E-commerce, once the playground of big conglomerates from developed countries, is now the more accessible and is rapidly gaining more players, such as Latin America's MercadoLibre, which rivals the operations of Amazon and Ebay.
In fact, MercadoLibre can be labeled as the "Amazon of Latin America." The advancement in communication technology, better payment gateways and enhanced and more powerful software and computer applications provide continuous and around-the-clock support for e-commerce sites around the world.
What is MercadoLibre?
MercadoLibre is the Spanish name of an online auction and e-commerce marketplace based in Buenos Aires, Argentina. It was organized in the United States in 1999. The name means free market. It was founded by Marcos Galperin and Hernan Kazah. Galperin was still enrolled at Stanford University in the U.S. when the partners established MercadoLibre.
As a startup, he got funding from HM Capital Partners' co-founder, John Muse. It later received more funding from Banco Santander Central Hispano, GE Capital, Goldman Sachs, Flatiron Partners and JPMorgan Partners. Considered as a high-impact entrepreneurship enterprise, it was hailed in New York as an Endeavor company in 1999.
By the number of site visitors, MercadoLibre is the most well-known e-commerce portal in Latin America. The company is now widespread, operating in several countries aside from Argentina. It has presence in the following countries:
- United States
- Dominican Republic
- Costa Rica
In Latin America alone, MercadoLibre reached 174.2 million site users in 2016.
The company provides a platform for online commerce that focuses on e-commerce and other services related to it. Users utilize the site to buy, sell and pay for a variety of items. The portal can be used likewise for the collection and generation of potential sales leads. It allows users to compare lists from the data collected from the online transactions.
Aside from providing a platform for buying and selling (including auctions) and payment options, MercadoLibre has established several subsidiaries.
The company's core business purpose is to provide a far-reaching marketplace for sellers and buyers. It offers an automated service for online transactions. Registered users can upload their items and conduct their online sales business, which can use two formats – auction-based or fixed price. It provides classified listing for higher-priced items including real estate, aircraft, motor vehicles, as well as various services. Advertisers and users can post text advertisements on MercadoLibre's web pages to promote and push their services and products. Purchasers register to the site in order to either list, purchase or bid for listed products.
MercadoLibre is gaining new grounds as it continues to dominate e-commerce business in Latin America. But the region is still quite young. It's a market that e-commerce still has to room to explore. Plus, the Internet coverage in the region still needs to expand.
The rising middle class in Latin America poses a huge potential for various business, including MercadoLibre. Right now it is at the front of an e-commerce culture in the region that is just starting to bloom.
MercadoLibre's brand image is widely recognized in the region. In such a competitive environment, one of the major strategic advantages that an e-commerce company can utilize is market leadership. A company's competitive strength gets a boost from a larger network. When you are a leading e-commerce portal, you attract buyers and sellers almost automatically because they are assured that the platform can provide them with more opportunities.
Although called the Amazon of Latin America, MercadoLibre's operation is patterned more on eBay rather than Amazon. MercadoLibre pairs buyers and sellers, building a reputation of a portal that facilitates e-commerce for various retailers, both brick-and-mortar stores and purely online sellers. Without maintaining an inventory, the company's profits come from commissions from transactions.
Aside from being an e-commerce portal, MercadoLibre offers other services for the use of its merchants, such as a shipping and fulfilment platform and an integrated payment system application. It continues to increase its database of registered users and it is projected to increase further as the Internet penetration in Latin America continues to spread and increase.
MercadoLibre now operates in 18 countries. It is expanding in Brazil, which is its biggest market, with Argentina running second. It has an agreement with eBay, which translates to Ebay not being a MercadoLibre competitor in Latin America. Amazon on the other hand is trying to encroach into MercadoLibre's territorial base of operations.
From a report published by Portada, online purchases from MercadoLibre as of February 2018 reached 47%. Purchases on Amazon from the Latin American market for the same period only reached 17%.
It has made several acquisitions through the years as well, all in line with the operation of the company. It acquired Dabee, an e-commerce startup from Silicon Valley. It has also acquired DeRemate.com and Classified Media Group to help improve the classified sections of their sites for car sellers and real estate agents. Aside from that, it also acquired other classified sites for real estate sellers in Mexico (Guiadin Muebles) and Portal Inmobiliario for Chile.
The company also created vendor model called Clasificados that helps individual sellers use MercadoLibre's technology for their online selling. Moreover, MercadoLibre has acquired several startups, to augment their business operations.
MercadoEnvíos and MercadoPago
As an e-commerce portal, MercadoLibre is not relying on many third party applications. Rather getting services that may or may not be beneficial to them, the company developed their own apps.
eBay for example made PayPal as a separate and independent company. MercadoLibre created MercadoPago as its own integrated payment platform under its own umbrella. MercadoLibre's users can use the program for payment and for migrating their funds from cash, credit card and bank transfer transactions electronically. The system and the manner of its operation have the potential for additional growth, which eBay let go off when they made PayPal independent. It has the potential to grow bigger on its own, which can open more doors for MercadoLibre's growth.
MercadoEnvíos is a logistics solution for shipment and fulfilment. It was a huge success in Mexico. According to the company, about 80% of MercadoLibre's sellers use the shipping platform. They use it as a guarantee of on time delivery of the products. To improve their system, MercadoLibre partnered with UPS to provide users with more options for successful transactions.
With the success of the MercadoEnvíos shipping system in Mexico, the company also started a loyalty and free shipping program in Mexico as well as in their other bigger markets, such as Brazil, Colombia and Chile.
Partnership with UPS
The partnership with UPS provides more visibility and flexibility. UPS will have solutions that are only for the exclusive use of MercadoEnvíos Full, which includes storage aside from shipping. At the company's distribution centers, the inventory management process will use the Application Programming Interfaces of UPS. This will automate the creation of shipping labels. It will allow for the better tracking of packages, and gives the buyers visibility when tracking the shipment of their purchases.
The partnership provides several benefits to the company as well as its customers and shippers. Next day delivery of smaller packages is assured by the UPS Express Saver®. Users can utilize the UPS Access Point™ network, wherein they can choose alternate locations for delivery of their packages, like pick-up and drop-off locations in local businesses with longer hours of operation that are close to the residence of buyers.
The services are initially available in Mexico.
Latin America's MercadoLibre is proof that sound planning, corporate direction and harnessing the power of technology can make an e-commerce operation work from any region or location. It is the determination of the owners/founders to grow their enterprise one step at a time, building from business knowledge, application of best practices, taking risks, analyzing business and consumer data and the developing additional systems that can enhance and improve the business.
Maintain your brand's image and improve customer loyalty
Globalization has reached so many previously unknown and unexplored markets around the world that have great potential for commerce. Many entrepreneurs have realized the massive potential of communication technology for their businesses. One barrier that needs to be hurdled is proper communication. Although English is still the main language of commerce, we cannot deny the fact that different cultures speak different languages and are more comfortable in doing transactions in a language they fully understand. While many people are already connected to the Internet and enjoying the benefits of e-commerce and online retail shopping, it is still vital to have e-commerce portals available in languages that the majority of shoppers speak.
The subject matter experts of Day Translations, Inc. are experienced in e-commerce translations and retail translations. Ensure that you are speaking the language that your customers speak by having your information translated into the languages spoken by your specific market. We are here to help. The human translators of Day Translations are all native speakers, handling over 100 world languages. They live in-country, ensuring that they fully understand the nuances of the language and demands and preferences of local culture. We also offer localization, which will be greatly beneficial to your business. Whenever you need e-commerce, business and website translations and localization, get in touch with the experts at Day Translations. Call us at 1-800-969-6853 or send us an email. We do not mind you calling use anytime, as we are open 24/7, 365 days a year to attend to your language services requests.
Image Copyright: MercadoLibre [Public domain], from Wikimedia Commons