mercadolibre presentation; stanford graduate school of business. march 2011
TRANSCRIPT
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MercadoLibre: the leading e-commerce ecosystem in Latin America
M E R C A D O L I B R E2
First Steps
Spring of 1999: idea to build an online marketplace for Latin America, while doing my Stanford MBA
Spring of 1999: drove visiting venture capitalist John Muse back to the airport, and pitched idea along the way.
June 1999: MercadoLibre is founded.
August 1999: first of our online auction services is launched in Argentina
MELI’s origins are tied to Stanford GSBM
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Early Challenges
Additional financing
Finding the right people : GSB provides the network
Quickly evolving competition
De Remate going head to head with MercadoLibre in 3 markets.
Local players such as Lokau in Brazil quickly expanding.
Imminent entrance of U.S.-based Yahoo! and eBay?
M E R C A D O L I B R E
MercadoLibre’s history
Source: Company
1999 2000 2001 2002 2004 2005 20062003
eBay acquired19.5% of MLfor iBazar Brazil
227% netrevenues growth—regional leadership
Break even. AcquiredDeRemate subs
Launched IPOUS$333mm
2007
Acquired LokauExpandedbusiness model
Acquired Tucarro.com and Tuinmueble.com
2008
What has happened since
Acquired the operations of DeRemate that it didn’t own
2009
Launched search advertising and web stores
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M E R C A D O L I B R E
GDP US$bn Pop mm GDP per
capita US$
Western Europe 16,452.1 500.1 $32,896.5
USA 15,157.3 313.2 $48,387.3
Japan 5,683.3 127.2 $44,682.3
Asia ex Japan ex China 5,478.2 2,310.2 $2,371.3
Latin America and Caribbean 5,014.5 572.2 $8,763.6
Middle East and Africa 3,522.4 1,223.7 $2,878.4
Central and Eastern Europe 3,513.2 317.1 $11,080.5
China 6,422.3 4,763.9 $1,348.1
0%
2%
4%
6%
8%
10%
(1,0)% 0,0% 1,0% 2,0% 3,0%
Population CAGR 2009–2012
GD
P C
AG
R 2
00
9-2
01
2
Latin America has one of the best combinations of actual GDP and population
size with expected growth rates
GDP and Population
Source: IDM
Population, 2011E
USWestern Europe
Central and Eastern Europe
Japan
Asia ex Japan and
China
Latin America
Middle East and Africa
China
GDP and Population
Source: IMF. Figures in table are 2011 estimates
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M E R C A D O L I B R E
Wirelines Wireless PCs Broadband Internet users
Regions Number CAGR % Pop Number CAGR % Pop Number CAGR % Pop Number CAGR % Pop Number CAGR % Pop
Latin America 87.6 (0.5)% 16.1% 393.5 6.1% 72.2% 150 11.2% 27.6% 33.3 20.1% 6.1% 158.9 20.3% 29.1%
Asia Pacific ex China ex Japan 184.6 3.2% 8.7% 1,073.5 12.1% 50.7% 229 13.6% 10.8% 46.5 17.3% 2.2% 297.1 15.0% 14.0%
China 239.9 (2.4)% 18.2% 769.4 8.9% 58.5% 265 10.8% 20.2% 104.4 15.4% 7.9% 344.5 11.8% 26.2%
Eastern and Central Europe 22.2 (4.2)% 23.9% 114.6 3.1% 123.3% 41 7.9% 43.7% 12.9 11.6% 13.9% 46.3 10.5% 49.8%
Western Europe 148.6 (5.9)% 31.5% 514.1 3.4% 108.8% 320 5.2% 67.7% 116.1 6.6% 24.6% 280.7 3.9% 59.4%
Japan 44.0 (9.9)% 34.5% 115.1 3.5% 90.3% 123 5.5% 96.6% 37.9 10.6% 29.7% 93.4 1.6% 73.2%
North America 137.5 (14.5)% 41.5% 301.5 5.3% 91.1% 325 2.6% 98.2% 96.2 2.9% 29.1% 250.1 1.2% 75.5%
Latin America is expected to post the highest internet users growth due to
improving infrastructure and low penetration base
Source: ITU, ICT Statistics
Global internet penetration per inhabitant %, 2009
Source: EIU databases, al numbers in millions, CAGR for estimates 2009-2012
Selected infrastructure statistics by region (sorted by internet users growth rates)
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Source: ITU, ICT Statistics
Global broadband penetration per inhabitant %, 2009
6%9% 9% 10% 11%
17%21% 22%
25% 26%30% 31% 32%
28% 34% 39% 41%49%
63%72%
78% 78% 80% 84%
M E R C A D O L I B R E
0%
5%
10%
15%
20%
25%
30%
35%
0% 5% 10% 15% 20% 25%
Internet buyers CAGR 2009–2012
Ret
ail
e-c
om
me
rce
volu
me
CA
GR
20
09-
20
12
…outpacing all other regions…
E-commerce growth
Current internet buyers, 2009E
Central and EasternEurope
Japan
LatinAmerica
US
USA
Asia Pacific ex-Japan
Source: IDM. Figures in table are 2009 estimates
WesternEurope
Asia Pacific ex Japan
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M E R C A D O L I B R E
Mexico
Colombia
Venezuela
Chile
Brazil
Ecuador
Peru
Uruguay
Panamá
Costa Rica
Dominican Republic
Argentina
Main Meli StatsMain Meli Stats
MercadoLibre covers almost all of Latin America
1ITU for countries where MercadoLibre has operations, as of 20092IDC, for all Latin American countries, 2009 estimates³Comscore, November 20104Comscore, One year average (Nov. 2009 – Nov. 2010)
Countries of operationCountries of operation
31.8 million unique visitors in Latin America³
1.7bn pages viewed per month on average4
11th largest global retail site, 1st Retail in LatAm
#1 Retail site in each of the markets
~50mm search page views /weekday
Main Region StatsMain Region Stats
Population covered: 499mm1
GDP covered: US$ 4,179bn1
Total retail market: US$477bn2
Total ecommerce retail market: US$16.3bn2
Total advertising market: US$33.4bn2
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Main Internet IndicatorsMain Internet Indicators
178 million internet users
Internet Penetration: 36%
Broadband subscriptions: 32 million
e-commerce over GDP: 0.39%
M E R C A D O L I B R E
Total unique visitors (000s) Reach
Total Internet audience 44,457 100.0% 1 Mercadolibre 12,914 29.0% 2 Lojas Americanas 10,415 23.4% 3 BuscaPe.com Inc 8,779 19.7% 4 UOL Shopping 6,808 15.3% 5 Netshoes.com.br 3,929 8.8% 6 Pontofrio 2,956 6.6% 7 Magazineluiza.com.br 2,795 6.3% 8 Extra.com.br 2,660 6.0% 9 Casasbahia.com.br 2,535 5.7% 10 Comprafacil.com.br 2,438 5.5%
Total unique visitors (000s) Reach
Total Internet audience 109,998 100.0% 1 MercadoLibre 31,760 28.9% 2 BuscaPe.com Inc. 10,756 9.8% 3 Lojas Americanas 10,237 9.3% 4 Amazon Sites 9,054 8.2% 5 Apple.com Worldwide Sites 6,963 6.3% 6 UOL Shopping 6,684 6.1% 7 Netshoes.com.br 3,860 3.5% 8 Wal-Mart 3,371 3.1% 9 Pontofrio.com.br 2,910 2.6% 10 MagazineLuiza.com.br 2,746 2.5%
Total unique visitors (000s) Reach
Total Internet audience 1,237,448 100.0% 1 eBay 259,866 21.0% 2 Amazon Sites 244,658 19.8% 3 Apple.com 119,801 9.7% 4 Alibaba.com Corporation 99,928 8.1% 5 Yahoo! Shopping 53,861 4.4% 6 Wal-Mart 43,788 3.5% 7 Hewlett Packard 43,487 3.5% 8 RAKUTEN.CO.JP 37,023 3.0% 9 Groupe PPR 35,315 2.9%
10 Otto Gruppe 34,833 2.8% 11 MercadoLibre 32,196 2.6%
MercadoLibre’s is the most visited e-commerce site in Latin America and #11
globally…
Global–Retail web sites audienceGlobal–Retail web sites audience
Brazil–Retail web sites audienceBrazil–Retail web sites audience
Latam–Retail web sites audienceLatam–Retail web sites audience
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Source: ComScore. All figures Q4’10 except global retail Q1’10
M E R C A D O L I B R E
… and one of the top internet destinations in the region
Latam–total internet audienceLatam–total internet audience
Brazil–total internet audienceBrazil–total internet audience
Total unique visitors (000s) Reach
Total Internet audience 109.998 100.0% 1 Microsoft Sites 105,683 96.1% 2 Google Sites 101,664 92.4% 3 Facebook.com 71,025 64.6% 4 Yahoo! Sites 58,032 52.8% 5 Terra – Telefonica 56,929 51.8% 6 Wikimedia foundation sites 46,617 42.4% 7 UOL 36,183 32.9% 8 MercadoLibre 31,760 28.9% 9 WordPress 28,372 25.8% 10 Organizacoes Globo 26,036 23.7%
Source: ComScore
Source: ComScore. All figures Q4’10.
Total unique visitors (000s) Reach
Total Internet audience 44,457 100.0% 1 Google Sites 40,015 90.0% 2 Microsoft Sites 39,452 88.7% 3 UOL 36,956 83.1% 4 Terra - Telefonica 36,102 81.2% 5 Organizacoes Globo 26,526 59.7% 6 iG Sites 23,213 52.2% 7 Yahoo! Sites 21,835 49.1% 8 Wikimedia Foundation Sites 15,297 34.4% 9 MercadoLibre 12,914 29.0% 10 Grupo Abril 12,714 28.6%
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M E R C A D O L I B R E
Four business units that create a powerful ecosystem
MercadoClics• Search
advertising• Display
advertising
MercadoShops• SaaS web
stores
MercadoLibre• Transactional
marketplace• Classifieds
marketplace• Search results
positioning
MercadoPago• Payments
processing• Consumer finance
Marketplaces
Payments
Webstores
Advertising
On
pla
tfo
rm O
ff p
latf
orm
On platform
Off platform
Both on and off platform
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M E R C A D O L I B R E
Marketplace: enabling buyers and sellers to transact
Key Elements of Value
Proposition
Depth of selection available Most affordable prices Fluidity of user experience
Business Characteristics
96% fixed price (4% auction) 75% new items Strength in both B2C and C2C segments
Key Initiatives Expand into new product categories Move towards more back-ended pricing Focus on continuously improving buyer experience
Revenue Sources
Transactional platform Classifieds / Listing Search result positioning
Size and Growth 52.9mm registered users (34% 5-yr CAGR) US$3.4bn GMV (41% 5-yr CAGR) during 2010 ~50mm search page views /weekday
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M E R C A D O L I B R E
3.406
2.751
2.079
1.512
55 164 299608
1.075
2002 2003 2004 2005 2006 2007 2008 2009 2010
GMVe (US$mm)
CAGR 2002 – 2010: 67,4%
29,5
21,117,5
1,43,1 5,1 8,4
13,8
39,2
2002 2003 2004 2005 2006 2007 2008 2009 2010
Successful items sold (mm)
CAGR 2002 – 2020: 52.1%
MercadoLibre’s key metrics –Marketplace
Source: company filings
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51,8
34,1
23,1
8,3 13,6 11,4 14,9 18,0
84,4
2002 2003 2004 2005 2006 2007 2008 2009 2010
New Paid Listings (mm)
CAGR 2002 – 2010: 33.6%
52,9
42,6
33,8
4,0 6,512,2
18,2
24,9
2003 2004 2005 2006 2007 2008 2009 2010
Registered Users (mm)
CAGR 2003 – 2010: 44,6%
M E R C A D O L I B R E13
Key Elements of Value
Proposition
Security of on-line payments
Fluidity of user experience / ease of integration
Low cost to merchants due to scale
Business Characteristics
Mainly on platform (today); recently launched off platform payments in Argentina and Brazil
55% financed payments
Average processed transaction of US$98
Key Initiatives
Increase penetration in marketplace (on platform)
Merchant services: enable third party payments (off platform)
Expand consumer credit offering
Revenue Sources
Off platform payment processing
Financing made available for both on and off platform purchases
Size and Growth
US$697.5mm TPV (20% of GMV, 79% 5yr-CAGR) in 2010
6.7mm payments processed during 2010
Over 1,200 off platform merchants
Payments: becoming an online payment standardM
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MercadoLibre’s key metrics –Payments
Source: Company filings
6,7
0,30,8 1,3
1,9
3,1
0,0
1,0
2,0
3,0
4,0
5,0
6,0
7,0
8,0
2005 2006 2007 2008 2009 2010
0%2%4%6%8%10%12%14%16%18%
CAGR 2005-2010: 82.4%
Number of transactions/successful items sold
697,5
38,5 89,0 158,0
255,9
382,5
0
100
200
300400
500
600
700
800
2005 2006 2007 2008 2009 2010
50
70
90
110
130
150CAGR 2005-2010: 78.5%
2 TPV/Number of transactions
Average ticket paid with MP2 US$
Number of payment transactions (mm) TPV (US$bn)
# transactions (mm) TPV (US$bn)
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20%
6%8%
10%12%
14%
2005 2006 2007 2008 2009 2010
MercadoPago penetration (TPV/GMVe)
85%
27%
39%45%
50%
61%
2005 2006 2007 2008 2009 2010
Adoption3
3 Share of Live Listing at the end of the period in MP countries
M E R C A D O L I B R E15
MercadoClics Key Characteristics
CPC search platform similar to AdWords and sale of display ads
Offers buyers access to inventory from branded retailers that complement
listings on platform
Offers advertisers >32mm unique monthly visitors and their purchase intent
Marks a focus on search advertising over display while capturing share of
wallet of large retailers
Starting from a small base showing very rapid growth: > 11,000 advertisers /
month, 19% QoQ
713mm Ads / month, 11% QoQ
>30mm ad impressions / quarter, 13% QoQ
Average CPC at $0.11
MercadoClics and MercadoShops: completing the ecosystemM
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MercadoShops Key Characteristics
Most customers are SMBs looking to launch their own online sales channel
MercadoShops has fixed pricing per monthly usage that gets credited back in
marketplace fees
Monetization mainly through MercadoPago
Deeply integrated with MercadoPago, Marketplace and MercadoClics
Low cost SaaS web-stores: average cost of premium shop USD30/month
Over 5,000 active shops already after official launch in H2’10
M E R C A D O L I B R E
Robust Financial Performance
56,0
2,4 1,1 9,7
18,8
33,2
0
10
20
30
40
50
60
2005 2006 2007 2008 2009 2010
0%
5%
10%
15%
20%
25%
30%
Margin
Source: Company filings
Gross Profit
EBITDA Net income
Net income (US$mm)
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CAGR 2005-2010: 88.5%
170,2
22,140,0
66,2
109,8
137,2
020406080
100120140160180
2005 2006 2007 2008 2009 2010
70%
74%
78%
82%
86%
MarginGross Profit (US$mm)
CAGR 2005-2010: 50.4%
79,5
2,4 7,4
23,2
40,9
59,9
0
10
20
30
40
50
60
70
80
2005 2006 2007 2008 2009 2010
0%
10%
20%
30%
40%
MarginEBITDA (US$mm)
CAGR 2005-2010: 101.6%
Net Revenues
216,7
28,252,1
85,1
137,0
172,8
0
50
100
150
200
250
2005 2006 2007 2008 2009 2010
Net Revenues (US$mm)
CAGR 2005-2010: 50.3%