The Internet population in Latin America grew 15% over the year to 112.7 million visitors in January 2011, according to comScore. Brazil was the largest online market in the region and reported 20% growth over the year to 40.5 million users. Venezuela reported the highest growth rate of 27% to 2.9 million users. Mexico’s online population increased 21% to 18.1 million. To put this in context, China’s Internet population is more than 457 million Internet users, making the Chinese market the biggest Internet market in the world. The U.S. is the second-largest market with 207 million users and is followed by India, whose Internet population is estimated at more than 100 million users spending 16 hours a week on the Web. Among other developing markets, the entire African continent is estimated to have close to 111 million Internet users. While the numbers in Latin America are smaller than those of other regions or countries, growth is strong and steady.
The leading Latin American online retailer, MercadoLibre (NASDAQ:MELI), saw Q4 revenues increase 27% over the year to $62.3 million, compared with the market’s estimates of $61 million. By region, Brazil generated $34.6 million revenues during the quarter, followed by Argentina’s $11.3 million and Mexico’s $5.1 million. EPS of $0.36 grew 38% over the previous year’s $0.26 and was a cent higher than the market’s projections. The company announced its first quarterly dividend payout of $0.08 per share.
For the quarter, Gross Merchandise Value of goods transacted on the site increased 26% to $988 million. MeracadoLibre ended the year with 52.9 million confirmed registered users, compared with 42.6 million a year ago, and reported 1.7 billion page views monthly.
For the year, revenues increased 25% to $216.7 million and the company recorded EPS of $1.27 compared with $0.75 earned a year ago. Gross Merchandise Value of goods transacted during the year increased 24% to $3.4 billion.
MercadoLibre Upgrades Platform
MercadoLibre is focusing on the development of a new software platform for its core applications to make them more robust, scalable, and open to third parties for developing tools and applications. It also expects the platform to help shorten internal product development cycle so that it can roll out additional functionalities such as an unlimited queue.
Last quarter, Mercado launched iMeLibre, the iPhone app that lets users navigate MercadoLibre.com from their iPhones, iPods, and iPads. The app comes with features that include search suggestions, filters, retention of search history, and bookmarking options, to name a few. An Android version of the app is also available for free download.
The stock is trading at $85.50 with a market capitalization of $3.77 billion. It touched a 52-week high of $87.38 last week.
comScore’s Media Metrix reported that the average Internet user in Latin America spent 24 hours online in January 2011 and visited the Internet 50 times a month to access 1,795 pages of content. Brazilians were the most engaged users in the region and spent an average of 25.8 hours online with 55.5 monthly visits to 2,077 content pages. Internet users in Argentina spent an average 25.5 hours online per month, while users in Mexico spent 25.3 hours.
The growth of Internet in Central and South America is, naturally enough, helping online retail sales. Forrester estimates that from 2011 to 2016, Internet use in Brazil will increase 18%, and the country will remain the “powerhouse in Latin American online retail.” Brazil e-commerce is projected to be worth $22 billion by 2016, compared with $7.9 billion in 2010. Mexico with its smaller base will grow at 19% annually to $3.4 billion in 2016 from $1.1 billion last year, and I believe that Mercado is well poised to address this growing market.
But there is competition. Latin America’s consumer e-commerce market is pegged at $30 billion, still much smaller than the United States’ market of $170 billion. Earlier last year, Walmart, which has had stores in Mexico since 1991, began online operations in Latin America with a site for Mexico that it launched in June. Today, Walmart’s Mexican site is among the largest retailers in the country. Walmart expanded its online operations in the region by opening websites for Argentina and Chile later in 2010. It is posing tough competition to MercadoLibre by offering services such as home delivery of groceries for orders through its Argentina site. It will be an interesting battle: MercadoLibre has been very successful, but Walmart is number 1 on Fortune’s list of the world’s biggest companies.