Some interesting moments from the $MELI Q2 earnings call this morning. Mercado Libre was founded in 1999 and continues to operate one of the largest ecomm platforms across South America -->
They have been testing a new take rate structure across a few test countries. The goal is to better match fees with the economics of different categories, which will hopefully drive more merchants to want to list.
$MELI is raising take rates on categories where merchants have higher margins, and lowering them on categories where merchants have lower margins - but overall, they are trying to do this in a way that is neutral against the overall system.
Consolidated take rate should still continue to grow as more merchants adopt the service. The test has been successful in Colombia, Mexico, and Chile, but it is a moving target. They have not yet announced a launch date for this roll-out in Brazil.
In Q2, $MELI ofc saw diminished foot traffic as a result of the pandemic. This lead to a decrease in QR code usage. They are using some incentives and discounts. They have also been doing more biz dev and partnering with other companies (ex: PayPal and Western Union).
$MELI has been building out their own logistics network so that they can control transpo & fulfillment. MeliLogistics has helped with the surge the last few months bc it allows them to rely less on large transportation companies - they can engage more smaller last-mile operators
When asked abt a potential Correos strike, the $MELI team said they did not anticipate it to be long or severe. More importantly, they’ve been able to shift volume away from Correos over time (they are not unreliant on them, but they r better equipped than in previous strikes).
The $MELI team commented that their investment priorities remain relatively unchanged in response to COVID. But they have made some strategic changes: (1) they have accelerated the rollout of their own logistics rollout
(2) They have also redirected resources and focus away from slower categories over the next few quarters to faster ones like home goods, CPG.
On the fintech side, there is greater focus on the overall digital account. While there is slower adoption of in-store features, there is overall higher engagement of the platform. They still see in store stuff as tremendous opportunities in the mid to long term, though. $MELI
$MELI execs pointed out that they have been able to work with governments in helping them distribute a lot of COVID aid (especially in Brazil). This has generated a ramp-up in users’ receiving account balances, and has driven the focus on digital accounts.
Long term, $MELI sees this higher engagement of the digital wallets platform as a way to convert customers to ecomm. but they note that this is not an immediate goal.
$MELI said they intend to integrate media partners w Mercado Pago. they want to make a subscription hub 4 users that also drives incremental cust acq. But content is only one prong here; they want to work w all kinds of partners who will give discounts in order to acquire users.
$MELI discussed investing in cust acq during covid. “This is a unique opportunity with tremendous fast-forward in digital adoption throughout the region. This is not a time to focus on market inefficiencies. We want to be aggressive in capturing the opportunity.”
Some competitors have an omnichannel network of stores acting as fulfillment. When asked if $MELI views this a threat, they said “as consumers get more demanding, as we have seen in developed markets, home delivery beats pickups. We want to continue to deliver to your doorstep."
