Mercado Libre

By William Barnett, Gary Mekikian
2013 | Case No. IB105 | Length 14 pgs.
As 2013 approached, Marcos Galperin and his team of MercadoLibre top executives were meeting to celebrate the breathtaking growth of their company, and contemplate the challenges ahead. Since starting the company with his Stanford Business School classmates in 1999, Marcos had transformed the company from an internet auction site akin to eBay, to Latin America’s leading online marketplace unique in its own right, and on par with Amazon. The MercadoLibre team had not just cloned eBay and Amazon in Latin America; it had made a number of key innovations in order to compensate for, and in some cases, take advantage of the lack of commerce infrastructure in its markets. On the technology side, MercadoLibre had started with a then state-of-the-art internet application based on an industrial-grade stack of Oracle technologies. The application handled millions of transactions, provided a good user experience, and facilitated the company’s growth and IPO in 2007. In 2008, Galperin had made what he described as a “bet the company” decision to completely replace the company’s technology by building and deploying a parallel system; not just another application, but a sophisticated e-commerce platform based on Web 2.0 and the latest mobile web standards. The gamble was paying off. The company’s transition was being hailed as another success for Galperin and his team. But there was a larger challenge looming on the horizon.

Learning Objective

Mercado Libre describes the creation of a new business model in South America, reflecting the different logic of that market. The case illustrates how the global context of management triggers novel entrepreneurial behavior. Superficially, the organization appears to follow a well-trod road from application to platform, similar to many successful silicon valley firms. But over time it evolves to deal particularly well with challenges unique to South America. Leadership and decision-making points along the way illustrate the value of authentic understanding of the local context.
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