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Latin America’s Biggest Online Marketplace Creates Opportunities for Millions

MercadoLibre’s ecommerce platform is enabling small and midsized business owners, including women entrepreneurs, to thrive.

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May 2022

MercadoLibre is Latin America’s largest online marketplace, with over 100 million monthly active users in 18 countries.1 The company says it wants to contribute to the sustainable prosperity of the region by becoming the Latin American tech company with the largest positive impact on society. It pursues that mission by aiming to democratize ecommerce and digital financial services.

To evaluate its progress toward this goal, MercadoLibre hired the research firm Euromonitor International to survey its customers, merchants on its platform, and logistics operators that MercadoLibre uses in its distribution system. The results of the survey, conducted in 2021, demonstrated how much success MercadoLibre has had with its efforts to transform the lives of millions of Latin Americans. It has created jobs and contributed to the economic growth of the region and to the growth of small and midsized enterprises (SME). The firm has also been inclusive by creating opportunities for underserved communities and regions and, importantly, for women.

Supporting Employment and Creating Jobs

The MercadoLibre platform is now the main source of income for 900,000 families in the region. In 2020, an average of six new jobs were created per hour in Latin America through the activity on the MercadoLibre platform. Sixty-five percent of the SMEs that sell on the MercadoLibre marketplace are family businesses that create an average of 4 to 11 jobs each.

Activity on MercadoLibre’s platform accounted for 13.5 percent (27,000) of the 200,000 logistics-related jobs created in the region during 2020. MercadoLibre itself added 6,000 positions in 2020, with half of them in its shipping department.

Helping Small and Midsized Businesses Thrive

In 2020, 84 percent of the SMEs in the region extended beyond their cities, as ecommerce helped them to gain new customers and increase their sales turnover. Nearly half a million SMEs—480,000 to be exact, constituting 4.3 percent of the SMEs across Latin America—use MercadoLibre to market their businesses.

Fourteen percent of the SMEs that use the platform receive 100 percent of their total income from it. In Mexico, 46 percent of the SMEs on MercadoLibre sell exclusively on its platform. One in four SMEs across the region gain 51 percent to 90 percent of their total income from MercadoLibre. In Colombia, five out of 10 of the SMEs said that they would not have survived during the pandemic if not for the sales they made via MercadoLibre’s marketplace.

Digital Banking Delivers Benefits to the Previously Unbanked

Mercado Pago, the firm’s fintech business unit, has greatly contributed to the firm’s goal of fostering inclusion by creating and expanding opportunities for more people and underserved groups. It provides a comprehensive financial services ecosystem for companies, smaller businesses, and individuals who want to manage their money in a safe, simple, and convenient way.

Mercado Pago’s platform makes it easy to send and receive online payments. It supports a variety of payment methods, including local credit and prepaid cards. Given that Mercado Pago imposes fewer limitations than traditional banks, people who did not previously have access to alternative payment methods can enjoy the same benefits as do people who have bank accounts. They can now easily pay for and subscribe to digital platforms that offer educational, health, and entertainment services that they would not otherwise have been able to access.

Three out of 10 users said that Mercado Pago was the first payment method they had used other than cash. The COVID-19-induced lockdowns brought an increase in online activity everywhere in the world. In Latin America, though, it also helped 39 million buyers discover the simplicity of online payments.2

Forty percent of SMEs indicated that they received their first offers of credit through Mercado Pago. Over 60 percent of the credit granted to SMEs was invested in inventory, equipment, logistics, and employment.

Card payments increased entrepreneurs’ income by 62 percent. Over 40 percent of them do not have or use bank accounts. Most of them collected card payments for the first time through the platform.2

Digital transformation has helped bridge not only geographical and economic gaps, but also gender gaps. One out of four SMEs surveyed by Euromonitor is led by a woman. Digital payment collection methods, by eliminating the barriers faced by those who don’t have access to traditional banking or financial services, enabled more women to launch their own enterprises during the COVID-19 pandemic.3 In 2020, there was a 7 percent increase in the number of women sellers versus men sellers on MercadoLibre’s platform.2

MercadoLibre has recognized that it can have a positive impact on the region only by expanding the economic opportunities of people of all backgrounds and genders.

Sustainable Development Goals

The Sands Capital six investment criteria tend to lead us to businesses that are innovators or vital facilitators of change in industries undergoing significant transformation. MercadoLibre is one of many portfolio businesses that create impact by addressing at least one major social or environmental challenge identified by the United Nations Sustainable Development Goals (SDGs). MercadoLibre’s efforts support SDG 1, No Poverty; SDG 5, Gender Equality; SDG 8, Decent Work and Economic Growth; and SDG 10, Reduced Inequalities.

References:

All data, unless otherwise noted, come from MercadoLibre’s “Impacts that matter” study conducted for the firm by Euromonitor International. The report is based on surveys with 4,000 MercadoLibre sellers and Mercado Pago users, as well as 50 in-depth interviews with logistics operators.

1 Source: App Annie, as of January 2022
2 Source: Mercado Pago’s research, as of March 2021
3 MercadoLibre’s research evaluates data for the two years prior to September 2021.

Disclosures:

The business profiled was selected based on its reported alignment with one or more U.N. Sustainable Development Goals. The views expressed are the opinion of Sands Capital and are not intended as a forecast, a guarantee of future results, investment recommendations, or an offer to buy or sell any securities. The views expressed were current as of the date indicated and are subject to change. This material may contain forward-looking statements, which are subject to uncertainty and contingencies outside Sands Capital’s control. Readers should not place undue reliance upon these forward-looking statements. There is no guarantee that Sands Capital will meet its stated goals. Past performance is not indicative of future results. A company’s fundamentals or earnings growth is no guarantee that its share price will increase. The specific securities identified and described do not represent all of the securities purchased, sold, or recommended for advisory clients. There is no assurance that any security will continue to be owned by Sands Capital. You should not assume that any investment is or will be profitable. GIPS® Reports and additional disclosures for the related composites may be found in the Sands Capital GIPS Report. PT#20210413

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