Mercado Livre announced in the early hours of Friday that it reduced the minimum price of eligible products for free shipping from $ 79 to $ 19, adopting a more aggressive commercial approach to growing competition from groups such as Shopee and Amazon in the e-commerce sector.
“Practically the whole site gets free shipping from now on,” said the company’s marketplace leader in Brazil, Fernando Yunes. The Free Market will absorb initiative costs, according to the executive, which has not provided estimates for new disbursements.
“It is a decision to keep the free market growing at a super attractive fee, bring more buyers to the Brazilian online, bring more buyers from online who are not in the free market to the free market and increase the frequency of purchases,” Yunes told journalists.
The executive said the onslaught was thought in the long run, betting on the attraction and loyalty of new consumers.
Asked about any short -term margin pressures, Yunes said he will have to “wait to see.”
According to the executive, the strategy of accelerating the migration of “offline” clients to “online” is necessary to maintain the company’s growth rate in Brazil, which in the first quarter was approximately 30% gross goods (GMV).
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One of the main competitors of the Free Market, Amazon offers free shipping from $ 79 to its customers, according to your site, and does not charge freight of eligible subscribers to your Amazon Prime service – a practice similar to that performed with Meli+customers, free market loyalty program.
Since late May, the free market has also applied a up to 40% reduction in shipping costs to sellers on its platform and another 17% in freight costs for new sellers, which was reinforced on Friday’s announcement.
Itaú BBA analysts said the largest discount on shipments aims at a product price range near which SEA Ltd Group Shopee, “seems to be gaining traction”.
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“Knowing how ‘paranoid’ the free market is about competition, this seems to be a calculated (and right) measure to improve competitiveness,” added analysts, led by Rodrigo Gastim, in a May 22 report.
