Magazine Luiza, the Brazilian retail chain known as Magalu, announced on Wednesday a commercial partnership with Mercado Livre that will let it sell products through the e-commerce platform's marketplace.
The deal covers products from the Magazine Luiza, KaBuM! and Época Cosméticos brands, all part of the Magalu group. It follows similar agreements the company has already struck with Amazon, AliExpress, Americanas, Itaú Shopping and Livelo.
Mercado Livre is Latin America's largest e-commerce platform, operating across Brazil and much of the region with businesses spanning online retail, payments and logistics. Magazine Luiza is one of Brazil's largest retail chains, selling electronics, appliances and other goods through both physical stores and online channels.
Magalu chief executive Frederico Trajano said in a statement to the press that the company's strategy was to combine the audience of its own channels with that of other relevant platforms such as Mercado Livre, in order to accelerate the growth of its online sales in the very short term and do so profitably.
Magalu's digital channels reach a base of around 50 million customers, the company said.
What Magalu will sell on Mercado Livre
On the Mercado Livre platform, the Magalu group will offer roughly 27,000 items from its own stock, spanning categories such as electronics and furniture as well as games, computer products, cosmetics and perfumery, among others.
Deliveries will be handled by Magalog, which describes itself as one of the largest logistics operators in Brazil, serving 100 external clients and generating more than 3 billion reais in revenue in 2025.
Magazine Luiza said the shipping partnership has room to grow. It raised the possibility that the chain's physical stores could eventually serve as pickup and return points for products sold by other Mercado Livre partners.
The company added that Magalog could also expand delivery options for heavy items such as refrigerators, stoves and furniture, and other products weighing more than 30 kilograms.
Analysts see a natural step after Casas Bahia's troubles
Analysts at Citi described the partnership as a natural step for both companies, particularly after rival retailer Casas Bahia filed for court-supervised bankruptcy protection. Casas Bahia has had its own partnership with Mercado Livre since last year.
For Mercado Livre, the analysts said, adding Magazine Luiza to its marketplace should help widen its product assortment and likely fill part of the gap left by Casas Bahia.
For Magazine Luiza, they said the agreement provides additional access to Mercado Livre's large base of online traffic and offers another way to monetize its inventory with limited extra commercial investment.
The Citi team said that at first glance they viewed the partnership as positive for both companies, but that they still needed more clarity on the economics of the deal, including commissions, product mix, logistics and any overlap between sales channels, before they could assess its impact more precisely.
The analysts said what mattered most for Magalu was understanding the actual commission, or "take rate," it will pay Mercado Livre, how that rate might change over time, and whether selling through Mercado Livre's platform will ultimately prove more economically advantageous than attracting a similar volume of customers through paid marketing channels.
Market reaction
Shares of Magazine Luiza surged more than 22% on the São Paulo stock exchange around midday on Wednesday. In New York, Mercado Livre's shares rose 1.37%, while shares of Casas Bahia fell 14.44%.
