A lot of ecommerce brands look to China to expand internationally while overlooking Latin America. But with the help of Latin America’s largest online retail platform Mercado Libre, brands can pivot to a less crowded market that offers an almost greenfield opportunity for growth.
In 2020, Latin America’s retail ecommerce sales grew by 36.7%. That’s higher than any other world region, including Asia-Pacific, which grew 26.4%, and North America, which grew 31.7%. Latin American countries also have some of the highest internet penetration rates in the world. Brazil’s is 68% and Mexico’s is 70%. Couple this with the fact that Mexico’s population is 127.6 million and Brazil’s is 212 million and the opportunities for growth here are undeniable.
In this article, we’ll go over the what, who, why, and how of Mercado Libre, so you can take full advantage of Latin America’s growing ecommerce market.
Mercado Libre is Latin America’s largest ecommerce platform. The name Mercado Libre translates literally to “free market.” And it’s easy to see why. The ecommerce platform has 63 million active users across 18 different countries. It’s one of the top 10 most visited ecommerce sites in the world and as of the first quarter of 2021, it had 299.5 million live listings. It’s no wonder the platform is valued at 77.49 billion USD.
Since its founding in 1999, Mercado Libre has expanded to integrate different ecommerce services, including a shipping service (Mercado Envios), a payment platform (Mercado Pago), a credit line (Mercado Crédito), and an advertising program (Mercado Publicado). Together, these create a full ecommerce experience for Latin American consumers.
So why sell on Mercado Libre? For one, Mercado Libre helps you establish brand awareness outside the US. Latin America is close enough that the low cost barrier to enter makes it an attractive opportunity for taking your brand into the global marketplace. Plus, you’ll benefit from more incremental sales and revenue. Mercado Libre customers overlap less with customers on other ecommerce platforms than, say, Amazon customers do with Walmart Marketplace customers. So you’ll get more from joining Mercado Libre as a seller.
Mercado Libre is open to US sellers through its cross-border Global Selling Program. With it, you can sell to customers in Mexico, Brazil, Chile, and Columbia from one account. But keep in mind, the Global Selling Program is invite only. That means you’ll need to apply to join. To apply, you’ll just need some basic information, including your business’s website URL and its monthly sales in USD.
Once your application is approved, you can start listing products on your Seller account with an excel spreadsheet template or an application programming interface (API). Just be careful not to list any restricted products. Mercado Libre provides a detailed list of restricted products by product category, where you’ll find that restrictions vary by country and fulfillment type.
While listing products is free, selling items comes with selling fees. When you make a sale, Mercado Libre takes a percentage cut that varies by product category and country. Each country also has different minimum listing prices. That means you can’t sell products below a certain price threshold. Try bundling smaller items into a larger package if you need to bump the price over the minimum listing price.
Mercado Libre customers have different payment options. One of the most popular is interest-free installment plans. Bear this in mind as you’ll be required to offer it. Other payment options include mobile Point of Sale (mPOS), digital wallet QR payments, prepaid cards, and credit.
What about different currencies? Fortunately, Mercado Libre has you covered. They allow you to set listing prices in USD and get paid in USD. The platform automatically converts your listings’ USD prices into your customers’ local currency. That way, you don’t have to worry about exchange rates and so on. Just process everything in USD from start to finish. You can withdraw your earnings every 2 weeks if they amount to at least $500. If not, you’ll have to wait until you reach this amount to withdraw. You can transfer payments to a Payoneer account or directly to your bank account.
In addition to taking care of currency conversions, Mercado Libre softens the language barrier for you with an automated translation tool. It lets you communicate with Spanish- and Portuguese-speaking customers in English by handling all the translation work behind the scenes. This is a great feature that takes some of the stress out of expanding into new countries and foreign markets.
When it comes to shipping your products to Latin America, you have two options:
First, you can take advantage of Mercado Envios Full, a comprehensive fulfillment service similar to Fulfillment by Amazon (FBA) and Walmart Fulfillment Services (WFS). It allows you to store your inventory in Mercado Libre warehouses and handles the entire logistics process, including picking, packaging, and shipping. What’s more, Mercado Envios Full is free with the avoidable exceptions of long-term storage and pickup stock fees.
Second, if you’d rather ship your products to customers directly, you can choose Mercado Envios Direct to consumers. It partners with international carriers DHL and MailAmericas. Just bear in mind that both carriers have different package size and weight restrictions. With this fulfillment option, your Seller account automatically generates a shipping label when an order is placed. Print the label and attach it to the order, which you’ll need to ship to DHL or MailAmericas within 3 business days. They’ll then deliver the product to the buyer within their own shipping time frames.
Now that you know how to sell on Mercado Libre, let’s go over how to be successful on the platform. Mercado Libre marketplace has a Seller Reputation System that measures your seller performance and quality along a color scale from red (low) to green (high). To stay in the green, you’ll need to reply to customers within 24 hours, minimize the number of quality complaints your products get, keep order cancellations under 3%, and handle shipments within 3 days.
If you perform well on Seller Reputation metrics, you’ll rank higher on the platform’s search engine results pages (SERPs) and you could save up to 60% in shipping costs. In fact, we’ve found Seller Reputation to be the number one driver of search engine optimization (SEO) on Mercado Libre. For example, we researched the keyword “bomber jacket” and found that the top result had fewer reviews and was twice as expensive as the other top five listings. What made the difference? The top listing’s seller had the highest Seller Reputation. So score high on your Seller Reputation if you really want to give your listings a boost.
Mercado Libre also offers pay-per-click (PPC) advertising to help you increase your sales. So far, the advertising tool is pretty simple, but it can help you attract new customers. Users will see your ads in search results and on product pages as sponsored ads.
Ultimately, success on Mercado Libre comes with experience. If you need help expanding into the Latin American ecommerce marketplace, Pattern can help. Our marketplace experts have helped brands successfully launch products online into Mexico and Brazil, for example. We’ve also specialized in shipping health and beauty products following the Brazilian Health Regulatory Agency ANIVISA’s strict import regulations. We know all the ins and outs of Latin American ecommerce.
Plus, our brand management helps brands grow revenue by an average of 30% in their first year. We can do this by analyzing which of your products would make a good fit for the Latin American market, providing estimates on annual revenue and potential duties, taxes, and non-tariff barriers, and giving you strategies on gaining market share in your product’s category. Learn more about Mercado Libre in our on-demand webinar or Request a demo of our ecommerce acceleration platform today.
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Walmart.com has announced important changes regarding the “Was Price” and promotions on the digital marketplace. These updates make it more important than ever to optimize your price through implementing proper strategies, controlling your distribution channels, and being intentional about your pricing strategy.
And, as with all digital marketplaces, succeeding on Walmart.com requires performing well in all areas of The Ecommerce Equation. Which means as you optimize your listings’ pricing, as well as traffic, conversions, and availability, your revenue increases.
Pattern has the resources ecommerce brands need to optimize on marketplaces for each factor in the ecommerce equation. We have the technology and strategists to help you improve your traffic, the brand dedication and passion to help you achieve greater conversions, connections to econtrol specialists who help brands regain marketplace control, and the data you need to be able to make smart forecasting decisions for better product availability.
Below, we’ll cover how Walmart.com’s recent platform changes impact ecommerce brands’ ability to drive traffic and conversions for their products and how to strategize around them to work best in your brand’s favor. But first, let’s go over the changes themselves.
Walmart.com’s newest changes reflect their mission to be the leader in low, everyday pricing. Therefore, Walmart’s customers come to the platform and expect low prices no matter what. Overall, these updates give consumers more visibility into the value they’re experiencing and hold brands more accountable in the pricing information they display.
Due to Walmart’s updates, in order for your products to qualify for a strikethrough and show “Reduced Price” or “Clearance” flags on Walmart.com, your product’s promotion must be at least 10% off the “Was Price.” (Note: “Reduced Price” is the most common type of badging. Your teams can request this badge when filling out promotion upload files.)
To specifically qualify for “Clearance,” the product needs to be discontinued and no longer replenished after selling through the remaining inventory.
Although “Rollback” is sometimes seen on site, it is a form of 1P-only badging.
Walmart now prohibits promotions lasting longer than 365 days.
Walmart’s “Was Price” was previously loosely defined and manually inputted on Walmart.com as an MSRP. Now, stricter rules are in place with regulations in the broader market to encourage enforcement and protect consumers.
The “Was Price” is now defined by these terms on Walmart:
Either the 90-day median price paid by customers for the item on Walmart.com (excluding special promotions like holiday campaigns, limited time deals, rollbacks, and clearance);
Or the median price offered by Walmart or Marketplace sellers for the item on Walmart.com for at least 28 out of the last 90 days (excluding special promotions like holiday campaigns, limited time deals, rollbacks, and clearance).
To protect your “Was Price” from price erosion, be intentional when planning promotions. To be most effective in your promotion, you’ll want to be able to give your customers a large enough discount to qualify for the slash-through and reduced price badging.
Without the right pricing strategy in place, your products are in danger of falling into deeper and deeper discounting as you chase the ability to achieve slash-throughs and proper badging. Without the slash-throughs and badging, you’ll lose the ability to easily communicate the increased value of your product and the traffic and conversions you’re trying to earn by running the promotion in the first place.
It’s important to keep your products’ prices as steady as possible to protect your promotion periods. As you prevent high-low price fluctuations, you’ll be able to use slash-through prices and promotional badges like “Reduced Price” and “Clearance” to your advantage in driving better traffic and conversions for your listings.
Without the ability to display badging, a promotion falls flat even if the price has been dropped. With steady pricing over time, you’ll be able to keep a stable “Was Price” and ultimately enjoy more rewarding promotional periods long-term.
It’s important to remember that the “Was Price” policy also applies to 1P and other 3P sellers representing your products on Walmart.com. Unfortunately, your other strategies will be ineffective if other sellers are breaking your MAP policy or playing the high-low price game. So, it’s more important than ever for brands to be conscious of their distribution channels and keep rogue and unauthorized sellers in check.
By allowing Pattern to be the authorized seller of your brand’s products and working with Vorys eControl law firm to eliminate rogue sellers, you can be confident in creating and executing a powerful selling strategy on Walmart.com and other digital marketplaces. As a 3P seller partner, Pattern is truly invested in our partners’ success, we’ll help you to create and execute a strategy that truly prioritizes the long-term performance of your products on digital marketplaces.
Contact us today to learn more about the changes on Walmart.com and how you can optimize your performance.
Pattern’s Accelerate22 event, the global ecommerce acceleration summit, provided a way for participants to learn from each other and leading experts about building a successful ecommerce presence. During our Brand Control and Compliance track, Leslie Hensell, co-founder of Riverbend Consulting and an Amazon expert, spoke to attendees about “Bezophobia”—the fear of losing brand control on Amazon. She talked about the importance of having a clear strategy to help you perform your best on the digital marketplace and the fact that achieving that is much harder to do in a 1P Amazon relationship.
With better control, which is more achievable in a 3P relationship, brands can let go of their fears and more richly enjoy the inherent benefits of selling on Amazon. If you think you could have a case of Bezophobia, read below for three important areas every brand should have control over when selling on Amazon.
Pricing is a huge concern for brands selling on Amazon—in most cases, Amazon prioritizes their customers’ happiness and providing a great experience for them on the platform over brands’ best interests. So, they want to offer their customers the best price available at all times.
This seems harmless enough until a rogue or unauthorized seller enters the ecommerce space. They’d like to capture your consumers’ interest as well, and often list your products at a lower price than you’d authorize. When Amazon notices the change, whether on its platform or on another, they drop your listing price to match.
Many brands seriously struggle to raise their prices after events like this occur, leading to what we call the Profitability Death Spiral. As your product prices fall, it’ll be harder and harder to raise them again, especially if you’re operating with Amazon as a 1P seller.
At Pattern, we know brands can’t achieve marketplace acceleration without brand control. So, we partner with econtrol firm VORYs to allow all brand partners to better understand their distribution channels and how to address control problems that ultimately lead to pricing issues.
The next key area of control brands should be focused on is their product selection on Amazon. Leslie spoke about this being a common issue for brands—as mentioned above, Amazon doesn’t see your brand as its top priority.
Many brands provide a certain assortment of their products to Amazon to sell, then find that their expectations don’t match Amazon’s efforts. Leslie has worked with many brands that have believed that Amazon will list, market, and move product the way a brand would if they were managing their Amazon presence themselves.
But, in a 1P relationship, it’s difficult to get true visibility into what’s really going on. If Amazon buys your products without putting the effort in to represent your product selection in the way you think, it can cause big, long-term issues that are very difficult for brands to reconcile.
In Leslie’s experience, this is a brand’s most important area to have control over on Amazon. Your ability to sell products is completely dependent on how you’re able to showcase those products through your content. And, in a 1P relationship, brands lose the ability to have the final say over how their products appear to consumers.
Leslie has seen many cases of brands’ sales dropping inexplicably, only for them to discover that their vendor has made significant changes to product detail pages and other marketing materials, such that they no longer reflect the brand.
Pattern understands how important your brand representation is on digital marketplaces like Amazon. So, when we agree to partner with brands, we provide a suite of creative services to help your products look their best, including a studio team for fully-optimized pictures and videos and an expert advertising team that knows how to write descriptions and copy that really help your products stand out among the competition.
If you’re able to get ahead and get in control of your Amazon strategy, especially in your pricing, selection, and marketing efforts, you have no need to fear the digital marketplace. As an Amazon expert and ecommerce accelerator, Pattern knows what it takes for brands to truly succeed, and is committed to helping all brands take charge of their strategy to achieve long-term success.
Set up a call to talk more about Amazon and ways Pattern can help you make the platform work better for you.