he said, adding that it would be in charge of negotiating prices with transporters.
It is also considering offering financing to companies that use the site. Mercadolibre stock is up 66.6 percent year-to-date.
Ignacio Caride, director general of Mercadolibre in Mexico, said the company plans to grant working capital credit to small businesses and entrepreneurs from Brazil and Mexico later this year. ($1 = 3.2549 reais)
(This version of the story corrects paragraph 7 to show that Mercadolibre revenue rose 30 percent to $844.4 million in 2016, not 42 pct to $256.3 million)
Writing by Alexandra Alper; Editing by Matthew Lewis