SM: What was your platform in those early days – an auction platform or a fixed price platform?
MG: It was completely an auction platform, and today it is 90% a fixed priced platform. Another thing we did different is that we did not like the Buy It Now feature on eBay. We used it as a transition from pure auctions to a fixed priced environment, but very rapidly we took it away and just left two options – auctions or fixed-priced. Overwhelmingly and across different countries, sellers were choosing to use fixed prices for their items, with the exception of used products or items where the market prices where difficult to determine. Auctions account for just 10% of our volume. The remainder is fixed prices; buyers prefer it and therefore sellers choose it more often.
SM: Is it a C2C or a B2C business?
MG: It is mostly B2C, with small businesses. 75% of the items sold are new items and we believe most of them are small businesses which are selling them.
SM: Do you have any idea as to what percentages of small businesses in South America are using MercadoLibre as a platform to sell?
MG: I cannot give you an accurate answer there.
SM: It is an interesting metric to look at, since retail is a relatively weakly organized sector in the region.
MG: I think we could get a good estimate of the number of small businesses in a region, and then see what number of sellers we have in a region. That could give us a percentage.
SM: Your business, the vertical penetration of the business, is it primarily consumer electronics and gadgets?
MG: I would say 50% is consumer practicals – gadgets, computers, photography equipment, etc. The remaining 50% accounts for all other services and sales.
SM: You also have a strong automotive category.
MG: Car auctions are very strong for us.
SM: Did the dotcom crash in the United States impact you here?
MG: Yes, because there was no more financing. We were lucky, because we were able to do our second round of financing just after the crash in May of 2000, and we closed out a $46 M round. Nobody else was able to access cash, with the exception of DeRemate … they were able to get more funds. Most companies were not able to get financing for 4-5 years, which gave us a great advantage. All of the smaller competitors died away. It helped us tremendously.
Operationally, before the crash, it was all about building the platform. After the crash, it was about building the business. From 2000 to 2003 is when we grew the most. People here continued to adopt the Internet, the telecoms continued to invest in broadband.