Mercado Livre buys Kangu delivery platform and expands logistics operations in Latin America

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SAO PAULO – Mercado Livre (MELI34) announced on Tuesday (24) the acquisition of 100% of the Kangu parcel delivery platform, expanding its logistics operations in Latin America amid the increased demand for e-commerce.

“The movement is in line with the platform’s strategy, which is increasingly investing in its logistics network to ensure efficiency to sellers and faster delivery in the country to its thousands of customers,” the company wrote in a note. The purchase amount was not informed.

Kangu, which already acted as a strategic partner of the retailer, connects e-commerce sellers to its network of partner stores in the neighborhood, such as petshops, stationers and other small businesses.

According to a statement, the company delivers within one day to 2,100 cities in Brazil, as well as same-day deliveries to dozens of locations.

Currently, more than 40 thousand sellers use Kangu’s network, in the three markets where the company operates (Brazil, Colombia and Mexico), which add up to more than 5 thousand collection and delivery points, more than half of them in Brazil.

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“Kangu already plays an important role in our ecosystem, connecting Free Market buyers and sellers in more than 5,000 points. The transaction will bring even more efficiency and capillarity to our operation, which works daily to bring faster delivery to the Brazilian consumer”, highlights Renato Pereira, director of new business at Mercado Livre, in a statement.

According to a press release, Kangu’s revenue grew more than 100 times in 2020 compared to the previous year. In addition to collection and delivery point services, the company’s business model also includes the transport of products with the support of external partners and reverse logistics.

According to Mercado Livre, technological investment, especially in intelligent data management, allowed Kangu to optimize deliveries and offer complementary services.

Upon completion of the acquisition, which is still awaiting approval from antitrust authorities, Kangu’s management will continue independently, under the leadership of current co-CEOs.

In a report, Itaú BBA writes that the news is slightly positive for the Free Market shares on the US stock exchange, Nasdaq.

According to analysts, the move underscores the company’s focus on improving its logistics in Brazil and adding advanced distribution centers to its logistics network in a way that “asset light“.

“This format can be a way for the company not only to improve the level of service and solve part of the issue of reverse logistics (allowing users to return items by post office or Kangu partner stores), but also to reduce their delivery costs – with products being shipped at a shorter distance and along known and predetermined routes, similar to the model implemented by other marketplaces in their own stores”, write the analysts.

The analysis team also highlights that, although Mercado Livre’s partnership with Kangu has existed since 2019, the acquisition will allow for better integration with the platform, as well as the exclusive use of Kangu’s technology.

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