By Andre Romani SAO PAULO (Reuters) -E-commerce firm MercadoLibre will start to sell Brazilian retailer Casas Bahia's products on its platform in November under a new long-term commercial partnership, the companies said on Thursday. The move is expected to increase MercadoLibre's share in its main market, Brazil, in segments such as electronics and household appliances, Casas Bahia's core business, by also boosting sales of the retailer, executives from both firms told Reuters. The companies did not disclose financial terms or sales projections. Uruguay-headquartered MercadoLibre has as its main business the operation of an e-commerce platform for third parties to sell their products, while Casas Bahia gets most of its revenue by selling its products direct to customers. "I see a huge synergy in the move," MercadoLibre's e-commerce head for Brazil Fernando Yunes said. "Casas Bahia has an enormous leadership and scale in home appliances, electronics and furniture." Casas Bahia will manage most shipping logistics, given its greater expertise than MercadoLibre in handling large products such as TVs and refrigerators, the executives said. MercadoLibre's e-commerce platform helped turn it into Latin America's most valuable firm by market cap, but the company has struggled to repeat its formula with electronics and home appliances. MercadoLibre's market share in large home appliances, such as ovens and refrigerators, in Brazil is at about a quarter of its average, Yunes said. For Casas Bahia, an over 70-year-old retailer with more than 1,000 stores in Brazil, the partnership could mean a sales boost as it seeks to complete a debt and operational restructuring process started in 2023. "It's a partnership that marks our entry into a channel that has been growing significantly and is projected to grow well into the coming years," Casas Bahia CEO Renato Franklin said, referring to e-commerce platforms that sell third-party products. Sao Paulo-traded shares in Casas Bahia jumped as much as 17% on Thursday, before paring gains to trade up some 4% in the early afternoon. Brazil's benchmark equities index Bovespa, of which Casas Bahia is not part, rose 0.5%, while MercadoLibre shares in New York increased 0.6%. "We see this as a win-win situation, given the complementary value proposition of each company," Santander analysts wrote in a note to clients. Players in Brazil's e-commerce segment, including MercadoLibre, Sea's Shopee and Amazon, tightened the competitive environment in recent months by expanding free-shipping policies and by offering consistent promotions. Last year, Brazilian retailer and e-commerce firm Magazine Luiza and Chinese e-commerce platform AliExpress launched a sales partnership allowing the two companies to sell products on each other's platforms. Shares in Magazine Luiza fell more than 8%, leading losses among stocks on Bovespa. Citi analysts added a "downside 30-day catalyst watch on the stock", writing that the MercadoLibre and Casas Bahia deal, in addition to the competitive environment, poses further pressure on the firm. (Reporting by Andre Romani in Sao Paulo; additional reporting by Paula Arend LaierEditing by Marguerita Choy)
(The article has been published through a syndicated feed. Except for the headline, the content has been published verbatim. Liability lies with original publisher.)
