Shares of MercadoLibre Inc. are experiencing significant declines, marking their largest two-day drop since November. The stock fell by as much as 5.8% on Wednesday, reaching an intra-day low of $2222.52—the weakest level since early May—adding to a 6.6% drop on Tuesday.
Market analysts have identified rising competitive pressures in Brazil, MercadoLibre’s most crucial and fastest-growing market, as a primary factor behind the downturn. This renewed concern follows an announcement from Amazon Brazil indicating that it will eliminate all Fulfillment by Amazon (FBA) logistics fees for all sellers, including storage and last-mile delivery, for newly onboarded merchants. This strategic move effectively makes Amazon’s marketplace free through the peak holiday season, intensifying the competition in the e-commerce space.
Rodrigo Gastim, an analyst at Itau BBA, remarked on the seriousness of Amazon’s initiative, highlighting it as one of the company’s most aggressive strategies to gain market share in Brazil against both MercadoLibre and Shopee. The influx of Chinese e-commerce platforms, such as Temu and Shein—offering low-priced goods—further complicates the competitive landscape in the region.
Despite Amazon’s recent maneuvers, MercadoLibre remains a dominant player in the Latin American market. In the previous year, the company processed nearly $200 billion in payments and shipped a record 1.8 billion items across 18 countries. Brazil, in particular, is crucial to MercadoLibre’s operations, with over 100 million unique buyers reported in 2024 and a remarkable 69% increase in gross merchandise volume, adjusted for local currency.
In response to competitive pressures, MercadoLibre has also taken steps to bolster its appeal, recently expanding its free shipping offer to orders costing 20 reais (approximately $3.60) or more. The company’s logistics subsidiary, Mercado Envios, has a strong infrastructure, including 19 distribution centers and a last-mile fleet featuring over 2,000 electric vehicles, enabling 56% of packages to be delivered within one or two days.
Despite MercadoLibre’s established logistics advantages, analysts suggest that Amazon’s ongoing investments in the region could narrow the gap, potentially enhancing customer experience and reducing waiting times for buyers. As the competition escalates, both companies will likely continue to adopt aggressive strategies in an effort to capture a larger share of the Brazilian e-commerce market.
