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Sunday, September 19, 2021

Mercadolibre (MELI), a digital footprint more than just Latin America (LATAM)

I was wondering about the reach of some of the continent specific e-commerce platforms. For example, Mercado Libre (ticker: MELI) in Latin America, and Sea limited (ticker: SE) in Asia and their effect on cross border commerce. I did a tree map on Global-E few days ago (Included at the end of the article as supplemental material) which show cases it strengths, on how it is making cross border commerce easy. Mercado Libre is huge in South America. It also has national websites catering to specific countries such as mercadolibre.com.pe for Peru and mercadolibre.com.ni for Nicaragua. It has done an excellent job of 'personalizing' the websites to the countries they cater.

One way to look at extent and reach of a website is to look at server traffic and countries of origination to those sites. I obtained data from Cloudflare to see where the visitors to Mercado Libre are coming from. This gives a good indication of the visitors to the site and a proxy of its reach. 

Method: I obtained the domains for Mercado Libre and its country specific website links. Then using this information obtained the website statistics from Cloudflare.  Cloudflare is a web infrastructure and website security company that provides content delivery network and DDoS mitigation services. The data was limited to last 30 days and provided top 10 locations for visitors to the respective sites. I then cross tabulated data for all of the country specific domains to see where are people visiting from on Mercado Libre's website. Given this was a multivariable data, it is represented as network map which shows the connections in entirety. The figure is shown below.

Figure 1: Country of origin of visitors to Mercado Libre's websites

Results

  1. Blue nodes are country specific websites for Mercado Libre, the key for the countries are Argentina (.ar), Bolivia (.bo), Brasil (.br), Chile (.ch), Colombia (.co), Costa Rica (.cr), Dominicana (.do), Ecuador (.ec), Guatemala (.gt), Honduras (.hn), México (.mx), Nicaragua (.ni), Panamá (pa), Paraguay (py), Perú (.pe), Salvador(.sv),Uruguay (.uy) and Venezuela (.ve) (arrow #1)
  2. The location country of the visitors are nodes colored with gradient green to red and sized. Thus the visitors from the country with highest frequency will be represented by largest nodes that are green while those that are not as frquent will by small and red. For example, in the figure Brazil, Argentina and United States are the largest nodes (most visitors, see dotted shape arrow #2) while Japan and HK (e.g. #3 arrow ) are smallest.
  3. The distance of the node to the domains is based on the frequency of visitors, thus if the nodes are closer to the country node, it means that the visitors from that country were most frequent. For example the Chile node is closest to .cl since most visitors to .cl were from Chile (see arrow #4)

Discussion

Following are my personal observations

  1. That most visitors to Mercado Libre's websites are from Brazil and Argentina and respective LATAM countries is expected, what was not expected there was also considerable website traffic from United States,  Europe (Netherlands, France, UK). This tells me that the MELI footprint extends far beyond LATAM and that visitors to the site are coming from outside of South America as well.
  2. There were some interesting findings as well, there we significantly higher number of visitors from Netherlands and France to Mercado Libres Nicaragua, Honduras and Salvador websites.
  3. There were also visitors from Asian countries like Japan, South Korea, Hong Kong albeit is much lower frequency.

This analysis shows that the visitors to Mercado Libre are more than LATAM countries and the digital foot print extends to US, UK, Europe and even Asia. The analysis has some limitation though for example, the look back period is only 30 days, there could be other patterns is the look back period was extended further. Cloudflare's data only allows for a 7 or 30 day look back. The data is limited to only top 10 countries. Visitors from a country may not mean customers, we do not know the intention or the deliberation of the visitors. While it is possible that some one may accidentally end up on their website, the proportion of those would be fairly small.  Additionally, with the advent of usage of VPN services, the origin of visitors could be spoofed but again this may be expected to be a minuscule proportion and no way to get around this. 

Conclusions: Mercado Libre, Inc. is an Argentine company headquartered in Buenos Aires,  that operates online marketplaces dedicated to e-commerce and online auctions, including mercadolibre.com.  The company operates in South America and has has operations in Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Mexico, Spain, Ecuador, Guatemala, Honduras, Peru, Panama, Uruguay, and Venezuela. Thought its operations are seemigly limited to South America, its digital foot print extends well beyond its borders.

Disclaimer: I own shares of Mercado Libre (MELI) and am invested in the company. The data was obtained from public sources.

Addendum:

Figure 2. Global-E, GLBE a cross boundary commerce platform