Daniel Wu of Bristlemoon Capital argues Mercado Libre survived the dot-com bust by focusing on organic growth rather than burning capital, then listing in 2007.
Mercado Libre holds a mid-to-high 20% share of Latin American e-commerce, and Wu sees Shopee's Brazilian push as the key threat.
Wu flags Mercado Crédito's credit card growth as risky, with non-performing loans near 28%, and says management prioritises risk control over growth.
Mercado Libre Keeps Reinvesting to Defend Latin America's E-commerce Lead
Mercado Libre has become Latin America's leading e-commerce and fintech platform by bringing proven models to the region and executing better than rivals. The next stage rests on adding services such as advertising and credit while holding off Shopee in Brazil. Reinvestment funds that defence, and credit quality is the main risk.
Takeaways
Mercado Libre dominates Latin American e-commerce at scale. Revenue reached nearly $21bn in 2024, with commerce just under 60% of it. The marketplace handled $51bn of GMV. Wu estimates a mid to high 20% regional share, over 80% in Argentina and about 40% in Brazil.
Services, not core fees, drive take-rate growth. Wu says the rise in take rate has come from value-added services. Advertising is only about 2% of GMV and he sees room for 3% to 5%. The Meli Plus loyalty programme, relaunched in late 2023, is still early.
Shopee is the main threat in Brazil. Shopee entered Brazil in 2019, reportedly passed Mercado Libre on monthly active users in 2022, and turned EBITDA positive there in the third quarter of 2024. Temu is weaker, since cross-border players struggle against local ones.
Mercado Libre answered Shopee by cutting shipping thresholds. In June 2025 it cut its free shipping threshold in Brazil from 79 to 19 reais. Wu reads the move as a reinvestment decision and a page out of Amazon's playbook.
Credit has grown fast but carries real risk. The Mercado Crédito portfolio grew from $480m at the end of 2020 to $9.3bn, with credit cards at $4bn. Non-performing loans sit around 28%. Management prioritises risk control over growth.
Brazilian card economics squeeze margins. Interest-free installments and a 30-day settlement cycle make cards a lower-margin product. Marketplace data underpins underwriting, and more balance-sheet exposure to card receivables partly explains a widening net spread, Wu thinks.
Reinvestment and reinvention are the lesson. Wu says the company won by bringing proven models to the region and executing better than rivals. Galperin is stepping back after 26 years to become Executive Chairman, with Ariel Szarfsztejn succeeding him as CEO.
How Mercado Libre was built
In 1999 Marcos Galperin and his co-founders start an eBay-style auction marketplace in a Buenos Aires garage.
The founders favour organic growth over burning capital, which lets the company survive the dot-com bust.
Mercado Pago launches in 2003 to remove payment friction.
The company moves to fixed-price sales early and lists in 2007.
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On this episode 2
Show 1
Mercado Envíos launches in 2013 to remove shipping friction.