Consultant Insight: LatAm e-commerce options grow with BigCommerce, Mercado Libre deal

The online e-commerce platform BigCommerce is expanding its reach into Latin America by partnering with e-tailer Mercado Libre, which has an estimated 24% share in total retail e-commerce sales in Latin America based on gross merchandise volume. The partnership should help both companies improve their cross-border capabilities. [caption id="attachment_69752" align="alignright" width="298"] Cathy Roberson, Cargo Facts Consulting senior consultant and Air Cargo World columnist[/caption] “Between shipping challenges, currency conversion, and language barriers, cross-border e-commerce can be incredibly challenging for retailers to navigate, especially small and mid-sized merchants, to capitalize on,” said BigCommerce Chief Commercial Officer Russell Klein in a statement. Indeed, in 2020, Mercado Libre noted that it planned to boost its cross-border sales. As part of this initiative, the company invested $500 million into its logistics network by adding warehousing, speeding up and subsidizing “free” deliveries and reducing dependence on outside carriers. The e-tailer also offers a payment platform. In terms of airlift, Mercado Libre has long been dependent primarily on the use of passenger airlines to move goods within and between Latin American countries, outside of a previous deal with Brazil-based Azul for capacity in the country. However, late in 2020 Mercado Libre invested about $35 million in dedicated aircraft in Brazil and Mexico, as reported by Cargo Facts . “The deal will allow us to reach more distant geographies in a shorter period of time,” Mercado Libre’s senior vice president of Mercado Envíos (Logistics and Supply Chain), Ariel Szarfsztejn, told publication El Financiero in November 2020. About 80% of all in-house stored goods are delivered within the first 48 hours through its fulfillment service in Brazil, compared to 89% in Mexico and 85% in Argentina, he said — nearly double the figures from 2019. As part of the BigCommerce and MercadoLibre partnership, BigCommerce sellers will transport goods to a Mercado Libre distribution facility within one or more of the 18 countries where they operate, including Argentina, Brazil, Mexico, Colombia, Chile, Venezuela and Peru. There are a few transportation options between the U.S. and the Latin American region that BigCommerce sellers have, such as cross-border e-commerce platform plugins such as Easyship, FlavorCloud and Global-e. These online platforms provide several options for international sellers, including transportation, customs and clearance costs, returns management, fulfillment, track and trace, and business intelligence tools. These cross-border e-commerce platforms typically include DHL, FedEx and UPS for international shipping, often at lower rates per the partnership agreement. Market competition The partnership comes at a time when BigCommerce is also expanding its platform fulfillment options within the U.S. by integrating Amazon’s Multi-Channel Fulfilment (MCF) service into its platform for its U.S. clients, giving them the same service options as users of the Fulfillment by Amazon (FBA) service. In addition, it recently expanded into the Netherlands, France and Italy after entering the U.K. market in 2018. Merchants will use the BigCommerce platform to manage their store in their local language and create a fully localized website experience for their shoppers with their local payment methods and currencies. As for Mercado Libre, the platform is facing increased competition within Latin America from local players as well as Amazon, whose market share in Latin America has doubled over the past five years to around 4.0%, according to some market estimates. According to consulting firms Americas Market Intelligence (AMI) and Euromonitor, Latin America is the second-fastest-growing market for e-commerce globally, behind only southeast Asia. In 2019, Latin America’s e-commerce grew 20%, outpacing GDP growth of only 0.8%. During the height of the COVID-19 pandemic in 2020, e-commerce grew at a slower pace of 8%, while GDP contracted 8.1%. AMI and Euromonitor forecast a 19.4% growth in e-commerce for this year with a 3.6% growth in GDP. International e-commerce is expected to return to 2019’s 17% of total Latin American e-commerce volumes in 2023, after dipping to 14% in 2020. Whether or not the partnership will be a serious threat to Amazon or even Alibaba’s online platforms remains to be seen. Still, it does provide an additional option for sellers and consumers. But, at the end of the day, the tightest supply chain will win the race.

Consultant Insight: LatAm e-commerce options grow with BigCommerce, Mercado Libre deal

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