MercadoLibre's New Shipping Policy
SAO PAULO (Reuters) - MercadoLibre, the leading e-commerce giant in Latin America, is taking significant steps to enhance its customer experience by expanding free shipping in its primary market, Brazil. This strategic move, announced on Friday, is expected to come with substantial costs, yet the company anticipates it will stimulate higher sales in an increasingly competitive environment.
Market Position and Competition
As the most valuable company in Latin America by market capitalization, MercadoLibre generates over 50% of its e-commerce revenues from Brazil, where it faces stiff competition from giants like Amazon and Sea's Shopee, along with newer entrants like Temu.
Details of the Free Shipping Initiative
Under the new policy, orders totaling 19 reais ($3.40) or more will qualify for free shipping, a notable reduction from the previous threshold of 79 reais ($14.15). Fernando Yunes, head of e-commerce operations at MercadoLibre in Brazil, stated, "Practically the entire site will have free shipping from now on."
Financial Implications
While Yunes confirmed that the company would absorb the financial impact of this initiative, he refrained from providing specific estimates regarding the costs involved. Additionally, since late May, MercadoLibre has been reducing shipping fees for sellers on its platform by up to 40%, a development recognized by analysts.
Competitive Strategy
Analysts from Itau BBA noted in a report that the expanded shipping discounts are strategically aimed at a price range where Shopee has been gaining traction. The move is seen as essential for maintaining MercadoLibre's competitive edge in the market.
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