eBay of Latin America: Mercado Libre CEO Marcos Galperin (Part 3)

SM: Having just 3% Internet penetration must have been very frustrating!

MG: Exactly! We tried to focus more on milestones which were operational but not necessarily revenue. We still remember the first time someone came and paid their bill at the office. We still have the PDF of the scanned check. We tried to focus more on the platform, and expanding to other countries and ensuring we had a team in every country. The business was a very small business in the beginning.

We always have fun when we read the eBay story. Checks started arriving to Pierre Omidyar’s home because the guy who hosted the site for him told him he was having too much traffic and they would need to start charging him, so he sent an email saying that he would have to start charging because he was being charged. Checks started arriving in such a large quantity that he realized he had a business – he actually hired someone just to take care of the checks. In Latin America, that would never have happened! We spent a lot of time waiting for the checks. This is just one example of the many differences.

We did two things well. One was to focus more on the platform and less on mass marketing. The other one was to understand the differences between implementing a business model in the States or Europe versus implementing one in Latin America.

SM: What were some of those key differences?

MG: The way buyers and sellers interact is different. eBay was very big into ensuring buyers and sellers could interact before the transaction. We felt that if we let them interact before the transaction we would never collect a payment. Instead we created a Q&A message board which ended up having very important side benefits. The message board is a great community generating tool. It is a great customer service tool for the seller who only answers questions once. It is great for buyers because you see questions which you perhaps may not have thought to ask, but which will make you feel more comfortable knowing the answer to them.

It ended up being great at preventing phishing and fraud schemes to sellers. In the old eBay system, if you could contact the seller then you could solicit information from the seller. eBay disabled the ability to send an email to the seller. Fraud rates are very, very low on our platform and we believe that is one of the reasons why – nobody can ever get our sellers’ email addresses.

This segment is part 3 in the series : eBay of Latin America: Mercado Libre CEO Marcos Galperin
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