When it comes to e-commerce, the first company that comes to mind is Amazon (NASDAQ:AMZN). While the company may not have invented the concept of online retail, it certainly has become the biggest player. So when you hear that more than 500,000 families make their living solely on one e-commerce platform, you'd be forgiven if you thought it was Amazon.
On this episode of Fool Live that aired on Nov. 23, Motley Fool co-founder David Gardner and Fool.com contributor Danny Vena were joined by Federico Sandler, MercadoLibre's (NASDAQ:MELI) head of investor relations. Sandler provided insight the company's relationship with the government and the local economies it serves.
David Gardner: Randy asks, "What effect, if any, will there be on MercadoLibre with the socialist movements in Latin America?" Another way I want to ask that question is, I'm a big fan of capitalism. I hope you are too.
Federico Sandler: Yes.
David Gardner: I suspect most of us watching right now, we may have some misgivings about excesses and it's not a perfect system. But especially for conscious capitalism, I'm a very big fan. So if capitalism were a stock right now, that if capitalism cross Latin America, how is it doing? Would you be buying capitalism in Latin America here? Do you find yourself having to fight off socialism? Where are you in that?
Federico Sandler: Yeah, I think that we're fortunate to be in an industry that is growing very fast but we've been very conscious and actually have tons of conversations with multiple government just to give you some color. There is north of 500,000 families that live exclusively off selling on MercadoLibre. We helped a lot of people who are in disregarded neighborhoods as we hire people from our logistics infrastructure in those neighborhoods.
So actually, our dialogue, even with more left leaning governments, has it been incredibly constructive because not only we're generating jobs, we're generating tax income from them, I would say, particularly in Argentina, I can't think of too many corporates that are delivering so much tax income to the state.
Then if you think about Mercado Pago and the digitalization of payments, that means more visibility, less informality, better way to monitor population, that's something that they like and then that governments do. I would say, increasingly, we feel better about not having too much of the government imposing sanctions or getting in the way of the business because I think we generate employment, we generate tax revenue, we're generating financial inclusion.
Venezuela didn't really deconsolidated because of a political reason. The problem in Venezuela was that because of the significant gap that existed between the official exchange rate and the parallel exchange rate, if we kept on not deconsolidating it, Venezuela was going to be like 60% of our business which is not reflective of [the reality of]our business, but Venezuela has been deconsolidated but it's actually doing very well. It generates a lot of cash flow. Not a lot in dollars because Bolivar is a worth less but the business continues to come very well. If I think about what's keeping management up at night, I don't think politics is one of them.