MercadoLibre to Triple Investment in Mexico Due to E-Commerce Rise

Argentine e-commerce company MercadoLibre said on Tuesday that will invest $ 1,100 million to expand its storage space and services in Mexico this year, fueled by a boom in online shopping during the pandemic.

The figure is almost the triple the $ 420 million the company spent last year in the country, a fast-growing market in which it is struggling to stay ahead of global giant Amazon and other rivals.

The investment will help MercadoLibre to Double Storage Space and Boost Financial Technology Services like consumer credit, the company said in a statement, adding that it will create more 4,700 jobs.

David Geisen, director of MercadoLibre in the Latin American country, said the company has decided to increase its spending this year due to the strong demand not only from buyers, but also suppliers who sell on their platform.

“If we don’t speed up (the investment), we would have several bottlenecks”he explained at a press conference.

Geisen added that he expected the company to register a double-digit growth in Mexico this year, approaching the pre-pandemic figures, after the Dollar earnings have grown more than 100% per year for the last two quarters of 2020.

In the period October-December 2020, Mexico outperformed MercadoLibre’s local market in Argentina in terms of items sold and the company has steadily increased its delivery network in the country, recently opening a fourth distribution center, a 60,000 square meter site in the northern state of Nuevo León.

At the end of last year, MercadoLibre was operating 210,000 square meters of storage space, mostly on the outskirts of Mexico’s populous capital.

The Argentine firm’s move comes at a time of high expectations for an economic recovery, as the COVID-19 vaccination has lit up encouraging prospects. According to International Monetary Fund (IMF), gross domestic product (GDP) of Mexico will increase by 5% in 2020. This estimate represented an increase from the previous one, when the agency forecast a 4.3% recovery.

“In Mexico, what we see, and have seen for some time, is a two-speed speed”said Gita Gopinath, director of the IMF’s Research Department.

Due to the health provisions of social distancing, thousands of users have chosen to consume through internet platforms, so companies that work in this area have seen their profits increase significantly.

According to the National Institute of Statistics and Geography (Inegi), the digital economy focuses on the contribution it generates “the use of information and communication technologies (ICT), by its own evolution or with the emergence of digital businesses (free messaging services and social networks) and the increasingly growing phenomenon of digital commerce (online buying and selling, which allows prices to drop and expand product catalogs) ”.

This category includes financial services, outsourcing of other services (transport, messaging, on-demand entertainment programs), free services that are paid only for advertising, others that do so with the sale of user information and free digital public goods.

So, as detailed by Inegi, E-commerce in Mexico has doubled its weight in gross domestic product (GDP) in six years, from 3% in 2013 to 6% in 2019.

With information from Reuters

KEEP READING: