Business & Economy

LatAm tech giant Mercado Libre ends 2022 with $1.45 bn investment in Mexico

Mexico City, Dec 20 (EFE).- Latin American e-commerce giant Mercado Libre will end 2022 having made an “historic” investment of $1.45 billion in Mexico, which has become its second-biggest market, the firm’s general director in that country, David Geisen, said Tuesday.

“We’re investing strongly here in Mexico, in fact this year is an historic year regarding investments, where we’re investing more than $1.45 billion in Mexico alone and a large part of this investment is being directed toward logistical infrastructure,” Geisen said in an interview with EFE.

He noted that just four years ago Mercado Libre did not have its own warehouses, last-mile service or aircraft, but 2022 “has been the year with the greatest investment and also the greatest growth in the size of the team.”

Now, he said, 268,000 families make their livings via Mercado Libre, according to Euromonitor, and thus on the logistical side there will be more investment in storage facilities, aircraft and vehicles.

“We’ll continue investing strongly in Mexico because we see the potential, we see the value that the ecosystem of solutions that we’re developing for millions of Mexicans contributes,” Geisen said.

He said that Mexico was the country in which e-commerce grew fastest in 2019, when the sector in general grew by 35 percent, a percentage that accelerated to 81 percent in 2020 due to the Covid-19 pandemic and which grew by 21 percent in 2021, according to the Mexican Online Sales Association (AMVO).

In that regard, Geisen added that Mercado Libre grew by 103 percent in 2020 and 50 percent in 2021, while during the first three quarters of this year the firm reported growth of between 20-30 percent in Mexico.

“Nowadays, Mexico is in second place in terms of the size of the business, after Brazil and ahead of Argentina, and that has changed after more than 20 years during which Argentina was in second place,” he said.

Even so, Geisen acknowledged the economic challenges in 2022, including the disruption of supply chains and inflation, which in Mexico reached 8.7 percent in August and September, the highest levels since 2000.

This pushed the firm to seek to improve its data analysis and tools so that it could avoid a drop in inventory, because product scarcity translates into longer supply periods and into users looking for less expensive products.

However, Geisen said that these problems do not mean less growth.

“The opportunities and the challenges (for 2023) are many and very complex, because so much growth and so much innovation obviously requires that we keep not only growing but improving the excellence of (our) execution,” he said.

Besides the assorted problems, the Mercado Libre director pointed to the obstacle and opportunities represented by financial exclusion in Mexico, where 54 million people do not have bank accounts, according to the National Institute of Statistics and Geography (Inegi).

“One of the most important brakes that we identify in the Mexican economy is the lack of access to credit, so nowadays we have more than 10 million preapproved … lines of credit for our customers on the platform,” he said.

Thus, Mercado Libre has placed its bets on Mexico to go farther in e-commerce with Mercado Pago, a platform whereby any user may process payments, send money, pay for services, charge, invest and request a loan.

“At the same time, we’re building a very important fintech business because Mercado Libre’s plan is for the democratization of commerce and money,” Geisen said.

EFE –/bp

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