Mercado Libre Strengthening Dealerships’ Digital Capabilities

Q: How has the professionalization of vehicle e-commerce advanced in recent years?

A: Sales professionalization has been happening for many years now at different stages. We have evolved from small lots to digital dealerships in the automotive market, including motorcycles, heavy vehicles, and motor-like machinery. In terms of sales process digitalization, there have been remarkable developments. Digital sales strategies have been on the table for 10 years but the pandemic and resulting lockdowns have accelerated the implementation of these strategies by five years.

Eight out of 10 people look for their next vehicle online but they still want the physical experience before completing the actual purchase. They need to see the vehicle, to test it, to feel it. We have accompanied dealerships in developing their digital strategies, their sales leads, the potential benefits, and how quickly they should respond, among other elements. For instance, users demand an answer within an hour and we have helped dealerships to reduce their response time by 45 percent through alternative means, such as WhatsApp. Taking all this into account, professionalization will need to continue as digitalization increasingly takes a prominent role in vehicle sales.

Q: What is the nature of Mercado Libre’s partnership with AMDA?

A: Mercado Libre’s goal is to democratize e-commerce. We have different sections for vehicles’ sales. The first one is, where every user can upload their listing for free or pay to get more exposure. There is also the professional or dealers’ section where most dealerships and brands participate. Our partnership with AMDA aims to make the transition to digital sales smoother for dealerships by combining AMDA’s expertise and extensive network regarding vehicle dealerships with our experience in e-commerce and digital strategies.

We are also working on a digital certification in partnership with AMDA. This certification will have six modules to help dealers understand how to build their digital strategy, digital marketing, how to make the best out of digital marketing, and Mercado Libre’s different ecosystems. This includes Mercado Pago, which has been adopted by Nissan and Peugeot, which allows customers to make a down payment within the platform. We also have Mercado Shops, which offers official brands within the marketplace, and Mercado Envíos, although this is not really applicable to some vehicles as the purchase is completed outside the platform.

Our next step is to create a similar partnership with ANPACT. Our partnerships are not limited exclusively to associations but also to professional services providers that can help dealerships to offer a more comprehensive approach.

Q: What relevant trends is Mercado Libre seeing on its platform as a result of the pandemic?

A: January to July 2020 saw a 7 percent contraction in the vehicle section, with April the worst month of all at the peak of the lockdown measures. From April onward, we have been seeing double-digit traffic growth per month, which means people have started to look for vehicles again. Mobility also has become a relevant factor for consumers. By this, I mean an increasing consumer interest in moving from one place to another safely, which means avoiding public transportation. Apart from seeing an increase in vehicle queries, we have also noticed an increasing interest in motorcycles. Following safety, the second reason for the rise in interest in motorcycles is that they have become a means to earn an additional income.

As for used vehicles, the ratio of queries between used and new vehicles before the pandemic was 2:1. Following the pandemic, the ratio is 3:1. This implies an increasing interest in used vehicles. There is no formal study available but we believe the price range for used vehicles is a better fit with the consumer’s budget. Sixty percent of the vehicles in our platform are from between 2016 and 2020 but there are also a variety of offers. As for motorcycles, the average price is MX$22,000 (US$1,002), which makes them an easier choice than buying a car priced between MX$180,000 and MX$200,000. (US$8,362-9,286).

Q: What role do aftermarket companies play within Mercado Libre’s marketplace?

A: Mercado Libre has always had a relevant role in the aftermarket. Our vehicle accessories section also includes spare parts. This is a really interesting opportunity for brands to have an extension of their business on the platform. We work hand-in-hand with different brands. Part of our mission is to strengthen this segment on the platform. It is not just a complementary segment; it can also be greater than selling vehicles.

Q: How does Mercado Pago support digital sales strategies?

A: We are working with BBVA to build an improved credit offering within the platform. Sixty percent of vehicles in the country are purchased via financing, which is set to grow given the market’s economic conditions. This project has been delayed from 3Q20 to 4Q20 but it is part of the complementary services that we want to offer, which can be fruitful for a bank. The platform could allow preliminary approval for vehicle financing.

On the other hand, Mercado Pago is a solution for brands to offer an additional payment method for down payments, for instance. This is not limited to online purchases.

Q: What lessons have you learned from the pandemic?

A: These past months have been exciting for us as we are redefining, creating, and innovating alongside brands and dealerships. As a sector, we have been rethinking how to make things different. This is fertile ground for creating new solutions.

 From April to July, we held 16 webinars with more than 4,500 participants. These were organized with AMDA, among other partners. Our digital certification was created after listening to the needs of sellers. In times of crisis, when you accompany your customers and become a true strategic partner, you become a solid leader that goes beyond sales and truly commits to the industry.

Q: How did the pandemic influence Mercado Libre’s strategies for the future?

A: Our goal is to continue being the No. 1 platform in the country when it comes to motor vehicles. In the new market landscape, our challenge remains how to become better strategic partners for our sellers, how to improve our product offering to potential consumers, and how to improve their experience. As we address these challenges, we create a virtuous cycle for the entire segment. We cannot expect the sales process, even within digital channels, to remain the same as before the pandemic. We are in turbo mode to accelerate the changes that we had planned for years ahead. Now, we are thinking about the next step we are going to take once those plans are completed. A digital strategy is not just another factor to consider for sales; it has become a really important element in how sales are conducted today

Mercado Libre is an Argentinian digital marketplace created in 1999. The company operates in 18 countries in Latin America and is already the region's e-commerce leader