#Part 1 – Introduction
Ricardo Kamaura, executive director of Cosin Consulting, interviewed on July 9, 2020 Leandro Bassoi, Mercado Livre VP of Logistics, they talked about behavior of the retail sector during the pandemic.
To put it in context, Leandro Bassoi tells about how Mercado Livre was born and how the company has been expanding since then. It has almost 21 years of history, presence in 18 countries in Latin America and the position of leader in all markets where it operates. A success story!
Besides the Marketplace, Mercado Livre created other business to fully serve customer and seller, such as Classifieds, Advertising, Paid Market, Shipping Market and Shops Market areas.
#Part 2 – Mercado Livre Logistics
“We started doing logistics very late, to be honest.”
The Logistics area at Mercado Livre started late. According to Bassoi, until the end of 2012, product receipt was handled directly between customer and seller. Now, this modality still exists, but the company also offers other options, such as cross docking, which is the collection at the seller’s house and, also, fulfillment, where Mercado Livre stores the seller’s stock.
#Part 3 – Pandemic and its impacts
“The issue of home office was very simple (…) we had more difficulty, and it took a little longer, to do this in logistics.”
Leandro Bassoi explains that they were already used to working at a distance, but that they had more difficulties in logistical issues and that is why they benchmarked with China and South Korea, replicating good practices in Brazil. They focused on compartmentalizing operations in cells of 5 to 8 people. That way, if there was a suspected case with Covid, they could isolate that work cell.
#Part 4 – Sales behavior during the pandemic
Leandro Bassoi compared sales during the pandemic with Black Friday sales, both due to the volume of sales and the rush of planning. The difference, according to him, is that on Black Friday they plan ahead and, during the pandemic, they had to do everything in a hurry. The success, according to Bassoi, came through 3 pillars: the preventive investment in the Distribution Center capacity, technology embedded in logistics and the occasional investment in new hires.
“Every stage of our logistics has technology behind it (…) when scaling with technology, it is much easier than without”.
Leandro Bassoi said that they grew by 120% in Mexico compared to the previous year and in Brazil they reached 60% growth – “The volume came in a brutal way”.
#Part 5 -The challenge of E-commerce infrastructure, regardless of the pandemic
Leandro Bassoi explained that Mercado Livre was born as a technology company and that the founders did not think about having to structure a logistics area, as they thought they would have partners who would do it better.
Relying on partners for logistics is problematic in several countries, from inefficiency in quality and speed of delivery, high cost and also because it did not allow for an increase in volume, as the decision depended on the capacity of the logistics partner.
Faced with this scenario, they made the decision to invest in the end-to-end logistics area, in the end, they found that they could be more efficient than the partners.
“We can be more efficient, faster and cheaper.”
#Part 6 – Operation centralization trend
About the internalizing the logistics operation to ensure better service, Leandro Bassoi mentions big names in online retailing that invest billions of dollars every year in expansion, such as Amazon and Ali Baba.
Bassoi says it is a trend to see logistics as a fundamental leg of the customer experience:
“Internalize control of the operation, internalize the definition of what the processes are, the definition of what the logic is, internalize the operation of technology systems behind this, if you can control this, you control the customer experience.”
#Part 7 – Social Aspect of the Mercado Livre
“Today in Brazil there are more than 300 thousand people who declare that they live exclusively by selling on Mercado Livre, and these people employ other people.”
In this context, the Mercado Livre contributes during the pandemic in two ways. in one hand, it manages to keep the wheel of commerce spinning, as it enables the continuity of sales. On the other hand, it facilitates people to stay more at home, behavior observed during the pandemic: at first there was a greater search for products such as masks and alcohol gel, after that, increased demand for items to improve the structure of the home, such as computer, camera, mouse and, finally, increased demand for sporting goods.
“We had 5 million new buyers in Latin America entering the platform during the pandemic.”
We thank Leandro Bassoi for dedicated time and for sharing with us all the experience of Mercado Livre in how logistics structure was fundamental to support all the increase in sales during the pandemic.