Case Study

MercadoLibreRebeca Dallal

MercadoLibre1

“Our mission is to democratize commerce.”

– Marcos GalperinMercadoLibre CEI

History

MercadoLibre was established by Marcos Galperín in 1999. While still a student in business school at Stanford, Galperín, had the opportunity to present his project to John Muse, got him interested and provided funding from Hicks Muse Tate and Furs in addition to JPMorgan Partners, Flatiron Partners, Goldman Sachs, GE Capital and Banco Santander Central Hispano. MercadoLibre was launched in Argentina and after a couple of years started doing partnerships and acquisitions as it grew and began services in other Latam countries.In 2005 MercadoLibre broke even for the firs time and in 2007 it went public and was the first technology IPO and showed quick growth.At the beginning it had only 4 employees, and has since grown to become a true online giant and the leading platform for buying and selling products across the Latam region. Today MercadoLibre is the eight worldwide online retailer with presence in 15 countries and over 1,500 employees. There are 62 million individual users registered on its systems and it processes

traffic equal to 2 million site requests per minute, with up to 4 million during peak times (such as Christmas).In the recent years MercadoLibre has expanded the services offered in order to keep up with changing markets and technology, as well as to expand its portfolio.

Solutions:• MercadoLibre Marketplace - a fully-

automated, topically-arranged and user-friendly online commerce service

• MercadoPago - an integrated online payments solution designed to facilitate transactions both on and off the MercadoLibre Marketplace by providing a mechanism that allows our users to securely, easily and promptly send, receive and finance payments online

• MercadoLibre Advertising - a cost efficient and automated platform that enables advertisers to acquire traffic through advertisements placed on our platform. Advertisers purchase, on a cost per click basis, advertising space that appears around product search results for specific categories and other pages. These advertising placements are clearly differentiated from product search results and direct traffic both to and from our platform depending on the advertiser. With millions of visitors to the site, MercadoClic delivers rapid returns on investment for advertisers.

• MercadoShops - users can set-up, manage and promote their own on-line webstores. These webstores are hosted by MercadoLibre and

offer integration with the other marketplace, payments and advertising services we offer. Users can choose from a basic, free webstore or pay monthly subscriptions for enhanced functionality and value added services on their stores.which is a platform that allows users to create new e-commerce sites quickly, at no cost. Companies can customize their sites based on their own brands and use free tools to administer sales, stock and transaction status. There’s also a feature that supports payments in 12 interest-free installments.

• Mercado Classified - which helps users earn more money from their websites by becoming Mercadolibre partners. Partners earn money for referring traffic to the Mercadolibre site and for each new sale generated through this activity

• MercadoShops - on-line webstores solution. Through MercadoShops, users can set-up, manage and promote their own on-line webstores. These webstores are hosted by MercadoLibre and offer integration with the

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Industry: InternetGoal: Be the leading eCommerce ecosystem in Latin AmericaProduct: Marketplace

marketplace, payments and advertising services we offer. Users can choose from a basic, free webstore or pay monthly subscriptions for enhanced functionality and value added services on their webstores.

• MercadoEnvíos - Shipping solution in Brazil and Argentina. Through this solution, we offer cost efficient integration with existing logistics and shipping carriers to sellers on our platforms. Sellers opting into the program are able to offer a uniform and seamlessly integrated shipping experience to their buyers.

MercadoLibre began as a used-stuff action site, now 75% of sales are new products. The platform is strong in C2C business, there is an important amount of people who make a living by selling their products in Mercadolibre.Another interesting service provided by MercadoLibre is free listings, or free announcements (which makes sense when users are trying to sell something), and they can be upgraded to paid listings, which offer greater visibility. Free listings were implemented because there were millions of new users, and making them free eliminated barriers. Growth was amazing, the Gross Merchandise Volume went from 5 million in 2002 to 3.4 billion in 2010, this means it grew 60 times.The solutions provided by MercadoLibre have been strategic moves to increase the number of users, as well as the number of transactions.MercadoPago was at first only to be used in MercadoLibre and paid escrow service, now its free and has rapid growth outside the platform. At first it was like PayPal, it was optional and now its compulsory that every seller offers this payment option. In 2011 30% trade actions were done this way. Other payment options caused noise because of the need of customer service, this greatly reduced this problem.

MercadoClics works in a similar way to Google’s Adwords. Small and medium size businesses were doing all right before this, but bigger retailers needed a better a way for buyers to find their products. Now, small and large retailers are in one place. There are over 13 thousand advertisements.MercadoShops had over 7 thousand active websites by 2013 and what it does for eCommerce is that it integrates with Mercadolibre, MercadoPago and MercadoClics and offers a full integrated ecosystem. in 2010 it generated $220 million USD, $56 million USD net income. This service has given back dividends to shareholders.All these strategies were implemented to overcome barriers and increase the number of people who join MercadoLibre. Another thing done in order to achieve this is regarding data given by people, if they would only have to fill-in their data once, it eliminates barriers and increases probabilities people will buy.The use of data is critical, so MercadoLibre makes sure it offers a good level of protection and safety, and do not sell it.Although MercadoLibre is present in most Latin-American countries, there is no commerce across borders because there is no common framework, financial or commercial agreement, so payment becomes a problem, it is hard to transfer money between countries. Customs and duties are also complicated and, up to the present, there is no solution that makes cross-border commerce viable.

Goals:• Increase Gross Merchandise Volume.

• Increase the number of users.

• Increase income by adding services, such as logistics.

Mergers and Acquisitions• iBazar

• Lokau

• DeRemate

• CMG

• Autoplaza

• NeosurIn September 2001, MercadoLibre entered into a strategic alliance with eBay Inc., or eBay, which became one of their stockholders and started

working with them to better serve the Latin American e-commerce community. As part of this strategic alliance, MercadoLibre acquired eBay’s Brazilian subsidiary at the time, iBazar, and eBay agreed not to compete with MercadoLibre in the region during the term of the agreement. This agreement also provided them with access to certain know-how and experience, which accelerated aspects of MercadoLibre’s development, which ended on September 24, 2006. Even though eBay is one of MercadoLibre’s stockholders, since the termination of this agreement, there are no contractual restrictions preventing eBay from becoming one of MercadoLibre competitors.In November 2002, MercadoLibre acquired certain key strategic assets of Lokau.com , a competing Brazilian online commerce platform and we incorporated all registered users of Lokau.com into

MercadoLibre’s platform.In November 2005, MercadoLibre acquired certain operations of a regional competitor in e-commerce, DeRemate.com Inc., or DeRemate, including all of its operations and the majority of the shares of capital stock of its subsidiaries in Brazil, Colombia, Ecuador, Mexico, Peru, Uruguay and Venezuela for an aggregate purchase price of $12.1 million, net of cash acquired. This acquisition increased MercadoLibre’s user base by approximately 1.3 million confirmed registered users and solidified our market leadership position in Brazil, Mexico, Venezuela, Colombia, Peru, and Uruguay. In that year MercadoLibre did not

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acquire DeRemate’s Argentine and Chilean subsidiaries, which continued to operate under the control of certain previous stockholders of DeRemate until 2008.In January 2008, MercadoLibre acquired 100% of the issued and outstanding shares of capital stock of Classified Media Group, Inc., or CMG, and its subsidiaries. CMG and its subsidiaries operate an online classified advertisements platform primarily dedicated to the sale of vehicles at www.tucarro.com in Venezuela, Colombia and Puerto Rico and real estate at www.tuinmueble.com in Venezuela, Colombia, Panama, the United States, Costa Rica and the Canary Islands. On the acquisition date, MercadoLibre paid $19 million subject to certain escrows and working capital adjustment clauses. On June 27, 2008, the Company released to the former CMG shareholders $1.9 millions in full satisfaction of the management escrow. On January 22, 2009, MercadoLibre released the escrow balance of $1.1 million to the sellers of CMG.In September 2008, MercadoLibre completed the acquisition of DeRemate.com de Argentina S.A., DeRemate.com Chile S.A., Interactivos y Digitales México S.A. de C.V. and Compañía de Negocios Interactiva de Colombia E.U. for an aggregate purchase price of $37.6 million. MercadoLibre also purchased certain URLs, domains, trademarks, databases and intellectual property rights related to those businesses for $2.4 million. On February 12, 2009, the purchase price allocation period ended and MercadoLibre agreed with the sellers to a working capital adjustment of $480,912 to be paid by the sellers to MercadoLibre.In September 2011, MercadoLibre acquired 60% of outstanding membership interest of Autopark LLC, a limited liability company organized under the laws of Delaware with 100% ownership of AP Clasificados, an online classified advertisements platform in Mexico primarily dedicated to the sale of vehicles at www.autoplaza.com.mx and real estate at www.homeshop.com.mx. The aggregate purchase price paid in cash was $5.5 million and includes URLs, domain names, trademarks, databases non-compete agreements and intellectual property rights that are used or useful in connection with the online platforms of the acquired business.In March 2013, MercadoLibre acquired the 100% of equity interest in an Argentine software development company located in the Province of Cordoba, Argentina. The objective of the acquisition was to enhance the capabilities of the Company in terms of software development. The aggregate purchase price for the business acquisition was $3.4 million.

Competitors• Mas Oportunidades

• Rakuten

• OLX

• Submarino

• NovoaPontocom

• VivaStreet

• Dafiti

• CasaBahía

• Walmart

• Webmotors

• Falabela

• Buscapé

• Bendfaro

• Zas

MercadoSolidario It is MercadoLibre's section where foundations and non-profit organizations sell products or organize charity auctions without paying any fee to MercadoLibre as part of its fundraising activities.MercadoSolidario is a social cause promotion program which helps non-profit organizations, civil associations and foundations in Latin America by providing them with eCommerce as a way to collect fonds and the generation of economic resources. It works as an online commercialization platform. It is so integrated to our business that it uses the same metrics that measure amount of articles sold, money raised and amount of registered organizations.(1)

PresenceCurrently MercadoLibre has presence in 13 countries in Latam and Europe:

• Argentina

• Mexico

• Costa Rica

• Panama

• Colombia

• Ecuador

• Peru

• Chile

• Uruguay

• Dominican Republic

• Venezuela

• Brasil

• Portugal

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1. United States Security and Exchange Commission. Annual Report Pursuant to Section 13 or 15 (d) of the Securities Exchange act of 1934.For the fiscal year ended December 31, 2013. http://secfilings.nasdaq.com/edgar_conv_html%2f2014%2f03%2f03%2f0001193125-14-078151.html#D639270D10K_HTM_TOC

2. Informe de Responsabilidad Social 2012, MercadoLibre http://static.globalreporting.org/report-pdfs/2013/016e568a41a1f20a7ede352143cf592f.pdf

3. Investor Relations, MercadoLibre http://investor.mercadolibre.com/results.cfm

Financial Status

According to Marcos Galperin, MercadoLibre CEO, the company’s growth is result of innovation and the expansion of product selection. The reinforcement their growth with added value products puts them in a privileged situation to face high demand seasons, such as Christmas (4).

InvestmentsMercadoLibre has been investing seriously in the past years. One of the main areas of investment is technology, with the objective of updating infrastructure, hardware and software, as well as doing research and innovation. (5)

5

0

27500000

55000000

82500000

110000000

1Q 2Q 3Q 4Q

2012

Net Revenue Gross Profit Net Income

0

37500000

75000000

112500000

150000000

1Q 2Q 3Q 4Q

2013

Net Revenue Gross Profit Net Income

4. El Economista, Ventas de MercadoLibre crecen 25.5%, 7 de noviembre de 2013. http://eleconomista.com.mx/mercados-estadisticas/2013/11/07/ventas-mercado-libre-crecen-265

0

30

60

90

120

2011 2012 2013

Purchase of Property and Equipment

5. United States Security and Exchange Commission. Annual Report Pursuant to Section 13 or 15 (d) of the Securities Exchange act of 1934.For the fiscal year ended December 31, 2013. http://secfilings.nasdaq.com/edgar_conv_html%2f2014%2f03%2f03%2f0001193125-14-078151.html#D639270D10K_HTM_TOC

6

0

22500000

45000000

67500000

90000000

1Q 2Q 3Q 4Q

2011

Net Revenue Gross Profit Net Income

0

17500000

35000000

52500000

70000000

1Q 2Q 3Q 4Q

2010

Net Revenue Gross Profit Net Income

0

250000000

500000000

750000000

1000000000

2009 2010 2011 2012 2013Net Revenues Gross Profit Net Income

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6%8%

12%

19%56%

2011

Brazil ArgentinaVenezuela MexicoOther Countries

6%7%

15%

24%

48%

2012

Brazil ArgentinaVenezuela MexicoOther Countries

6%7%

18%

26%

44%

2013

Brazil ArgentinaVenezuela MexicoOther Countries

Net Revenues by segment

Strategic Analysis2

“We want to use the benefits of eCommerce to create a positive impact on a community of users”

– Marcos GalperinMercadoLibre CEO

Strategy Models

Generic Strategy ModelBroad Range of Buyers

• Although it has a good degree of differentiation, the goal is to achieve an as broad reach as possible.

• Provides good performance that attracts users.

• Offers great User Experience which promotes users to return.

Low Cost

• Offers users free services

• Upscale to low/fair cost services

• Matches rivals and equals or beats them on price.

Five Forces Threat of New Entry:

• Mercadolibre has done great efforts to reduce entry barriers by providing no cost services such as free listings.

• Reduced barriers by implementing a one time sign-in, so they must fill-in their data only once.

• Mercadolibre has economies of scale, although on a whole, not equal to eBay.

• Similar eCommerce platforms can be created at low cost, but the effort it takes to scale to Mercadolibre’s size and reach is an important barrier for competition.

Supplier Power:

• Mercadolibre has few software suppliers due to very specific technology needs, only a few offer proper solutions, so suppliers have a lot of power.

• Another thing they need is hosting, but Mercadolibre has eliminated this by acquiring its own servers.

• Mercadolibre has its own tech team and is developing their own technology, reducing (not eliminating) the need of suppliers.

Threat of substitution:

• With technology resources and tools available at present, it is fairly easy to implement eCommerce, but not at the scale and reach Mercadolibre has.

• Mercadolibre has spent a lot of time and resources creating a whole ecosystem which improves and supports the commercial

experience, this is extremely hard and expensive to do by competition.

• A considerable threat would be eBay or Amazon, they have the platform, technology and reach, but they haven’t focused on the Latam market.

• Competitive Rivalry:

• Mercadolibre is quite strong in the eCommerce market, there have been some niche competitors, but have been bought by Mercadolibre.

• There is only one real competitor (eBay), but the threat is decreased because of Mercadolibre’s regional strength.

• Mercadolibre’s users are not very likely to switch to another platform because they are offered free and easy processes and options (as well as effective) here. Users will hardly leave MercadoLibre to go to non-digital options because it reduces reach and the don’t usually have the necessary infrastructure.

Buyer Power:

• There is a very large number of customers.

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Lower  Cost Differentiation

Broad  Rangeof  Buyers

Narrow  Buyer  Segment

• High buyer concentration, there are one-time-sellers and companies who use the whole ecosystem.

• Very high buyer volume .

• The switching cost is relatively low, but if sellers switch they lose visibility.

• Users who sell have several costless options, some options are low price. The company does this to reduce barriers.

• Users who buy hardly pay any additional costs to the product they are buying.

SWOTStrengths

• Senior executives in MercadoLibre since the year 2000 providing a stable and experienced management team.

• Outstanding usability.

• Free services.

• Varied and efficient payment methods.Weaknesses

• No integrated delivery.

• Inability to keep up with industry and technology changes.

• Delays or problems with upgrading existing information technology infrastructure.

• Inability to properly manage the size of the business (if it continues to grow).

Opportunities

• Expansion to other regions.

• Integrate delivery services.

• Improve and add logistics.Threats

• Cross border commerce not possible because of country regulations.

• Multiple currencies in the region.

• Uncertainty in Internet legal issues could adversely affect the business.

• Liability for the sale of regulated and prohibited items, or infringe on intellectual property.

AnalysisSeasonalityLike most retail businesses, MercadoLibre experiences the effects of seasonality in all operating territories throughout the calendar year. Although much of the seasonality is due to the Christmas holiday season, the geographic diversity of operations helps mitigate the seasonality attributed to summer vacation time ( i.e. southern and northern hemispheres) and national holidays.Typically, the fourth quarter of the year is the strongest in every country where MercadoLibre operates due to the significant increase in transactions before the Christmas season (see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Seasonality” for more detail). The first quarter of the year is generally the slowest period. The months of January, February and March correspond to summer vacation time in Argentina, Brazil, Chile, Peru and Uruguay. Additionally, the

Easter holiday falls in March or April, and Brazil celebrates Carnival for one week in February or March. This first quarter seasonality is partially mitigated by the countries located in the northern hemisphere, such as Colombia, Mexico and Venezuela, the slowest months for which are the summer months of July, August and September.CompetitionThe market for trading over the Internet is rapidly evolving and highly competitive, and MercadoLibre expects competition to intensify even further in the future. Barriers-to-entry for large, established Internet companies are relatively low, and current and new competitors can launch new sites at relatively low cost using commercially available software. While MercadoLibre is currently the market leaders in a number of the markets in which it operates, MercadoLibre currently or potentially compete with a limited number of smaller marketplace operators, with businesses that offer business-to-consumer online e-commerce services or others with a focus on specific vertical categories..There are also a growing number of bricks and mortar retailers who have launched on line offerings and shopping comparison sites located throughout Latin America. There also is competition in the classified advertising market we compete with regional players such as OLX an, and with local players which have strong positions in certain markets.In addition, MercadoLibre could face competition from a number of large online communities and services that have expertise in either, developing online commerce, facilitating online interaction, or both. Other large companies with strong brand recognition and experience in online commerce, such as large newspaper or media companies, also compete in the online listing market in Latin America.In September 2001, MercadoLibre entered into a strategic alliance with eBay, through which eBay became one of MercadoLibre’s stockholders and started working with to better serve the Latin American online commerce community. As part of this strategic alliance, we acquired eBay’s Brazilian subsidiary at the time, iBazar, and eBay agreed not to compete with MercadoLibre in the region during the term of the agreement, which ended on September 24, 2006. This agreement also provided MercadoLibre with access to certain know-how and experience, which accelerated aspects of our development. Even though eBay continues to be one of our stockholders, since the termination of this agreement, there are no contractual restrictions preventing eBay from competing with us. For example, in 2012, eBay acquired Alamaula.com, classifieds site which operates in many of the countries where we operate.MercadoPago competes with existing online and offline means of payment businesses, including, among others, banks and other providers of traditional means of payment, particularly credit cards, checks, money orders, and electronic bank deposits, international online payments services such as Paypal and Google Checkout, local online payment services such as DineroMail in Argentina, Chile, Colombia and Mexico, and Bcash and PagSeguro in Brazil, money remitters such as Western Union, the use of cash, which is often preferred in Latin America, and offline funding alternatives such as cash deposit and money transfer services. Some of these services may

operate at lower commission rates than MercadoPago’s current rates.Finally, Amazon started operations in Brazil during 2012 by offering on-line content. MercadoLibre does not compete in this space, however the consolidation and expansion of their operations in Brazil, could eventually lead to more direct competition.Intellectual propertyMercadoLibre regards the protection of copyrights, service marks, trademarks, domain names, trade dress and trade secrets as critical to the future success and rely on a combination of copyright, trademark, service mark and trade secret laws and contractual restrictions to establish and protect our proprietary rights in our products and services. MercadoLibre has entered into confidentiality and invention assignment agreements with our employees and certain contractors. MercadoLibre has also established non-disclosure agreements with our employees, strategic partners and some suppliers in order to limit access to and disclosure of our proprietary information.MercadoLibre pursues the registration of our trademarks and service marks in each country where they operate, in the United States and in certain other Latin American countries. Generally, we register the name “MercadoLibre,” “MercadoLivre,” “MercadoPago” and “MercadoSocios” as well as the handshake logo, and other names and logos in each country where they operate. As part of MercadoLibre’s acquisition of DeRemate, they acquired the trademarks of DeRemate and CMG, respectively, throughout the countries where they operated, as well as certain other jurisdictions.Autopark LLC, an entity in which we own a 60% interest and have an option to acquire the remaining 40% ownership interest, has 100% ownership of AP Clasificados which owns trademarks of Autoplaza.com.mx and Homershop.com.mx in Mexico. MercadoLibre expects to acquire the remaining 40% ownership interest in Autopark in the future.We have licensed in the past, and expect that we may license in the future, certain of our proprietary rights, such as trademarks or copyrighted material, to third parties. While we attempt to ensure that our licensees maintain the quality of the MercadoLibre brand, our licensees may take actions that could materially adversely affect the value of our proprietary rights or reputation.Third party technologiesWe also rely on certain technologies that we license from third parties, such as Oracle Corp., SAP AG, Salesforce.com Inc., Microstrategy, Teradata, Radware, Juniper Networks, Cisco Systems Inc., Arista Networks, Imperva, F5 Networks, and Netapp, the suppliers of key database technology, the operating system and specific hardware components for our services.Third parties have from time to time claimed, and others may claim in the future, that we have infringed their intellectual property rights by allowing sellers to list certain items on MercadoLibre. See “Item 3. Legal proceedings” below and “Item 1A. Risk factors—Risks related to our business—We could face legal and financial liability for the sale of items that infringe on the intellectual property and distribution rights of others and for information disseminated on the MercadoLibre Marketplace”.(2)

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Users

Marketplace

Classifieds

Shops

Pago

Envíos

Advertising

•List merchandising items•Conduct sales and purchases online

•Browse for products•Bid for purchases• Offer for sales

• Generate leads• Real Estate and Services

categories!

• Enable businesses to promote services and products on the Internet

• Place display and/or text advertisements on web pages in order to promote their brands and offerings

• Acquire traffic through advertisements

• Transactions on and off MercadoLibre• Mechanism for secure online payments• Check balances

• Set-up, manage and promote their own on-line webstores

• Offers integration with the marketplace, payments and advertising services

• Basic, free webstore or pay monthly subscriptions

• Cost efficient integration with existing logistics and shipping carriers to sellers on platforms.

• Offer seamlessly integrated shipping platform to buyers

MercadoLibre Ecosystem

MercadoSolidario

• Platform for non-profit organizations• Ability to sell products, services and

receive donations• Same functionality as for vendors

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Storage

• Guarantee proper function 100% of time• Secure content storage• Safeguard from intrusions and attacks

Distribution

• Offer seamlessly integrated shipping platform to buyers

• Logistics support

ISP

• Provide broadband • Stable connection• Cost-awareness for download of

images

• Money transfer MercadoPago• Online banking• Money balance

ePayment

• Desktop, laptop and mobile• Integration with platforms• Functionality support

Devices

Platform

• Multi-Platform readiness• Responsive Design• Ensure Usability• Software R&D• Security and privacy

Users

Advertising

• Marketing through different digital channels

• Visibility in major sites (Google, Yahoo, MSN, etc.)

• Partnership and exchange with businesses

Ecosystem Analysis

Value Chain Analysis

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• Call off to sellers/suppliers

• Search & selection of products or services

Procurement

• Vendor agreements

• Alliances & Partnerships

• Tech solutions

Tech Development

• R & D • Software design• Usability

Human Resources

• Recruiting & hiring• Training• Certification

Infrastructure

• IT• Executive Board• Advisory Board• Finance• Accounting• Regional

Management•

Primary Value Chain

Support Activities

• Product or service classification

• Transaction• Packaging

• Order processing

• Shipment• Delivery• Invoicing

• Advertising channels & alliances

• Analysis & market research

• Customer support

• Upgrades• Maintenance

Procurement

Inbound Logistics Operations Outbound Logistics Mkt & Sales Service

IT Strategic Grid

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Factory Strategic

Support Turnaround

Significant

Business Implications of IT Applications Portfolio

Limited

Limited SignificantBusiness Implications of IT Project Portfolio

• Proprietor of Servers

• Highly capable IT department

• Constant Innovation•Sufficient storage space

• Effective Risk Management

• Robust Infrastructure

• Cultural concerns

• Trans-country differences

• Trade law• Copyright

regulation

• Constant IT staff training

• Use of emerging technology

• IT Investment

MercadoLibre

Technolgy Solutions3

“We have collaborated with youth education promoting digital inclusion and strengthening of non-profit organizations.” -

– Marcos Galperin

Solutions

Based upon the strategic models presented in this paper, which provide a clear vision of the current status of different areas or MercadoLibre, and where the company is now, the threats and risks it faces, as well as where it wants to be in the future, I recommend the following technology solutions in order to be better prepared for the future and to be able to build a solid strategy.:Faster Web ExperienceImplement a web accelerator with velocity and flexibility.MercadoLibre’s marketplace is heavy in content and it is critical that pages load quickly or users will leave the page.The site has over 50 million users, so a solution is needed to optimize performance and in order to do this web pages must be stored in memory by servers so they do not have to create the same page over and over again, it should do so only when it is changed.The use of cache also speeds up websites, loading pages much faster, however care must be taken to evaluate the download speed of different providers.Website performance and speed are essential to keep the customer satisfied.(6)Build a Cloud InfrastructureA website which has become the leading forum for buying and selling products online across the Latin America region, with around two million site requests/min. and up to four million in peak times, infrastructure must be flexible enough to be auto-provisioned in real time.IT must constantly be aligned to business needs and count with unlimited scalability either with a low cost or, preferably at no cost.To serve MercadoLibre’s needs properly, a 1,000-node cloud infrastructure should be

deployed, it should support self-service realtime provisioning of IT resources.(7)Augmented RealityAugmented reality (AR) is a live, direct or indirect, view of a physical, real-world environment whose elements are augmented by computer-generated sensory input such as sound, video, graphics or GPS data. It is related to a more general concept called mediated reality, in which a view of reality is modified (possibly even diminished rather than augmented) by a computer. As a result, the technology functions by enhancing one’s current perception of reality. By contrast, virtual reality replaces the real world with a simulated one. Augmentation is conventionally in real-time and in

semantic context with environmental elements, such as sports scores on TV during a match. With the help of advanced AR technology (e.g. adding computer vision and object recognition) the information about the surrounding real world of the user becomes interactive and digitally manipulable. Artificial information about the environment and its objects can be overlaid on the real world.By using this technology to show products, customers will be able to see them better and it will be easier to make a choice. The use of this technology will is also fun and will motivate people to use it and increase the probability of selling.(8)

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Augmented Reality

Offline Window-ShoppingWiFi in not always available or, in some cases, costs are high. Because of this it incorporating the capability of downloading research results of a certain product or service can be done and stored on the device, and then to be able to consult it offline. This will allow customers to make a purchase choice and do the shopping when they go online again.Current technology development foresees in a medium term, by the year 2020, that most of the globe will have infrastructure that provides a near to 100% wifi coverage. However, speed is a critical factor for the proper usability and correct viewing of content heavy websites, such as MercadoLibre, in which many pictures are needed in order to view products well. So this proposed solutions would increase the amount of people capable of viewing products and services in the platform, and increase the probability of purchases.Social ShoppingFuture tendencies point strongly towards the use of Social Networks as the natural place in which socializing takes place in an increasing manner. The platform should start integration of social networks so customers can go online, specially on mobile devices, and share with their friends the products or what they buy. Purchases should take place seamlessly and all this be automatically shared on the network (s). A good strategy is to compensate customers when buy and share as a way to motivate users.This strategy lowers barriers and democratizes shopping.(9)

6. Varnish software, https://www.varnish-software.com/sites/default/files/fields/attachments/success_story_mercadolibre_web_0.pdf7. Ubuntu Case Study, http://insights.ubuntu.com/wp-content/uploads/Mercadolibre_CS_WEB1.pdf8. Augmented Reality, Mashable, http://mashable.com/category/augmented-reality/9. How Smart Devices and Social Media impact your Shopping Habits, Mashable http://mashable.com/2012/10/02/smart-devices-social-media-shopping/

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Recommendation

Based on the strategic analysis models presented in chapter 2, it is clear that MercadoLibre was born with a long range vision of building a company, not only with a narrow focus just on products or customers. The company has been able to achieve sustained growth and maintain innovation while in a very competitive and fast changing industry.MercadoLibre faces great challenges and risks because it operates in 13 countries across Latam and one in Europe, so it must deal with great differences regarding legal issues, banking, currency, customs, communications and cultural differences. All these trans-border disparities are not likely to change soon and MercadoLibre has absolutely no control over this, it is in the hands of individual governments to work towards regional integration.My recommendation for MercadoLibre, based on the issues mentioned in the above paragraph, is that it should direct efforts to using innovative technology with a future vision for the following issues:

• Provide a state-of-the-art eCommerce platform with seamless integration across the services offered in the ecosystem.

• Expand and adapt operations to meet rapidly changing industry and technology standards.

• Maintain a top-of-the-line information technology infrastructure to avoid business disruptions.

• Prepare for future growth to be able to appropriately manage a larger business.

• Develop an increasingly efficient technology for a 100% reliable payment processor for online transactions.

• Ensure information safety within the ecosystem.

VisionFuture trends point towards and increasing technology integration with everything, Internet of Everything (IoE), so MercadoLibre must get into that frame of mind and gear towards total integration of their eCommerce platform with every platform, device and network in which people will be able to view content. Whenever a user lists an item on MercadoLibre, it will appear everywhere:

• YouTube, facebook, Pinterest, Twitter, etc.

• WordPress, Blogger, etc.

• Computers, smartphones, tablets and phablets.

• In virtual worlds

• Social games

• Lifecasts and Livestreams

Keep in mind:

• Google Glass

• Thought text

• 3D everything (pictures, printing)

• Wifi and Broadband for everyone, everywhere

• Crowdsourcing

• New materials (graphene, silicene, ferrafluids)

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