A few weeks before Christmas, Amalia Blasios found the perfect gift for her daughter. The Disney princess backpack she wanted was about $40 on Amazon. This is a quarter of a similar item in Buenos Aires.
But to Bulacios’ dismay, the duties and fees won’t arrive until after Christmas.
“At first, the price difference seemed huge,” covers Bulacios, an economist at S&P Global Ratings. MercadribbleMercadribbleFounded in Argentina in 1999, Mercadolibre is an online marketplace that also owns Mercado Pago, a leading payments and financial services app in Mexico and Argentina.read moreLatin America’s largest e-commerce platform, told Lest of World. “But at the end of the day, it didn’t make sense. What I had to pay on top of the backpack price was even more than the backpack itself.” Mercadolibre has a BB+ rating in S&P. , indicating a moderate risk level.
In September, Argentina made history with inactraw rampant tariffs and labyrinthine regulations when Amazon said it would charge a flat fee of $5 for shipments from the U.S. to land in the South American country. imports, but they have been rocky at best. Competition is stiff: Argentina is both the birthplace and base of MercadoLibre, which recently announced international shipping. There is also an extensive and popular network of smugglers who have been ferrying foreign goods onto commercial flights for many years.
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Although the government announced in November that it would reduce taxes on goods purchased overseas, Amazon’s success is not guaranteed.
“The Argentine e-commerce market has great potential,” Yanina Lojo, founder of Consultorala Lojo, which specializes in Argentina’s foreign trade issues, told Lest of World. “But this is just the beginning. There is still not widespread adoption as people are not used to the new system. Amazon has the advantage of being the most globally recognized brand, but competition from Argentina’s Mercado Libre is simply too strong.”
Argentina’s long-standing protectionism means items from abroad often hold up weeks in customs. According to Pricestats, a company that compiles online prices, electronics cost a staggering 90% more in the country than in the United States. Argentina is also consistently ranked among the world’s most expensive countries for iPhones. For example, the 256GB iPhone 16 Pro Max is currently listed in Buenos Aires for over $3,100.
Textiles face similar markups. A $100 fleece jacket on Amazon can cost almost twice as much at Buenos Aires. Even with Amazon’s discounted shipping rates, many Argentine imports remain unaffordable.
These conditions created fertile ground for the success of MercadoLibre, an e-commerce giant that grew from a Buenos Aires garage in 1999 to a regional powerhouse with a market capitalization of $100 billion. It has become the preferred destination for millions of Argentines to buy online. Its reach extends to many countries in Latin America, and is particularly strong in Mexico and Brazil.
High import taxes also forced hungry locals to get creative with foreign-made goods. The network of small businesses facilitating imports has increased in recent years in parallel with the emergence of baghaeros, or informal couriers who bring goods in suitcases on commercial flights and charge up to 60%. .
Amazon upgraded to free shipping in Argentina in November, shortly after introducing $5 freight. Still, delivery delays and widespread mistrust from Argentina mean baghaeros remain the go-to option for many. “People think Amazon is going to wipe out the market, but as a consumer, you’re going to end up paying a lot more this way,” he told the rest of the world.
“There may be more enthusiasm for free shipping now, but these private transactions still make more sense for low-ticket items,” said Bagayeros, whose practice is not legal and to maintain anonymity. said Juan, who did not give his last name.
In November, Argentina’s libertarian president and Donald Trump ally Javier Mairei began waiving $400 per shipment of import duties and raised the total limit from $1,000 to $3,000. He touted the move as a holiday relief package that would give Argentina the chance to shop on U.S. platforms after a year of economic hardship and recession.
“Imported products are now cheaper and will compete in an e-commerce market that already has a high level of penetration,” Andrés Ado, president of the Argentine Office of E-commerce, told Lest of World. According to trade association data, the market had 23.2 million buyers in 2023. Growth potential remains significant in a country where e-commerce still only accounts for 18% of all retail sales.
Amazon declined a request from the world for comment on its Latin America strategy. Transport promotions in Argentina are indeed gaining attention, but they do not match the $5 billion in investments that have been rolled out in neighboring Brazil since 2011 or the rapid expansion seen in Mexico in recent years.
In October, shortly after Amazon introduced its $5 freight fee, 28-year-old Luis de Dominicis decided to surprise his mother with a gift: a slow cooker. He was surprised to find it priced at around $250 on MercadoLibre. He told the rest of the world that buying it on Amazon costs almost five times as much as it costs on Amazon in the US, even after taking into account the surcharges and duties that doubled the price of the item. .
De Dominicis had come across a practice known as dropshipping. Taking advantage of the limited variety of products available locally, some sellers in Argentina list U.S. goods at sky-high prices and only import them after receiving orders. This is a strategy that thrives on the lack of options and logistical challenges faced by consumers, and could end if door-to-door imports are actually encouraged, as the government has promised.
Still, De Dominicis believes Amazon’s influence will remain limited. “Only a small group in Argentina will benefit,” he said. “Many people simply don’t know how to buy internationally or may be willing to wait.”
According to Analytics Firm Semrush, MercadoLibre’s Argentine website drew more than 100 million visits, far more than the 5.3 million Argentines who visited Amazon’s U.S. site during the same period. Amazon was eventually able to increase its numbers with aggressive pricing, but that’s a far cry from MercadoLibre’s widespread adoption.
Even as Milei continues to chip away at Red Tape and work to promote business investment, experts and consumers say it will take a long time for foreign companies to make significant foreign direct investment.
“What Amazon is doing so far feels like an early stage effort. It’s like a test to gauge market response, and it’s very easy to crack,” Bulacios said. says Mr.
On the other hand, many like De Dominicis remain loyal to Mercadribble.
“For mid-range items like clothing or electronics, where stains aren’t cheap or outrageously expensive – Amazon is definitely convenient,” he said. “But for everyday purchases, I stick with MercadoLibre. Their lightning shipping is unbeatable.”