Last-Mile Battle in Mexico City: Mercado Libre to Add 4 Warehouses to Surpass Amazon

In the Valley of Mexico's metropolitan area, a fierce competition is unfolding to dominate the last-mile logistics network in the country's central region. Over the past four years, the rivalry between Mercado Libre and Amazon has intensified. Both companies have rapidly expanded their infrastructure in Mexico City's industrial market to improve delivery efficiency and speed. However, their strategies differ.

On the one hand, Mercado Libre seeks to diversify its logistics network with new industrial warehouses, while on the other hand, Amazon is focusing on expanding and improving its existing distribution centers.

According to SiiLA data, Mercado Libre and Amazon account for 44% of the gross leasable area (GLA) in the capital's consumer goods sector. With investments in distribution centers and advanced technology, this competition drives industrial real estate development in the region, setting the pace for technological advancement and innovation in logistics, and positioning Mexico City as one of Latin America's most essential e-commerce hubs.

In the coming quarters, Mercado Libre is projected to take on four warehouses totaling nearly 300,000 square meters of GLA. One of these warehouses, nearly 78,000 square meters in Punta Norte, could be ready by early 2025. The other three—one over 100,000 square meters, another almost 21,000 square meters, and one exceeding 99,000 square meters in Cuautitlán Izcalli—could be ready by the end of this year.

It's important to note that these warehouses are significantly larger than those typically occupied by Amazon and Mercado Libre in the region, which average between 20,000 and 30,000 square meters of GLA.

If these transactions are finalized, Mercado Libre's presence in the Mexico City metropolitan area will increase by 65%, significantly surpassing Amazon and other competitors. This potential expansion not only underscores Mercado Libre's growing dominance in the region but also signals a shift in the competitive dynamics of the last-mile logistics network. Currently, the Argentine company has at least 15 properties in the country's central region, covering over 460,000 square meters of GLA. In comparison, Amazon has around 14 industrial warehouses totaling approximately 300,000 square meters.

Competition and Expansion

The last-mile battle between Mercado Libre and Amazon intensified in 2020 when e-commerce experienced explosive growth due to the pandemic. This global crisis not only accelerated the shift towards online shopping but also increased the demand for fast and efficient deliveries. In response, the competition between these e-commerce giants has continued to redefine the logistics and commercial landscape of the region.

Between the first quarter of 2020 and 2024, Amazon's space in Mexico City increased by about 80%, doubling its number of distribution centers. Regarding Mercado Libre, its GLA grew more than 2.5 times, quintupling the number of properties in its distribution network.

To put the growth of these two giants into context, it is essential to note that the consumer goods sector, to which they belong, grew by 46% in the same period. This increase shows that the expansion of Mercado Libre and Amazon has far exceeded that of the sector in general, underscoring their dominant role in transforming and modernizing the logistics and industrial market in the region. This trend also reflects the robustness and adaptability of their business models and their ability to anticipate and respond to market demands more effectively than their competitors.

The industrial real estate market in Mexico City and its metropolitan area is essential because of its high consumption levels, which are vital for last-mile logistics. According to SiiLA Market Analytics, 50% of Amazon's national GLA and 67% of Mercado Libre's are concentrated in this region. This concentration highlights the significance of Mexico City as a crucial logistics hub that meets e-commerce demand. Companies seek to dominate this market to optimize their supply chains, reduce delivery times, and remain competitive while leveraging the capital's connectivity as strategic infrastructure to expand and streamline their operations nationwide.

For more information on the performance of these and other tenants in the industrial market, explore SiiLA REsource or contact us at contacto@siila.com.mx.