Mercado Libre Stock Plummets Amid Brazil eCommerce Rivalry

Shares of Mercado Libre experienced their most significant two-day decline since November, reportedly triggered by increased competition in Brazil’s eCommerce sector. Bloomberg reported that the eCommerce and payments firm's stock value decreased by 6.8% on Wednesday (Oct. 1), following a 6.6% drop on Tuesday (Sept. 30).

Competition Factors

According to the report, the decline was due to Amazon Brazil's announcement of waiving or reducing Fulfillment by Amazon fees for certain sellers during the holiday season, as well as Temu and Shein offering extremely low-priced goods in the region.

Mercado Libre, the largest eCommerce player in both Brazil and Latin America, is continuing its significant investment in the region and expanded its free shipping offer a few months back, the report stated.

Mercado Libre's Investments

Mercado Libre stated in an Aug. 4 earnings release that the expansion of its free shipping program in Brazil was aimed at easing the country’s move to online commerce and increasing the purchase frequency of shoppers on its platform. The company noted that the reduced threshold for free shipping led to a 34% increase year over year in items sold in June.

The company said in its earnings release that its commerce business continued to perform better than the overall market, driven by ongoing investments in free shipping, user experience, and assortment in Brazil, Argentina, and Mexico.

It was reported in April that Mercado Libre was planning to increase its investment in Brazil by 48%, from about $3.7 billion in 2024 to about $5.8 billion in 2025, with a focus on logistics, technology, and marketing, as well as increasing its staff in the country by 14,000 to reach 50,000 employees.

Its investment in Brazil followed its announcement that it would invest $3.4 billion in Mexico, which is its second-largest market after Brazil. The company did not reveal its plans for Argentina, where it was established more than 25 years ago.

On Sept. 22, it was reported that the company launched a new B2B unit in Argentina, Brazil, Chile, and Mexico, expanding its business beyond the consumer market it has traditionally served. According to the report, the company began testing this unit a year prior and now has over 4 million users enabled for wholesale purchases.