Amazon challenges Mercado Libre in Argentina with low-cost international shipping

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The news: Amazon is offering $5 flat-rate international shipping to eligible addresses in Argentina, Aruba, The Bahamas, Cayman Islands, Ecuador, and Trinidad and Tobago. The offer is available across a wide range of products including beauty, toys and books, and PCs and accessories.

Why it matters: Amazon appears to be turning to the same low-cost shipping playbook it used to gain share in Brazil and Mexico—markets dominated by Mercado Libre.

  • Mercado Libre dominates the ecommerce market in Argentina; we expect it will account for 66.5% of the country’s online sales this year.

  • But competing with Mercado Libre on its home turf won’t be easy given Argentina’s various local and national regulations, and customs taxes that will automatically be calculated before shoppers complete their orders.

Analyst take: While Amazon is dipping its toes into the Argentine waters, it’s unlikely that it is going to dive all the way in anytime soon, said Matteo Ceurvels, principal analyst at EMARKETER.

“Amazon may be able to attract some shoppers in Argentina with flat-rate shipping, but it will have to invest a lot more time and energy to make inroads into a market where Mercado Libre already has a sophisticated retail flywheel in place,” he said.

If the past is prologue, it seems unlikely that Amazon will make the significant investments that are necessary to seriously compete with Mercado Libre.

  • For example, Amazon spent $2.93 billion (MXN 52.00 billion) between 2015 and 2023 in Mexico to develop machine learning and high-tech tools to reduce delivery times and improve logistics efficiency.

  • That’s a little more than half the $5.27 billion (MXN 93.45 billion) that Mercado Libre invested in Mexico between 2017 (the first year it reported its investments) and 2023, which it used to grow its logistics network, strengthen its Mercado Pago payment app, and expand its technology capabilities.

This year alone, Mercado Libre will invest a record-breaking $2.45 billion (MXN 43.45 billion) in Mexico.

*Link to complete article here on EMARKETER’s website.