Temu Surpasses Mercado Livre as Brazil’s Second-Largest Marketplace

Citi Bank’s recent report reveals a significant shift in Brazil’s e-commerce landscape. Temu, the Chinese e-commerce platform, has quickly risen to become the second-largest marketplace in Brazil.

The platform achieved this feat in just six months of operation, surpassing the long-established Mercado Livre. Temu’s rapid growth in Brazil is remarkable. The platform reached 39 million monthly active users, marking a 600% increase in its customer base since launch.

This surge in popularity places Temu behind only Shopee, which leads the market with over 50 million active users. The platform’s success extends beyond user numbers. Temu led in downloads with 3.9 million new users in its sixth month of operation in Brazil.

This outpaced Shopee’s 2.5 million and Mercado Livre‘s 2.4 million downloads in the same period. Temu’s growth contrasts sharply with its competitors’ performance. Mercado Livre saw a modest 13% increase in its user base over 12 months.

Amazon experienced a 5% reduction in users during the same period. The Brazilian e-commerce market continues to expand rapidly. IMARC Group projects a growth rate of 13.32% for the sector between 2024 and 2032.

Temu Surpasses Mercado Livre as Brazil’s Second-Largest Marketplace. (Photo Internet reproduction)

However, this growth is driven by increasing internet usage, a growing middle-class population, and advancements in digital payment systems. Temu’s success in Brazil is part of its larger global expansion strategy.

Temu’s Expansion in Brazil

The platform operates in approximately 70 countries as of November 2024. It boasts an estimated 400-500 million users worldwide, with about 200 million monthly active users.

Several factors contribute to Temu’s rapid growth in Brazil. The platform offers aggressively low prices, often undercutting local competitors. It invests heavily in marketing, including high-profile advertising during major events.

Temu also employs gamification elements in its app to engage users and gather data. Despite its success, Temu faces challenges in Brazil. The country recently approved legislation imposing a 20% tax on cross-border e-commerce parcels valued under $50.

This new tax, combined with the existing 17% ICMS sales tax, creates a significant tax burden for cross-border e-commerce platforms. Temu’s rise in Brazil represents a significant shift in the country’s e-commerce sector. It highlights the growing influence of Chinese platforms in Latin America.

As competition intensifies, established players will need to adapt their strategies to maintain their market positions. The platform’s long-term success in Brazil will depend on its ability to navigate the country’s complex tax and import regulations.

It must also improve logistics and customer service to compete effectively with local players. As the Brazilian e-commerce market continues to evolve, all eyes will be on Temu and its competitors.