MercadoLibre expects revenues to triple in 2004

Argentine auction site MercadoLibre expects transactions volume to triple in 2004 to about US$810mn, up from the estimated figure of US$270mn for this year, as the company moves through a period of "hyper-growth," MercadoLibre general manager Osvaldo Giménez told BNamericas. The estimates are based on the experiences of US auction site e-Bay, which owns 19.5% of MercadoLibre, and saw exponential growth in other markets as Internet penetration increased and users became more sophisticated, two trends now spreading across the Latin America region, Gimenez explained. Brazil is MercadoLibre's most important market, accounting for about 60% of total transactions, followed by Argentina with 25%, Mexico about 15% and the rest of the countries, Chile, Colombia, Ecuador, Uruguay and Venezuela making up the difference. Revenues should grow slightly faster than transaction volume, as MercadoLibre recently started charging its 5% commission on transactions in countries where it had until now been offering the service for free. The company also charges for placement within the portal, he said, without disclosing overall revenue figures. The company recently started offering financial services to settle transactions through its web site, which could boost revenues over the medium-term, he said. The move was led by MercadoLibre's customers, which have been asking for a financial solution, Gimenez said, adding that he also expects it to attract new users that have not yet bought or sold online. The option for small companies selling through the portal to allow customers to pay in installments should also help boost sales, he said. MercadoLibre plans to offer payment services using checks, credit cards or "Pago Fácil" (Easy Pay). When a transaction is completed, the buyer's money will be held in escrow by the payment service, MercadoPago, until the products are received. MercadoPago will charge a commission of 3.99% for cash deals and 9.99%, for credit card or check deals. The payment solution will be rolled out across the company's operations in Latin America, he said.