🛒 The eBay of South America

Today’s post breaks down how Marcos Galperin pioneered e-commerce in South America and grew his company to $14.5B in annual revenue!

Read time: 5 minutes

Good morning! It's Thursday, March 28th. Today’s post breaks down how Marcos Galperin pioneered e-commerce in South America and grew his company to $14.5B in annual revenue!


The eBay of South America

You're probably not very familiar with MercadoLibre, but in South America, it's a dominant fintech and e-commerce giant. 

MercadoLibre was the first Latin American tech company to be listed on the NASDAQ in 2007. If you invested $10K when MercadoLibre went public, your shares would be worth $529K today! 

Let's break down the business and how it brought massive innovations to an entire continent. 

So, What's the Business?

MercadoLibre was created to become Latin America's eBay and was uniquely built to overcome local challenges and capitalize on regional buying powers. So, it's no surprise that its services initially mimicked eBay's online auction style. 

However, MercadoLibre offers a greater variety of services than eBay, and that's because they had to in the early days. When the company was founded in 1999, only 2.7% of Latin Americans owned a computer with internet access. So, MercadoLibre had to fully facilitate the use of its online marketplace. 

The Core Business Model: 

  • MercadoLibre Marketplace: Today, its e-commerce platform looks and operates more like Amazon, letting consumers purchase a wide array of goods from over 10 million sellers

  • MercadoEnvios: Its logistics solutions give sellers easy access to third-party carriers and offer warehousing and fulfillment services. 

  • MercadoPago: A digital payment system for its online marketplace that vendors can also purchase for their own websites and physical stores. 

  • MercadoCredito: MercadoLibre offers lines of credit to merchants and buyers on and off its platform. 

Each of those services comes with a variety of marketplace, credit interest, and shipping fees, providing hefty revenue streams from all across South America. Take a look at MercadoLibre's revenue by country in 2023: 

  • Brazil: $7.6B

  • Argentina: $3.2B

  • Mexico: $3B

  • Other: $653M

Last year, MercadoLibre generated $14.5B in total revenue, a 37% increase from the previous year!

How They Won: Bringing a Proven Concept in a New Market

MercadoLibre founder Marcos Galperin is from Argentina, and his family owns the renowned leather company Sadesa. In 1999, Galperin graduated from Stanford Business School, but not before securing funding for his startup idea. 

Galperin had forged a strong connection with a Stanford professor known for attracting business celebrities to his class. When John Muse, the founder of HM Capital Partners, visited the class, Galperin was selected to chauffeur him back to his private jet. 

The professor set that drive up for Galperin to pitch his startup to Muse. While online marketplaces like eBay were soaring in North America, there was an absence of a similar player in Latin America. 

The drive was longer than expected, with Galperin taking wrong turns to buy himself an extra twenty minutes. However, it worked, and Muse became the first investor in MercadoLibre. That led to a $7.6M seed round from Muse, JPMorgan, and the Flatiron Fund. 

Galperin and his first investors all knew that internet penetration was low in the continent and that online buying was practically non-existent. But Galperin argued it was only a matter of time for Latin America to modernize, and broader internet usage would be an inevitable consequence. 

He was right, and when MercadoLibre launched, there was an open playing field without a meaningful competitor in sight. By partnering with internet providers, creating online payment systems, and building fulfillment center networks, Galperin fast-tracked Latin America into the modern era of e-commerce.  

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