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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