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Amazon is expanding operations and services across Latin America. How will Mercado Libre respond?

One of the biggest winners of the coronavirus pandemic has been the e-commerce giant, Amazon. According to the financial data firm Facetus, consumer spending was up by 60% between May and July from the same time last year. With an increase in spending, Amazon has set eyes on expanding operations and services in the region outside the US, closest to its Seattle headquarters — Latin America.

In September 2020, Amazon announced plans to open its fifth and largest distribution center in Brazil. A few days later, the company stated it would create 2,000 jobs in Colombia, mainly in customer service. This comes as no surprise as it had previously promoted the creation of 1,000 jobs in the country. In Mexico, acknowledging the strong cash culture of the country, the company launched a payment option that makes it possible for customers to complete purchases with cash at participating convenience stores. Although this is great news for a region whose labor market has been badly hit by COVID, how will this affect the growth and future of the incumbent regional leader, Mercado Libre?

In an earlier post, we highlighted how Mercado Libre became the most valued company in Latin America in 2020. The Argentinian e-commerce platform has expanded payment and logistic services, and reported that it will open a tech and innovation center in Colombia, resulting in the creation of 200 IT jobs.

It will be interesting to see if the local incumbent will be able to compete with the international giant and on what terms.

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