It is All About Traffic and ExposureSat, 09/01/2018 - 12:03
Q: How has Mercado Libre grown its position in Mexico and what new projects have you started here?
A: We have been the market leaders in Mexico since 2017 with growth rates of 40 percent year-on-year in terms of clients, moving to 2.2 million announcements posted during 2017. The used-vehicle market has presented a great opportunity for Mercado Libre to grow its position, especially now that new-vehicle sales are contracting. That being said, in the last year we have grown our collaboration with distribution groups so dealerships can post their new-vehicle offering on our platform. Today, 50 percent of the publications on Mercado Libre are uploaded by private users and the rest by dealerships and multi-brand distributors in both the new and used-vehicle segments. The latter remains our main offering but already new vehicles represent 5 percent of our posts.
Q: Why should distributors choose to upload their offering to Mercado Libre’s platform?
A: It is all about traffic and exposure. Clients used to visit eight dealerships on average before purchasing their vehicle. Now, that number has narrowed to two. Dealerships no longer receive as many people as they used to, which means they need to find new channels to reach their customers. Today, when clients start their search process, their first point of contact with the available car offering is online. Interest in purchasing a vehicle is still there but companies need to understand that the clients’ mindset has changed. Mercado Libre’s Motors Classifieds division alone generates 20 million visits per month from at least 7 million unique users. In comparison, a dealership’s website receives approximately 20,000 visits per month. Through Mercado Libre, clients can search their preferred vehicle option from our entire catalogue based on their price range, instead of visiting several websites from different dealerships to compare models and prices.
Q: How has Mercado Libre worked to build confidence among clients that are still reluctant to participate in the online business?
A: In June 2018, we evolved from just generating leads to becoming an active participant in the sales process. Once clients find the car they are looking for and thanks to Mercado Pago, they can put that model aside and reserve it with a down payment depending on the cost of the vehicle. We saw this was a global trend among digital marketplaces around the world and we decided to be the first to implement it in Latin America.
Part of the reason why people are still reluctant to reserve a vehicle online is because of the security issues in the payment process, particularly in smaller cities. By implementing Mercado Pago, we give much more certainty to the process since clients do not have to rely on monetary transactions outside of the platform. The money is held by Mercado Libre until the sale is completed and any party can back out at any moment providing the buyer with a full refund.
Q: What is Mercado Libre’s position in the auto parts segment and what challenges do you see for this segment regarding digitalization?
A: In this segment, Mercado Libre manages the entire sales process from search and payment through Mercado Pago, to delivery through Mercado Envíos and today, auto parts represent 10 percent of all sales transactions on Mercado Libre. The platform has over 5 million active auto parts posts and most of our clients are vehicle owners, although there is a small percentage of specialists and mechanics that use the platform.
We have established relationships with several auto parts manufacturers and most have a micro website hosted on our platform. We already have over 100 of these “official stores” on Mercado Libre dealing with tires and other spare parts. The challenge in this segment has been to help both manufacturers and end clients understand the benefit of purchasing these types of products online. There is no retailer or distributor that receives 20 million visits per month. Similarly, there is no store that has 5 million different part numbers in stock.