Amazon to set up a new Data Center in Argentina

By

Alicia Mares

Published
Oct 23, 2017

After Brazil, Amazon sets its sights on Argentina, home of Mercado Libre. The American company officially arrived in Brazil, the largest market for the Argentinian platform, on October 18. And this Friday, October 20, an Amazon spokesperson confirmed in the newspaper La Nación that the American company would be setting up a Cloud Data Center  with 100 employees through Amazon Web Services (AWS) in Buenos Aires. 

The news comes days after Noah Mamet, former American ambassador to Argentina, told the newspaper Perfil that Amazon had signed a deal to open an office with 100 employees in Buenos Aires at the end of this year, with the possibility of expanding the operation in 2018. 

Currently, Mercado Libre's market dominance in Argentina is strong. Since its foundation in 1999, the the platform has maintained consistent growth in its country of origin and has been well received by local consumers. Nonetheless, the Argentinian company's position could very well be destabilized by the confirmed arrival of the North American e-commerce giant in Argentina. 

Shortly after the announcement of the imminent arrival of Amazon in Brazil on October 12, the Argentinian platform suffered the economic effects. On the same day, shares in Mercado Libre fell 10.2% on Wall Street. According to Forbes Argentina, Mercado Libre's losses will reach approximately 100 million dollars of the private assets of its CEO and founder Marcos Galperín, a fortune which previously amounted to some 1.21 billion dollars. 

It is worth remembering, however, that Mercado Libre also competes with Amazon in another of its most important markets: Mexico. Commenting on the impending arrival of the company's American rival in Brazil, the Vice-President of Mercado Libre Sean Summers told Forbes that competition with Amazon in Mexico had worked as an advantage for the company. "We've been competing [with Amazon] for a year and a half. Having a formidable competitor helps you. It helps to open the market and to keep you in line, to keep you awake", underlined Summers in December of 2016.

Comparing the two companies' results, both increased their sales in the second quarter of 2017. In its results report, Amazon recorded a total of 38 billion dollars in sales, with a surge of 25% compared to last year. For its part, Mercado Libre's sales shot up 58.5%, achieving 316.5 million dollars in receipts. 

Internationally, although the American online retailer operates directly in 11 countries around the world, Mercado Libre dominates e-commerce in Latin America with operations in 16 countries in the region.