Mercado Libre to invest billions in its biggest market Brazil
Latin American e-commerce giant Mercado Libre announced that it will invest BRL 19 billion (USD 3.6 billion) in Brazil in 2023. The amount is a record, well above the BRL 1 billion that the company has poured into what has already been its biggest market for five years. However, it also represents a slowdown in MeLi’s investment pace.
While the volume of resources the company invested into its Brazilian expansion jumped 70 percent year-over-year in 2022, it grew only 11.5 percent compared to last year, when Mercado Libre posted more than USD 10.5 billion in net revenues and a fivefold increase in net profit. Brazil accounted for 54 percent of the company’s net revenues in 2022.
The company will invest most in its logistics operations (Mercado Envios) and technology teams, in addition to Mercado Ads, the company’s digital advertising business, which accounted for 1.4 percent of MeLi’s gross merchandise volume last quarter, and the company’s digital bank, Mercado Pago.
On the logistics side, the company plans to add new fulfillment centers, more electric trucks and vans, and planes for its fleet of at least ten aircraft operated in partnership with airlines such as Sideral, TSM, Gol, and Azul. In addition, the company aims to further increase the number of cities it serves with same-day and next-day deliveries, currently available in 100 and 2,100 municipalities, respectively.
At the same time, company executives expect Mercado Pago to surpass Mercado Libre’s commerce business in terms of revenue in 2023 or 2024. In Q4 2022, it accounted for 45 percent of Mercado Libre’s revenues.