I expect the market to continue to grow strongly for the next few years. As broadband penetration continues to grow, the price of accessing the internet through various devices continues to go down. The large and growing middle class continues to enter our market. We expect a CAGR of 33% in terms of e-commerce volume. There were $19 billion of gross merchandise volume transacted last year in the region. We expect that to continue growing. In terms of the number of people who buy online, we had 45 million consumers buying online this year. We expect that to continue growing at slightly over 20%. The growth rate in Latin America is the fastest in the world, both in terms of number of internet users and also in terms of gross merchandise volume. It's still a relatively small region in absolute size.
We expect this strong growth to continue for several more years. We have built a company that covers all of the key markets in the region, over 95% of its GDP. We are the leading e-commerce site in every country where we operate, and obviously in the region as a whole. In terms of the three largest markets, Mexico, Brazil, and Argentina, we have a strong leading position in each one of them. Our market share ranges between 20% and 35% for e-commerce overall. When you look at the region as a whole, we have almost three times the traffic of the second largest player. In terms of world standards, already our company has a relatively interesting size in absolute value. We are the eighth largest e-commerce site in the world with 33 million unique visitors per month. These are scores for figures.
Our results have been very strong during the last several years. This shows the evolution of gross merchandise volume since we IPOed and total payment volume. Gross merchandise volume, which is the value of goods transacted on our Marketplace, has been growing faster than e-commerce at over 30%. In the first half of this year, we grew at 32%, currently with a run rate of over $4 billion annually of gross merchandise volume. In terms of the payments transacted through Mercado Pago, it's been growing even faster at 64% CAGR. In the first half of this year, we've grown at 99% with an annual run rate of over $1 billion. Interestingly, our new businesses have also been growing very rapidly. We'll be covering each one of these business units in greater detail in a different presentation.
Mercado Clip, which is our search advertising business, has grown over 5x since we launched it in Q1 of 2010. Mercado Shop, our e-commerce storefront solution, has grown to over 18,000 active shops by the end of Q2. We launched it in Q3 of 2010. One of the things that we're going to be talking about today is how we have evolved since we IPOed in 2007 till today and where we see the company going forward. When we IPOed in 2007, we basically had an e-commerce site and a closed payment platform that cleared transactions that occurred within our e-commerce site. The plan then and what we have been executing since then and we continue to execute going forward is transforming our company from a website to an e-commerce platform that provides solutions to whomever wants to do something related to e-commerce in Latin America.
First, as we grew our Marketplace, as you've seen, and we're going to see in much greater detail all the things we've been doing to our Marketplace, the Marketplace has been growing very, very strongly. In addition to that, we've launched an open payment platform that serves to process transactions that occur both within our Marketplace but also outside of our Marketplace. Mercado Pago has been growing very rapidly and has enabled us to capture share of e-commerce that occurs outside of our Marketplace website. Mercado Clip, our search advertising solution, has been very instrumental initially at helping us capture the large retailers that had always been hesitant at listing products on our site because they saw us enabling thousands of competitors that competed against them. They were not very friendly to us.
They've come to the realization that they will have to compete with smaller merchants and that Mercado Libre is a great tool for them as well. They have been eagerly buying traffic from us. That has enabled the relationships that we intend to drive forward, eventually having the large retailers also listing us on our platform. Finally, Mercado Shop has also enabled us to capture share of e-commerce outside of our Marketplace as small merchants have started to build a presence on their own in the web. In addition to that, as the web goes mobile and local and social, we've realized that just being a very successful website is not enough. We have started to produce solutions that enable people to access our various properties from the mobile devices. We've launched our Marketplace application for Android and iPhones a few weeks ago, slightly over a month ago.
We have several hundreds of thousands of downloads, and it's growing very rapidly. Where we're going is mostly towards linking all these properties together so that each one creates synergies with the other one and opening them up so that we can create a platform for third-party developers to create further solutions using our properties as a basis for e-commerce in the region. We believe that is a very sustainable vision that will enable us to continue growing the company for many decades as commerce in general and e-commerce continue to grow in the region. We believe that today it is still day one as e-commerce is a very small fraction of commerce in general. Even after doing all the things that I just briefly described, we see the opportunity as big as we have ever seen or perhaps even bigger. That's what we intend to capture.
We will be focusing on trying to remove three key friction points that we believe e-commerce generates and has so far been hard to solve. One is when you look at this from the buyer perspective, it's finding whatever you're looking for. The second one is receiving it and being able to track it and making sure it gets there on time. The third is paying for it. Each one of these areas presents lots of difficulties. We have been working a lot to solve these difficulties. We will continue to be focusing a lot behind these three areas. In terms of finding or matching supply and demand, we have invested tremendously in search. Daniel was going to be giving you a lot of details about this.
Our search engine is by far the most sophisticated in the region in terms of e-commerce and is very successful at matching demand and supply. We will continue to invest there. We will also continue to focus on increasing selection as we grow the number of listings in our Marketplace and also we grow selection outside of our Marketplace with the various solutions that we have through Mercado Shop and also our search advertising. We will be focusing very strongly on having better solutions for verticals. We have been very successful at doing this with motors, where we have the leading position in almost every country in the region, particularly which is a very big opportunity in apparel and fashion. Social, as you obviously know, is a huge opportunity. We have been integrating our solutions to the social platform strongly. We've been seeing very good results.
We see a great opportunity here as well. Finally, mobile. As you know, mobile in Latin America, as well as in other parts of the world, is growing very rapidly. People are accessing the web through their mobile devices. We are going to continue to focus on providing good solutions on the mobile platform. Finally, local. Combining mobile and local is a huge opportunity. We're going to be increasing demand and supply, particularly supply, by surfacing local listings to our users. In terms of payments, there are several areas where we will be focusing on. Mercado Pago today is the largest online payments platform in the region and is growing very rapidly. It's a key area because it provides buyers the ability to pay with several distinct means of payments, not only credit cards but also offline means of payments.
In Latin America, people use credit cards many times to finance transactions. We are working and continue to provide lots of financing alternatives, very favorable financing alternatives to our buyers. The volume that Mercado Pago has enables us to get very good terms that we transfer to our buyers. It's a huge benefit, particularly for the small sellers. Osvaldo will be giving you more details about this. We will guarantee to users, we already do in many cases, that whenever they pay a transaction through Mercado Pago, it's going to be a safe transaction both for the buyer and for the seller. We're also going to grow payments outside of our Marketplace business, as we have been doing, adding sub-brands that use our payments platform to process their payments. Finally, mobile.
As people start to buy offline with their mobile devices, there's a huge opportunity for Mercado Pago to not only be the largest online e-commerce payment platform but also to capture share of commerce overall as online and offline continue to grow. In terms of shipping, this is a key area where there are lots of things to be done. We will be focusing on enabling in-store pickup that we believe will continue to be relevant in many areas of Latin America. In addition, integrating with online tracking, integrating our systems with the systems of the sellers, enabling fulfillment better, and allowing buyers to have expedited shipping 24 hours so that they can have a very fast and convenient transaction. Finally, in addition to focusing on payments and shipping and in findings, we will be very active at providing a world-class customer service.
Whenever we see friction, we intend to solve it with our technology. In addition, we will be very proactive with our customer service efforts to help our users have a great experience every time they use our properties. We are going to be focusing on fraud detection, on setting the right rules and policies for the different countries, and the buyer protection program, integrating our Marketplace with the best CRM. We are actually working with Salesforce. We are integrating all our backend to Salesforce and ensuring excellent results in terms of productivity and customer satisfaction. Overall, we will be very proactive at giving better customer support to our users. Summarizing, we've done lots of things in the last four years. We've grown a lot. The region continues to grow very fast. E-commerce continues to grow very fast. Online and offline are beginning to blur. We see lots of opportunities.
We have a very strong leading position. The environment is moving very rapidly with mobile becoming a very real opportunity, social as well. We are going to continue migrating from having created the leading website to creating a platform that serves anyone and everyone to do e-commerce in the region, both as a buyer and as a seller, so that we are able to provide a solution to whomever wants to do commerce in the region, whether they are a small merchant who wants to sell on our Marketplace, a medium-sized seller who wants to sell on our Marketplace but also set up their own website, a large retailer who has their own website but wants to capture our traffic or wants to sell excess inventory through our Marketplace, and people who want to benefit from the financing that we offer through Mercado Pago.
All these things are things that we will be focusing on and connecting ourselves better with the shipping providers and the logistics services so that buyers and sellers can have better integrations with their systems and our backend. They can better monitor the process of their purchases from the warehouse until it's received by the buyer. With that, I will hand over to Stelleo, who's going to go into greater detail about our Marketplace system.
Thank you, Marcos. Good morning, everyone. I'm Stelleo Tolda. I'm the company's COO. As Marcos mentioned, I'm here to present on the Marketplace. The Marketplace is our largest and our oldest business unit. It is where Mercado Libre was born some 12 years ago. Last year, we had 15 million users who transacted on the Marketplace, more than 40, or almost 40 million items. Over 90% of those items were fixed-price items. Over 80% of them were new in-season products. Despite the fact that the Marketplace is our oldest business, these are really exciting times for the Marketplace as we see continued growth. The middle of this year, we saw yearly growth at 32%, very much in line with the growth rates that we had seen over the course of the last five years, and also higher than the growth rates we are seeing in e-commerce in the region.
Much of this growth is coming as we attract more users to Mercado Libre. At 58 million users at the end of Q2, we were about 25% of the internet users in the region. Though it is a sizable base, it's still a small base by comparison to the number of users in the region. There's tremendous potential for us to continue driving growth as we attract more users to Mercado Libre. A key factor for growth in the Marketplace is obviously the balance between supply and demand, as Marcos mentioned in his presentation. We've been focusing on both ends of this equation, starting with lowering the barriers for sellers, making it easier for people to list on the platform, catering to the needs of those sellers, especially by providing a strong flow of buyers. We provide a very liquid Marketplace for buyers and sellers.
Let me start talking about the supply side of this equation first. As we have lowered the barriers for sellers to list, we have seen an impressive growth in the number of listings on the Marketplace. At the end of Q2, there were more than 11 million listings on the platform. A key factor for the growth on the supply side has been our willingness to migrate from a model which originally charged for insertion fees to a more back-ended price model, decreasing the barriers for people to list and effectively creating a freemium model where users who are looking for placements can pay to stay at the top of our search results. Ultimately, users who are not interested in placement can pay a commission when they have a successful transaction. We've also attracted sellers with a very complete package, which starts with payments.
Mercado Pago is a one-stop shop solution for payments. There's a lot of work that has gone into integrating with all these payment providers in the region. There's a lot of technology also that goes into providing this sort of portfolio for clients. This is in itself a reason why more and more sellers have joined the platform. Marcos mentioned as well in his presentation, and Osvaldo will be delving more into this in his presentation. Financing is a key component of sales in the region. As we see people paying in installments with a credit card, we see more volume and typically higher tickets as well. Through Mercado Clip, our advertising product, we've also been able to attract a group of retailers or sellers who weren't selling on the Marketplace. Nicolas will also be talking about that in more detail.
What we see is that these sellers are interested in our large traffic. We saw some of those traffic numbers in Marcos' presentation. They continue to be interested in participating in that traffic through Mercado Clip. We are seeing interest that goes beyond just buying traffic from us, from large retailers. This interest consists of actually listing on our platforms. This may be different in some more developed markets. We are just seeing in some of our markets that our retailers are looking at the potential of the internet for the first time now, moving their offline inventory online, setting up their own e-commerce websites, and evaluating Mercado Libre as a potential Marketplace, not just for them to use as an advertising platform but to actually list on the platform and sell directly.
Mercado Libre is well positioned to capture this interest because we believe we offer an interesting value proposition that competes directly with the offline through a more cost-effective solution, including Mercado Pago, of course, a marketing product which really is based on results. As we move into providing shipping solutions, we also believe that we can be competitive in that space. Part of the challenge of attracting these large sellers or vertical retailers to list and sell directly on the platforms is a technology challenge. We understand that many of these companies that do sell online through their websites have their own systems of managing inventory. This is something that requires that we provide also a technical solution for them to integrate onto the platform directly. Many of these sellers are also looking to sell in categories where Mercado Libre currently is not strong, particularly fashion.
Most of our transactions are still in consumer electronics, as you may know. We've been working very hard to provide a solution that is both interesting for sellers but also, in this case, this is a more buyer-focused slide, if you will. We have already been starting to provide in this category what is an interface that we believe is more adequate for buyers who would be looking for clothing, so things such as size and color, which before were not available on our platform. Finally, when we talk about fulfillment, our initial efforts are in what we call dropship, which consists basically of providing a more consistent experience to the buyers. Many of our sellers who are less professional or smaller sellers ship directly from their own home. Sometimes people go and pick up a product directly from them, as we saw before.
As we integrate with shipping providers in the region, we believe that we can negotiate better terms for these sellers. We can also provide what we believe is a more consistent experience. As we seek to attract larger retailers, the needs become more complex and may require that we also partner with fulfillment providers in the regions to provide a more complete solution, which includes fulfillment directly for these sellers as well. Let's talk about the buy side, the demand side as well. First objective there is to generate more activity from our users. We saw that our user base is very sizable and growing. If you look at how many people have transacted from that user base, last year, only 21% of our registered users bought on the site. If you add sellers, 26% of our users bought or sold on the platforms.
That number is significant at 50 million and growing at almost 30% a year. We still believe that we can extract more and more activity from our existing user base. The second objective is to generate more repeat purchases from those users. We have seen that repeat buyers are actually growing faster than new buyers. Last year, for the first time, more of our GMV came from buyers who were buying not for the first time. As we see, the growth is not quite twice as much, but one and a half times as much as the growth coming from new buyers. We also see that repeat buyers buy on average more than new buyers. Clearly, for us, this is an area of focus. How do we do this? First, by ensuring a very trustworthy experience.
Our users are looking to have what they consider a good and safe experience on Mercado Libre. We work very hard at preventing fraud. If we do have a problem, we also provide a buyer protection program to resolve the disputes and problems that our users may have. Of course, we need to be available when they need to contact us. Our customer support center is the largest group within Mercado Libre, with more than 700 people in two major centers in Brazil and Argentina, and now smaller centers in Venezuela and Uruguay as well. Part of providing a great experience, a safe experience for our buyers, includes also identifying who our best sellers are. We do that through what we call a certification program. A certification program is a mystery shopping experience where we evaluate who our best sellers are.
We reward them by providing them a logo that identifies them as a power seller. Typically, their results appear first on search pages. We also offer them priority customer support and discounts on transaction fees. From the buyer perspective, we cover transactions from those sellers with a higher buyer protection program. There is clearly an incentive both for sellers to grow into this category and for buyers to buy from these sellers. Let me share also some of the exciting things that we're doing on the product side. Daniel will be speaking next about those in detail. Let me give you some of the perspective from the Marketplace on products. We've really undergone a major change in our flow, starting with the registration. On the left, you see what our old registration page looked like. On the right, the new one. We can debate here what we like more.
It's not so much a question of what looks better. Really, we've seen tremendous improvement in our results as we launched this stage on the right, as we have really lowered the barriers for people to register on site. Offering a more social experience and a more personalized experience is also key in improving conversion. Until recently, we didn't have the capability to do these sorts of things. Daniel will go into more detail why we can now and could not before. This has also provided us with an increase in growth rates and transactions. As people see recommendations from Mercado Libre, or they are able to navigate where they were before, the history, as they see social content that other users offer on the platform as well, search is key for the buying experience. We know that.
Marcos mentioned in his presentation it's an area where we have used lots of resources over the years and continue to do so. As we launch these new features, we have seen conversion improve directly as a consequence of them. To finish up, Mercado Libre has what is the leading position in the region. We have a very well-known brand and a strong Marketplace business. We really see the opportunity as just beginning. There's opportunity for us to continue growing very fast as we reduce the friction to our users and improve conversions continuously. We've got the supply side, where we have a solution for our existing sellers, which includes payments, which includes advertising, and increasingly will be including as well shipping. That caters to the different types of sellers. We intend to attract a group of sellers that today only list on the platform through Mercado Clip to sell directly.
Finally, if we look at the demand side, our focus is on increasing the activity from our existing users by providing an experience that is more social and personalized and also guaranteeing that they have safe transactions. Thank you. Now I'll turn over to Osvaldo, who will talk to us about Mercado Pago.
Thank you, Stelleo. It's a very exciting time for Mercado Pago. What I'd like to share with you, I thought I would first go through a very brief summary of what we've done today, and then also spend some time going through some of the initiatives we are rolling out, most of them in this quarter. We expect those will be the growth driver for the coming quarter. Mercado Pago enables e-commerce. We first started back in 2004 as a closed platform only working within Mercado Libre. Over the years, we have been turning that, rolling out what we call Mercado Pago 3.0, or a subversion of Mercado Pago, which is an open platform that allows e-commerce both on Mercado Libre and off Mercado Libre. We first rolled out Mercado Pago 3.0 in Argentina two years ago in September 2009. Last year, we rolled out Mercado Pago 3 in Brazil. That's on July 10, 2011. Sorry.
Earlier this year, in April, we rolled that out in Mexico. We have already announced that we are rolling that out in this quarter in November in Venezuela. We will then see what the impact that has been having on growth. We are very excited with this. In terms of geographic locations, beyond these four countries, we're in Chile and Colombia. We have local offices in each of these countries. These are the six more relevant Mercado Libre markets. Even though we have local offices in these countries, we have most of our people in Argentina and Brazil, Brazil because it's our largest market. In Argentina, we have mostly all the backend and all the operations for all the Spanish-speaking countries. Over the years, we have integrated with over 50 different means of payments. Something that is interesting are the peculiarities and the complexities of each market.
Even though, for example, we work with credit cards, with major credit cards in each of the markets, we require at least a local integration on a country-by-country basis. It's complex. Part of the reason for that is that there are many local brands, such as, I don't know, Intercard in Brazil or Tarjeta Naranja in Argentina, which you have to integrate locally. There are also many globally branded cards, such as Visa or MasterCard. When you get a Visa in Brazil, it says valid only in Brazil. That transaction has to be processed locally, and therefore, it requires a different integration in each of the markets we're in. Furthermore, if you look at Mexico, for example, and if you want to process installments, we'll be talking about installments later in the presentation.
If you want to process installments with most of the issuing banks, you need a specific integration for most of the banks. We had to do six different integrations in Mexico when we launched, one with Manamix, one with Mercomer, one with Amex, and so on. The reason I'm mentioning all this is because each of these integrations takes between one and two months. It really becomes a competitive advantage once you've done it. It's a barrier to entry into these markets. It also adds to the value you offer merchants when they start selling with Mercado Pago because with a single integration that they can do in a couple of hours, they are able to, for example, in Mexico, sell an installment with many different banks, with pretty much all of the different banks. Something else worth mentioning with regard to means of payment is cash alternatives.
Bank penetration and credit card penetration in Latin America is in the order of 40%. Even though most of the people who have access to the internet have a credit card, many of them don't, and particularly the younger ones. For us, roughly 30% of the volume comes from these cash alternatives. What are those cash alternatives? Things such as boleto bancario in Brazil, portienda factura in Mexico, or pago fácil in Argentina. In each of these cases, users will go to Mercado Pago, say they want to pay for something, print an invoice with a barcode in it, and then go physically to a local branch, to a local bank in Brazil, or to a tienda Oxxo, which is sort of a 7-Eleven in Mexico, or pago fácil, which is a small kiosk in Argentina, and pay cash.
Within 24 hours, the money will be in their account, and they will be able to complete that transaction. This sounds cumbersome. It is cumbersome. For people who don't have a credit card or a bank account, it's the only way they can do e-commerce and get prices which are significantly cheaper than they would get in their corner stores. Mercado Pago has been growing roughly at a CAGR of 80% in the last few years. If you look at volume, it's been growing at 79% and transactions at 82%. Something that is exciting is that during the first half of this year, we grew both volume and transactions significantly faster than our CAGR. We grew in volume at 99% and transactions at 144%. We are very excited with these results. What I'd like to talk now about is a little bit about what we are working on right now.
Most of these things we plan to roll out during this quarter or if not during the next few quarters. We believe we'll continue to drive our growth. The first thing we are doing is continuing the rollout of Mercado Pago to the new markets. As we mentioned, we first rolled out this. This is the number of transactions, the total number of Mercado Pago transactions on a quarter-by-quarter basis for the last two years and a half. At the beginning of the third quarter in 2009, we rolled out Mercado Pago in Argentina. You can see there that there was an acceleration in the number of transactions. The same thing happened when we rolled out Mercado Pago in Brazil at the end of Q2, beginning of Q3 last year. The same thing happened when we rolled out Mercado Pago in Mexico in early Q2 this year. We will roll out now in Venezuela.
We are very excited about this. Obviously, Venezuela is not as big as Argentina, Brazil, or Mexico. Nonetheless, we believe that our penetration in Venezuela will grow significantly. Something else we're working on is, and Daniel will speak in more detail, you've probably been hearing for several quarters that we are moving our application, our Mercado Libre application, from a monolithic application where everything interacts with each other to a more open application, with monolithic and closed to an open application with less dependence from the different parts. This is enabling us to gain more flexibility and more speed in the amount of changes we do. This is shortening the feedback loops. We think we'll roll out something, and we roll out something else, and we get feedback on that. For example, in the same way as Stelleo mentioned, we have changed our homepage, our view item page.
We are now in the process of rolling out a new checkout process for within Mercado Libre. It used to be the case that on a prior checkout, you just have to go through six different screens in order to complete the checkout to pay with Mercado Pago. With our new checkout, which we have already started to roll out in Brazil, it's live already for a few percentage points of our user base in Brazil. They can pay with just three different screens. Actually, those screens are light bulbs, so they're never leaving the view item page. All the transactions take place in the same screen. We believe this will increase and improve our conversion rate.
As I just mentioned, we started to roll this out to a few percentage points of our users, and we are fine-tuning it before making it widely adopted first in Brazil and in the next few quarters to the other markets. This will help us in two ways. This new checkout will help us first grow organically, the penetration of Mercado Pago within Mercado Libre. By penetration, we mean the total PPV divided by its total GMV. This number has been growing steadily over the years. It was 14% in 2009, 20% last year, and 27% in the first half of this year. We believe that with an improved checkout, with increasing conversion, we continue to drive this number up.
Not only that, also, as we feel more comfortable with the new checkout, and we believe that users find it easy to use, what we plan to do is start making Mercado Pago obligatory for specific segments, mostly for segments who today have a lower conversion rate or for new users and new sellers where we believe there are higher risk transactions. We'll start with those segments. Eventually, we plan to increase making Mercado Pago obligatory and take that eventually to 100%. If you look at marketplaces in other parts of the world, it's very common that 100% of what gets sold in a marketplace gets paid through the marketplace. That is in the direction we are moving. We believe there is a huge opportunity, despite the growth we're having, to continue growing within the Mercado Libre platform.
The other part of Mercado Pago, and probably the one where we are seeing the most growth in the last year and a half, two years since we started rolling out MP3, is off Mercado Libre transactions. We don't disclose specific numbers, but Mercado Pago is growing several times faster off Mercado Libre than it is growing on Mercado Libre. When we started rolling out Mercado Pago first in Argentina two years ago, our targets, we started working with those merchants who already sold on Mercado Libre. They were starting to build their new sites, small and medium retailers. Then we fast moved from that and added larger retailers. We worked, for example, with Nike in Argentina or with Pepe Urbano in Argentina or with Graffiti or Autoplaza in Mexico and Brazil. We started to move to larger retailers. Over the last year and a half, two specific segments have been growing a lot in the region.
The first one is Groupon clones, which is a coupon site. There are hundreds of coupon sites in Brazil. Every large city, every major city has several ones of them. This has become a very significant category for us, both in Argentina and Brazil. It is starting to take traction in Mexico. Also, digital goods, mostly games so far, but it was an industry that was pretty much nonexistent a couple of years ago in Latin America. It is starting to take traction. In order to better serve this site, what we have been doing and what we are also rolling out right now is a new checkout. In the past, the checkout we offered was similar to the one we had on Mercado Libre, but it was even worse, probably because the users had to leave the site where they're buying something to come to Mercado Pago.
The flow would take them to the Mercado Pago site, enter their credit card information or log in to our site, and then go back to the site where they were buying. This would take an average of five steps. We are now rolling out a new checkout, which is also based on light bulbs. This allows users to complete all of the transactions in fewer steps, but without leaving the site they are in. If the user is already a Mercado Libre user or a Mercado Pago user, they just have to log in into that site and tell us if they want to pay with a credit card we have stored for them. Even if they are not a user, they can pay in what we call a guest mode, meaning they just enter their credit card information and their name and email.
They don't have to create an account at that moment and just complete the transaction without leaving the third-party site. This is done in a very secure way. We still hold all the, and we still capture directly all the credit card information so the third party does not have access to that information. This has, we believe, two big advantages. One is for the buyer, it's a better experience. The drop rate is smaller, so it has a larger conclusion rate. It also gives us access to some retailers who were not willing to work with us if the user had to leave their site. Now they are more open to working with us because they see all the transactions take place within their own site. This has also been done with attention to our new technology. This gives us lots of flexibility.
One of the things that has happened to us is we've been approached many times in the last few months, I would say, by subscription services asking for us to release a recurring payment solution. We'll be doing that in the next few weeks, in the next few months. This will enable us to start really working with that kind of good that our users are sold and charged on a monthly basis. Let's move on to payments for a second. This is not necessarily an innovation we are doing right now. I believe it's probably the most difficult to understand part of our business, most particularly in Brazil. I wanted to spend a couple of slides going into a little bit more detail than we usually do over the phone. Roughly 70% of the volume of our PPV is paid with credit cards.
Of that 70%, roughly another 70% is paid for in installments. A little bit over 50% of our volume is paid for in installments. Probably the first thing to know is that in Latin America, mostly in Argentina, Brazil, and Mexico, installments are hugely popular. If you want to buy a chicken dough, most consumers will just check what is the price of the monthly installment. They are more concerned about that price rather than the total amount they are paying. They're more concerned about whether they can afford to pay a monthly installment of, let's say, 100 reais. You see that the most popular installment we have on the right-hand side is 12 installments. It's the way most consumers decide to pay for what they're buying.
If we were to chart an average selling price versus the number of installments, it would be the case that the larger the number of installments, the higher the average selling price. People, when they're buying higher ticket items, are paying for the most in installments. Installments work in a different way on a country-by-country basis. Probably the most complex one is in Brazil. I have detailed how a transaction works in Brazil. I graphed the transaction, assuming it was paid for in three installments to make it easier. The process is exactly the same if it were to be 12 installments. The buyer decides he's going to pay in three installments. The standard solution is not what we do today. The standard solution today in Brazil is that you pay the first third of what he's buying for.
He's buying in 30 days, the second third in another 30 days, and the third third in 90 days. On average, he will pay in 60 days. The clearest thing about Brazil is that when the buyer pays in three installments, all the money flow happens in three installments. The issuing bank pays the acquiring bank in three installments, and the acquiring bank pays us as a merchant or pays the merchant in three installments. For us, that would demand a lot of working capital because we pay sellers. We let sellers withdraw their money. We have two different types of accounts. Professional sellers may withdraw their funds in two days, and personal sellers may withdraw their funds in two weeks. However, on average, they withdraw their funds in about three weeks, in about 21 days.
If we were to collect after 60 days and pay in 21 days, we would have 40 days of negative working capital. What we have been doing and the way we work is we sell all those receivables pretty much on a daily basis, sometimes on a weekly basis. Instead of collecting after 60 days, we collect right away the next day or five days after the transaction. How we do that is we sell those receivables either to a bank or to a credit card processor company. What is really attractive about Brazil is that this is a competitive process because I have all these receivables, and then I have several banks who are willing to buy them. It's attractive to them because we have first a huge volume and also because this is extremely low risk. They control the flow of funds.
They will get paid as our acquiring bank. They will get paid by the issuing bank. There's a lot of receivables, so it's really low risk. It doesn't have pretty much any risk because the risk of the buyer defaulting is carried by the issuing bank, not by the acquiring bank. The risk of there being a charge back is still carried by us. If somebody makes a fraud and doesn't pay, it's still carried by us. For a bank, if it's buying those receivables, there is pretty much no risk. We get very competitive rates, and we are able to pass those rates to buyers and sellers. We charge buyers, not sellers, for the financing. The opportunity that the price they get is really, really competitive. This enables us when we are working on Mercado Libre.
We already have very competitive prices on Mercado Libre, and now we have competitive prices and competitive financing. If we are off Mercado Libre, we are able to enable small, medium, and even large sellers to get a better rate, to offer a better rate to their consumers than they would be able to offer on their own. Most small or medium sellers would not be able to get a bank to discount their receivables because they're not large enough. In the case they do, they would end up paying a significantly higher rate than the one we are paying. Moving on to Argentina, which is another country in which we have made significant developments in financing over the last, I would say, two years.
In Argentina, it's common or has been common for the last three or four years for merchants and banks to tie up to offer specific offers to consumers, to those bank cardholders. They are usually in the flavor of paying up to X installments with no interest. Usually, even the largest retailers get a sign-up to a couple of banks, two or three banks, some a little bit more. We did our first deal two years ago with Banco Hipotecario. It was such a success for them that we were able to replicate this deal with 15 different banks. We have 15 different banks in Argentina who offered their cardholders up to 12 installments with no interest. This is a huge advantage for cardholders. They can get the low Mercado Libre prices in pretty much every category, and they are able to pay for that in 12 installments.
We are talking about some very large banks such as Banco Galicia, which is one of the largest private banks in Argentina, Banco Hipotecario, Citibank, Standard Bank, and so on. This has been a good driver of Mercado Pago adoption in Argentina and also a significant driver of growth market and volume in Argentina. Finally, I wanted to go through some of the initiatives we are currently working on. The first one is in the same way as I think Daniel will go into more detail afterwards. As we're moving from this monolithic architecture to an open and decoupled architecture, we get to work and do things faster. This is where we started to do these changes, with the core and the Marketplace itself. We are behind the Marketplace probably two or three quarters, so we are starting to see results of this decoupling.
Beyond the checkout, one of the things that we are starting to prepare are our APIs. So far, Mercado Pago has been a closed transaction, a closed platform you could only use going to our site. By launching APIs, this will allow third-party developers to, for example, modify their checkout or allow Mercado Pago to their specific needs. We believe we generate a lot more traction on the platform. We are continuously working on improving our fraud protection engine. We have over the years developed a very strong engine. We have a very low fraud rate and a very small false positive rate. We have done this by using lots of technology, but also by leveraging the huge amount of information we have. As Stelleo mentioned, we have nearly 60 million users. That is a significant percentage of total users in Latin America.
For most of the people who are entering a transaction, be it at Mercado Libre or a third-party site, we most likely already know something about them. We have combined all that information in a storing mechanism that allows us to process most of those transactions simply in times of seconds. We are also working on a backend tool pretty much to strengthen and automate what can be automated, upgrading banks and launching new means of payments. There are always means of payments we want to add in different countries. As we move to more countries, more means of payments in those countries too, what we try to do is try to prioritize those in terms of what added volume they will bring to the platform. I mentioned, in general, those installations, those building those pipeline stage between one and two months per bank. Let's talk a little bit about mobile.
There are two things worth mentioning about mobile. The first one is probably not the obvious one. Some 80% of the mobiles in Latin America work as prepaid, meaning users have to go and pay first in order to get airtime to be able to use their mobile phones. What we just launched in Brazil, and we launched this, I don't remember if it was this Monday or last week. We started rolling this out last week, is to enable users in Brazil to withdraw funds not to their bank account but to their mobile phone. We believe it will be very attractive for users, not for large users who have thousands of reais in their account. They will still want the money to go to the bank account.
For one-time users who probably have BRL 20 in their account or BRL 30 in their account, instead of withdrawing to a bank account, they can send that to a mobile and have it as credit for airtime. It is attractive for users. It is also attractive for us. When we send money to a bank account, we pay a few cents for transaction fees. When we send money to a mobile phone, we get paid by the carriers. It will increase our take rate to those funds that are sent to the carriers. It is still very early to tell, but we believe it will add some revenue to Mercado Pago. Finally, we are starting to adapt Mercado Pago to have a decent application to pay with mobiles, mostly with iOS and Android. We are also probably one or two quarters behind the Mercado Libre application, but we will get there.
There is very little e-commerce going through mobiles in Latin America. I would say probably mobile e-commerce adoption in Latin America is 12- 18 months behind what is going on in the U.S. To sum it up, we are very excited with the growth we've had and we continue to have. We are working on several initiatives to continue growing strongly in the next quarter. Most important, the rollout to the new regions of MP3 and launching the new checkout both on platforms and off platforms. In both cases, we are starting in Brazil. In both cases, we have already started. We have it live with some sellers off Mercado Libre and to a small percentage of buyers on Mercado Libre. We expect to complete those in the next over this quarter. We are also working on several initiatives we just mentioned to continue to improve the buyer and seller experience.
Thank you. With that, I'll pass over to.
Let's take a break.
Sorry. Take a break.
Hello, everyone. Welcome back from the coffee break. My name is Nicolas Berman. Together, we will drive through the advertising business presentation. As we've seen in previous presentations, Mercado Libre has been incredibly successful in bringing small and mid-sized businesses into its ecosystem. Millions are selling in the Marketplace. We have millions using the Mercado Pago solution. We have an incredibly growing number of businesses starting to create their own online store by using Mercado Shop. With large retailers such as Best Buy and also brands such as Ford, Sony, Walmart, among others, the story is quite different. If we narrow down to the key elements of e-commerce, we know that we need supply, we need demand, we need a technology where supply and demand match, we need payment, and we need fulfillment. In the case of large retailers and brands, they already have supply.
Most of them already have their own technology so that it can accommodate to their needs. They have solved the payment issues, and they have also solved fulfillment in many cases. What they are always looking for to increase and increase and increase is basically demand. They are always trying to get more customers, more people into their properties so that they can boost their sales. Demand is something where Mercado Libre is a huge opportunity for them, as we are the largest property in terms of unique visitors in the e-commerce world in Latin America. We are not only the largest in the e-commerce arena in Latin America, but we are the site of combining the three following players altogether. We have more than 33 million unique visitors a month. We have a lot of users that are coming to Mercado Libre looking for products and services.
That's what we can provide at value to other large companies such as the ones we mentioned. We can provide them with traffic. We can provide them with sales. The way we do so is very similar as brick-and-mortar shopping centers do. We attach the large retailers into our platform. We attach them into our traffic so that they can capture our users and boost their sales. With this, we are not only getting advertising revenue for Mercado Libre, but we are also bringing more offerings for our users. It's not only about traffic, the amount of traffic. It's also about the quality of the traffic. Our advertisers are getting the chance to segment by interest. We have more than 2,500 categories where they can post their advertising. They can also target the millions of queries, the millions of different interests that people are looking for when they come to Mercado Libre.
If somebody wants to sell, let's say, diapers, and they want to place an ad in Mercado Libre so that people will go to their sites to buy the product, they just need to place the ad in the right category and select the right keywords. They will be finding people looking for their product very, very easily and in a huge amount.
This traffic and all this segmentation capabilities is what powers Mercado Clip, which is our search advertising solution. It's a cost-per-click, auction-based, highly targeted search advertising solution for our clients. The brand is all across Mercado Libre, and you can find it in the view item pages, you can find it in search results, and also in category browsing. As we can see in this example, when a user is looking for a notebook, he will get not only the organic results from the sellers that are listing on the Marketplace, but will also get different options on the right side of the screen, where other companies are also offering their supplies to our users.
It also appears on the bottom side of the page, and for some specific cases and some specific other titles, we allow them to use images in their ads so that they can boost their click-through rate, and with that, their clicks and the revenues that are driven through Mercado Libre. What's great about Mercado Clip is also that it's highly scalable. It has a self-service interface so that advertisers, the ones who place ads in Mercado Libre, just need to come, get registered, and then it's a two simple step process to have a campaign up and running. They just need to create the ads to go through step one, where they say what title they want on their ads, the subtitle, the destination URL where the traffic is going to be sent.
They need to define what the amount of money they want to invest on a daily basis, and then in the second step, just tag that ad to a category, and it's already set. They will be, in a matter of seconds, running ads in Mercado Libre. We do not disclose revenue numbers for Mercado Clip, but I wanted to share with you the growth rate that we are experiencing. In the last six quarters, we've been able to increase revenues by 5.5 x. Great momentum. We are very excited about how the business is growing and planning to continue doing so. What's most important for us is that, additionally to the revenues, we've been able to bring on board into our ecosystem brands and companies like Walmart, like Carrefour, like Samsung, Best Buy, Citroën, Falabella, Nokia, Philips, and many other more.
We have right now running more than 11,000 advertisers in the platform that are active. This has been a great success because we are not only bringing these large retailers and brands, but we are also helping in taking them to other parts of the ecosystem, of the Mercado Libre ecosystem. This is the case of Garbarino, which is the largest electronic retailer in Argentina, similar to what Best Buy is here in the United States, that has embraced also Mercado Pago. He started using advertising, and now he's using Mercado Pago in their own stores. It is a great success that we are bringing these kinds of customers and being able to take them into other parts of the ecosystem. For some specific advertisers that are looking specifically to boost discovery of the products and their services and branding, we also provide them with some display advertising units.
We have banners in several places of the website that they can use. We have some banner special positions in our homepage, advertising units in the homepage that are used to boost new products and special items that we call Products of the Month so that they can showcase their new product. We also offer sponsorship in some categories. Also from the homepage, we have a net unit that we call Deal of the Day, where companies that are—can we get Sarah from that?
OK, thanks. Where companies that want to showcase special promotions and very discounted products to our traffic can do so. Today, we are going to announce a new product, a new advertising unit that we are going to roll out in the next days that's basically starting to integrate third-party inventory into our Marketplace shopping experience. Let me show you an example that will make it more clear. There are lots of large retailers that want to get Mercado Libre traffic. What they want to get is sales, basically. They want to increase their sales. They want to get purchases. I'm going to take the example of Groupon, which is the first company that's embracing this new ad format. Groupon is going to send us the information of the coupons that they want to showcase in Mercado Libre.
We are going to grab that information and create, similar as the view item page, we're going to create a view coupon page. This is a view item page switch so that you can set coupons. It will be in the format of Mercado Libre, the user experience of Mercado Libre. We will showcase that view coupon page from an ad's recipient in the homepage so that the user will get interest in that coupon, will go into this view coupon page. Once they are there and they want to buy that coupon, traditionally, we would have sent the user through Groupon to the Groupon buying experience. He would need to get registered and follow Groupon checkout. It's a different experience from where he started, which is Mercado Libre.
Instead of doing that, we're going to allow the user to click on the buy button, and he will get directly into the Mercado Libre checkout. By doing this, the user is going to see the ad and be able to buy it directly in Mercado Libre. Once we get the payments information, we will send that to Groupon so that Groupon will fulfill that operation. It's a great experience for our users as they don't have to leave Mercado Libre to make the purchase. They already know us. They already know our checkout. It's very easy to do. It's also a great opportunity for advertisers because we are not driving traffic to them. We're driving sales. We're just sending the sales to them. What keeps me awake during night, in addition to my baby, is the great opportunity that we have ahead by going deeper and wider.
Deeper, in one hand, by expanding these third-party inventory integrations, bringing more and more and more items and services into Mercado Libre, and starting to plug this not only in advertising format, but also starting to plug it into the organic results. On the hand of Marketplace, we have a huge opportunity going deeper by continuing improving our algorithm. An improvement in the algorithm will drive an improving CTR in click-through rate that will bring more clicks, and more clicks are going to bring more revenues. We are going to focus ourselves on improving the recall of our algorithms, the sorting of our algorithms, and we are going to start leveraging all this data that we have from users.
We have tons of information that we can leverage from to start having behavioral segmentation so that we can show the right ad to the right user at the right moment in the right place. This will get us higher relevance and higher effective CPM, which will drive more revenues for the company. The one I'm most excited about is the opportunity that we have to go wider. Today, we are using the Mercado Libre inventory, and we are connecting it to the advertisers that we already have in the platform that we already brought.
By going wider and by opening our APIs, what we are looking for is to be able to go off MELI and not only have the inventory that we have in Mercado Libre, but also bring in inventories to be sold from other publishers so that we will be moving ourselves from being a product to an advertising platform. By doing this, we'll be able to capture more advertisers by connecting to other networks, exchanges, bringing more marketing budgets, and also connecting with more publishers, networks, exchanges, small publishers. We can all even use our own affiliates. We have a very large affiliate program that can be plugged into this. More advertising budget, more publishing, more impressions will eventually drive more business to the company. Wrapping up, we've been delivering great revenue growth rates. We're bringing large retailers and brands to the ecosystem, and we have a huge opportunity ahead.
By continuing integrating large retailers' inventory into Mercado Libre, continue improving our algorithms and leverage user data, and finally, opening Marketplace to third parties so that it becomes a platform, an advertising platform. Thank you. I think we might too. Daniel, our CTO .
Morning, everyone. I'm Daniel, and I'll be covering technology and product. Let me start by doing a little bit of history. Our platform was architected in the early 2000s. It was a great technology. It grew up here, but it was monolithic and closed. We had to get out of this monolith because it was slowing us down. We were only able to perform one release of our product every week. We approached many different evolutionary approaches to the problem. Then we chose a revolutionary approach. We took no shortcuts, and we spent more than a year rewriting first class. We switched from a monolithic application to an open and decoupled class. By decoupled, I mean that we're splitting our company into smaller cells. The cell is a functional unit that has its own SIEM, data infrastructure, and source code.
A cell can interact and talk to each other via well-established interfaces called APIs, application programming interface. Each cell acts as if it was a separate company, an independent company. For example, the order companies for APIs may perform as an API call on the user's API or the Facebook API or Twitter or its interior API. Conversely, any third-party application may call any of those cells if they have the right to access to do that. The real beauty of this is that given the fact that cells are small, they may push new code into production whenever they feel they're ready. They only have to check that they don't break their own functionalities, and of course, they don't break their contract. Benefit number one, agility. We switched from one release a week to 10 releases a day. I would expect that number to aggressively increase over time.
We have these common and base foundational layers of APIs. Despite there are cells, they are presented as only one API to their clients. We are becoming our second point. No, no, no. We became our first client. We rewrote our own web properties on top of these API layers. It was a huge rewrite. In parallel, we started working in mobile applications, desktop applications with third parties, and of course, our own back end. This is huge. Just as an example, we are implementing right now Salesforce.com as our new CRM solution on top of this very same layer. I think the benefit number two of this way of doing things is going multi-channel. It's got to check these unsustainable ways of keeping up with all those new screens that are going to appear over time.
At this point, I would like to share some examples of the acceleration in innovation and execution that we have seen as a consequence of those changes. We showed the most important flow within one of our business units for multiple rates as an example, and that's the buy flow. This flow could be represented as a four-step sequence starting by the homepage and ending up purchasing an item. I would like to share a technical and short view on this one. Let's start by the homepage. Recently, we have shown that there are two groups. There are the searchers, and they go straight to the search box. Nothing else matters to them. We have the browsers, and those guys come up into our site, and they want to be surprised with content. They don't know exactly what they're looking for.
It is pretty obvious that we were not delivering the right content for them. The flavor of the homepage was delivering great content to enhance and maximize serendipity within a homepage. We've done a series of experiments. This is funny because I wrote this slide two weeks ago, and today's homepage has a whole new widget in there. We are the present. We used to calculate the most sold items on our platform every day, and we narrowed down to every hour. Every time you cross, the homepage is also a hub. When we go again to your homepage, you get fresh and new content. We added this little arrow to the right, and that provides navigation within every single widget on the page. Those little arrows get clicked like crazy. We implemented the Facebook instance personalization mechanisms. I will go into greater detail on those later.
A diner registration form. This installment, as Osvaldo mentioned, installments are really important there. We added those below each one of the listings. This your activity widget, local daily deals, and last, the most shared items on our platform calculated every hour. Those just are examples. We've seen a 10% increase in the successful items coming from the homepage to the total impressions rating before after the change. Going back to the first group, the vast majority of those buyers do perform a search at some point in their buying experience. The flavor here, this is a full different game. The challenge here is to take advantage of the largest e-commerce-related data sets in Latin America. The problem there is how to use all this data, teach our machine learning algorithms how to improve search. That's the problem. It's a Facebook problem. It's hard.
Just as an example, we search for an iPhone there. Search right now can calculate related searches and also the right domain for this iPhone. It might be obvious to you, but search right now narrows down the search to the devices category. They are not showing iPhone accessories or books about iPhone. They calculated the right assets. In this case, one of them is already selected. This is just one query. We are optimizing right now millions and millions of those. The exciting thing is as we get more data, search will become more and more accurate. It's not the algorithms. It's the data. Another example, spelling corrections, hugely important for us. Our users are Portuguese and Spanish-speaking users. Our most important categories are consumer electronics that are usually spelled in English. It's not that easy for one of our users to spell things like Bluetooth correctly.
In this case, we search for Bluetooth, but horribly spelled. As you may see, both the formal perspective and the advertising platform can translate this particular correction into the right one. This is, again, just one correction. We have millions and millions of those. We're continuously adding new corrections to the system. We're roughly correcting 7% of our traffic. I would expect that number to triple in the next few years. If you find a product that you like, you click on this product, and you will get this product. In the product page, flavors here are speed, larger pictures, and information architectures. We've done usability testing and figured out the current version, and it's not going to be the last one. Larger pictures were great, but they were not enough. In many cases, buyers needed even larger pictures.
We started playing with these zoom-in pictures and the large pictures that are especially important for categories like fashion or collective. We also verticalized this view item page within our classified widgets. For example, this is the motor view item page, larger pixels, of course. Then there's contact data and catalog attributes as a central part of the page. This is a real estate version of the same page here. Maps and previews are the most important part. Again, after releasing the new version of this view item page, we have seen an interesting change in our core operating metrics and last checkout. The flavor in the checkout process is quite different. The flavor here is friction reduction. I took the same slide that Sally mentioned in the HIP's presentation because what's behind this great improvement is actually our APIs. Our APIs unlocked internal innovation. I'm very excited about this.
The guys that were writing the checkout process could build an integrated registration in their flow that they have access to. They want to invest in this. The before and after is obvious. Another experiment with the friction reduction is credit card information. When you eliminate friction, conversion rates increase. There is no exception to this. I wanted to show this example of the incredible acceleration of innovation and execution that we are seeing internally. APIs are great to open our platform, but they are already being great in unlocking our internal processes and internal innovation. I've never seen this pace of acceleration in a very long, long time. At this point, I would like to share with you some of the next steps we're taking and things we're working on right now. The first one is social. There's been a lot of experimentation in this area.
I would like to share three first experiments. We will continue experimenting in this area. The first experiment is the classic porting data from Mercado Libre to Facebook. In this case, when a buyer says something with one click, you can post this into your walls, and hopefully, it will be interesting to your social circle. The second experiment is the other way around. It's getting social into our website. In this case, we use this social integration for two different reasons. The first one is endorsement. We have 600,000 signs within our community. If it's the first time you visit our page, it is quite likely for you to bump into a familiar face. It will catch your eyes. With this tiny registration form combined within the same area, those two together, it's a two-work here combination.
It was easy to see the moment in which we implemented this with the form of the daily registration. This most shared item on Facebook is also a great widget because they show different inventories than the most sold items. You share different things of the things you buy. There are different sections, but they are not the same. This was one of the highest CTR widgets, setting aside the search posts and the category lists. The merit is double because it's on the bottom of the page and many times below the fold. A third experiment within social comes from the store business, the shops. You create a store in a couple of minutes, and if you're willing to implement and to spend a couple more minutes, you can create your Facebook store. That's a mirror store, and it's for free, and infotainment free.
Those are our three initial experiments, but we've shared a lot to be done in this area, just for the autograph. You should expect news in this field in the next couple of words. Finally, we launched our first mobile application recently. It's available on iOS, Android, and BlackBerry devices. You may appreciate it's a clean and easy-to-use application. We'll launch officially on October 6. I'm thrilled because we have already 400,000 downloads. That's a number even higher than I would have imagined. Payment of platform. As Osvaldo mentioned, we'll face many technical challenges. The most important thing of this from the product perspective of our merchants, most of them could end up in the gaming type, that they want to just look at a light box or a pop-up within my game, say, and then continue playing. This is the standard integration, and it's great.
With the new APIs, they will be able to customize this even more. We are to keep on investing in this area. Shipping. The main goal here is to ensure a consistent shipping experience within the platform, regardless of which seller you're buying from. We're working in structuring addresses and locations and the back end for sellers, and of course, integrating with the different shipping carriers. We have already verticalized our classified business. For our core Marketplace, one size does not fit all. You can expect us to continue verticalizing our core Marketplace categories. In this example, fashion, where the flavor is variations of size and color, but those ones may vary. Last, I want to spend a minute on the platform because there are many, many APIs out there, but not all APIs are created equal.
To pass a healthy platform progression consists of first, you must use your API within your property. APIs should not be just a backdoor in your system that allows third-party decisions because problems will come. We wrote our APIs, and we spent a lot of time rewriting our own properties on top of these APIs. Mercado Libre and Mercado Pago and Mercado Clip and Mercado Shop will eventually be built into the same APIs that we were sharing. If we could build the largest e-commerce site in Latin America, anyone could do the same or even better. In parallel work, we're working with partners because we need to have a sense of how it's like to share our data and processes with other companies and then open this API to the general public. We are waiting for the right moment, and you will feel really comfortable in opening this API to the general public.
We will do so. You may expect to do so after this episode, sorry, in the next few words. Wrapping up, we rebuilt our platform from scratch, greatly accelerated the phase of execution and innovation. We developed a new checkout, both on and off platforms. We launched our first mobile application. We're working on shifting on vertical. We are in the process of opening up class. That concludes. Thank you very much. If you have questions, I will be happy to take those if you're here.
There's a running competition within the company. What are the words that Latin Americans can misspell the most? I think it was PlayStation for a long time, had like 50 misspells. Now Volkswagen has like 96 different ways a Spanish speaker can get it wrong. We'll see what's next. Great. Last presentation before we break for Q&A. First of all, you've seen some of these slides just a few times, but I think it's important and worth going over everything that's been accomplished thus far. We've built an e-commerce platform that really is central to e-commerce activity in the region. We've built a brand that's synonymous with buying and selling online. We've gained significant market share throughout the region and in most of the markets where we operate as a consequence of all this.
The business, since the IPO and over the last few years, has diversified significantly and continues to do so, both by country and region, but also by business model. Mercado Libre really is the only regional e-commerce platform in Latin America, with operations in 12 countries in terms of platforms and a very, very strong market position of leadership in each one of those, in addition to throughout the region. As we've seen from my colleagues, a growing and vibrant ecosystem of new business units generates increasingly diversified cash flows and revenues for us from a financial model perspective, and also, perhaps even more importantly, for our users, offer them a variety of different ways to move online and sell online and a variety of different pricing and format alternatives.
It's really become a complete suite of e-commerce solutions that we can offer individuals on the C2C level, as well as retailers and large retailers, as Nicolas was showing. This has allowed us to scale the business significantly. The last quarter was the first quarter where we did more than $1 billion of gross merchandise volume, on track to surpass the $4 billion mark in terms of annual GMV, on track to surpass the first $1 billion in one year of payments processed, all of this being done by significantly more than 12 million active users, and all of these metrics growing at a faster rate than the rate of new users coming online and of the market as a whole. These business metrics have consistently transferred over into a very strong P&L with great top line growth, healthy margin profile. We continue to scale our OpEx.
We continue to generate free cash flow. We have a very efficient CapEx and property planning equipment investments and capital structure, and a balance sheet that is increasingly strong and gives us increasing agility. I think if we recap from the IPO to today, we're incredibly proud of what we've accomplished and the way the company has grown. We're very confident that we've delivered on everything that we said we were going to deliver at the time that we took the company public. The question now becomes, what next? I think part of what I want to do is walk you through. You're not going to get guidance from us, not yet at least. I do want to walk you through the way we think about our business and the way we think about our financial model going into increased granularity as we move forward.
First of all, some guiding principles. This was really just an excuse for me to be able to do four icebergs since Marcos did once, and I can up him. Seriously, probably the most relevant thing that we never forget is that despite everything we've accomplished over the last 12 years, this is still day one of the internet in the region. We are scratching the tip of the iceberg. Only a third of the population is online. Of those users that are online, only one in four are registered on our site. Of the overall population, less than 10% shop online. Less than a third of those that are online do e-commerce. All this translates to less than 1.5% of retail being online. All this, however, is changing at an incredibly fast pace.
We are at the epicenter of this move from the offline world to the online world in commerce. To make sure that we're able to capture that opportunity, guiding principle number one is we need to sustain investment in generating value for our users. We don't manage the business to margin targets. We don't manage the business to take rate targets. We manage the business to making sure that we invest everywhere we need to invest to generate value to our users. That will allow us to continue capturing users that come online.
It will allow us to continue increasing the user engagement and the engagement metrics that we drive from our existing user base, which will allow us to scale our business, to leverage our expenses, to continue to generate cash that we can then reinvest in continuously innovating, iterating on behalf of our users to generate more value for them and start the cycle again. This truly is the way that we think about our business and the way we think about our financial model. We look at ourselves each quarter, and we try to figure out where are we not doing enough and where do we need to put money against improving the user experience for both our buyers and our sellers.
We do, however, recognize that because of the financial model we have, we can do all that and at the same time continue to deliver solid earnings ramp-up for our shareholders. This is a balancing act that I'm going to walk us through a little bit more. Let me start with the revenue side first. This has been a story of growth on growth, a very attractive secular trend of growing online, an emerging market where still internet growth is here for a long time. It hasn't had the kind of hockey curve or exponential curve that we see in the U.S. Part of that is because the infrastructure still needs to be built out. Credit still needs to be extended. As we've always said, it probably means that growth will be much more sustained in time.
If you look at long periods of time, because of the growing ecosystem, because of market share gains, we've delivered revenue growth on top of the growth of the market. We're fairly comfortable that the revenue growth drivers are still there to continue to deliver growth on growth. If we look at secular trends, the macroeconomic outlook for the region continues to be very positive. Access to credit continues to be extended. A growing middle class continues to have upward income access. Broadband adoption, which is still in the teens, continues to grow. As I said before, more and more offline retail is moving online. That should continue to be the case for many years.
On top of that, we have a business, as you've just seen, that had an expanding ecosystem where, in addition to all the growth we still have in the Marketplace, from pursuing more vertical categories beyond our core set of consumer electronics and improving the experience and thus improving engagement of our users. On payments, we are very, very early stage. The off-platform payment addressable market is gigantic. In addition to driving on-platform payments from 25%- 100%, advertising is a very new business unit. Nicolas just walked you through the huge opportunities that exist there. One BU that is so small we haven't even addressed in detail is the Mercado Shop business unit, which is software as a service, essentially storefronts for merchants who want to complement the sales they have on Mercado Libre with their own storefront.
We showed one example of how you can cross-link the storefront we're providing to you with Facebook. The amount of things we can still do on that business unit in terms of delivering better and better storefronts for small and larger retailers is incredible. Finally, continuing to seed investments for future growth in mobile, the platform strategy that Daniel just talked about, which allows us to become a technology provider in addition to allowing retailers to sell on our own websites. Regional growth, although we cover 95% of the region's GDP, there still are markets where we don't operate marketplaces. It is very low cost for us to add an additional market. Obviously, with our balance sheet and with a growing ecosystem of interesting and innovative startups in the region, M&A is something that we probably will look to get more aggressive with as we move forward.
Turning to expenses, the focus for us here has to be to continue to deliver, scale, and leverage on most of our OpEx while freeing resources for the four key areas of investment where we feel we need to be the most aggressive to sustain our competitive advantages. Those are technology, customer service, compensation to retain talent, particularly in our engineering talent pool, but also beyond that. Do not forget that it is very early days and that customer acquisition and customer retention, so investing in marketing that has the right ROI, is still core. The job is in everything else to be very, very focused on scaling, scaling, scaling. The other important thing in terms of margins and the financial model is as our payments business really begins to hit stride and grow in terms of penetration of the overall Marketplace, that does generate margin pressure.
The payments business is a huge opportunity for us, perhaps the largest upside potential we have, but it is a lower margin business. From a COGS perspective, as payments continue to grow, there will be an increase in interchange fees derived from that payment volume. There are important offsets to that, namely as we scale that business, we also have increased negotiating power to drive down our merchant discount rates. We can also become more aggressive in directing funding sources. Obviously, the margin profile on a Mercado Pago purchase that is carried out through a bank transfer is better than one carried out through a credit card. From a COGS perspective, and I've already mentioned this and Marcos did too, customer service, we believe, is a key part of the value proposition we need to deliver over the next few years. We will continue to invest aggressively there.
Daniel mentioned that we're integrating Salesforce.com. I think that's a good example of how we invest more to improve the quality of customer service we deliver, but we also gain productivity from some of those investments, which help offset the initial investment in the new tool or the new program or the new service. Sales taxes, certain sales taxes that we do account for as COGS, are important to remember that some of those are driven by total payment volume growth and not revenue growth. As CPV continues to grow at the rate it's been growing, there is some margin pressure that's derived from that as well. On the positive side, an additional offset, as we provision and as we move more and more of our infrastructure to the cloud, and as connectivity charges become more and more commoditized, there are scale advantages that we can drive from there.
From an OpEx perspective, I think this is a great chart and one I like a lot because it shows that our operating expenses, A, are scaling, and B, they're scaling the way they should scale at a technology company. That is scale in G&A and scale in marketing, no scale in product development and R&D. Added advantages that technology is the smallest of the three investment buckets, but that's exactly how we think of the business and how we'd like to continue managing it going forward. Continue to aggressively invest in innovation. Continue to expand the engineering pool.
If you ask any of the business managers at Mercado Libre what frustrates them the most, and this is probably the case for any technology company, is that the list of things we know we can do to delight our customers is always significantly larger than the number of engineers we have to get those done in a quarter. For us, this is key. Continuing to grow the engineering pool we have, retain talent, and enhance the amount of talent we have. When we move to sales and marketing and G&A, it's much more about continuing to drive scale and leverage there without, as I said before, losing the focus on acquisition and engagement. We've already reached the point where more than half of our volume comes from existing users, as Stelleo mentioned. That should continue to be the case.
Acquiring new users, when only one in four internet users is a Mercado Libre registered user, only one in three Latin Americans are online, and only one in 10 shop online, is still very, very critical to our future success. G&A is obviously the area where we should be able to drive the most scale. There was a significant ramp-up in going from a private company to a public company and in meeting all the compliance and public company obligations we had. From that point on, our ability to scale G&A should be increasing over time without losing track that we want to continue to be competitive compensation-wise and that we are managing a business that increases in complexity. It is very important for us to make sure that we have the management information system and the management processes in place to keep up with the growing complexity of that business.
When you begin to look at the size of our payments business, the size of our Marketplace business, and the amount of regulatory and government oversight that that entails as you grow, it's critical that we do continue to invest intelligently in G&A, scaling it, but not forgetting it. Moving on down, if we look beyond EBIT, I think a couple of important things about how we think of the business model and the P&L going forward in the financial model. The first one is, and Osvaldo covered this, strong commitment to manage the business in a cash flow positive way, not take on debt. There's really no need to take on debt except for a capital structure perspective. The business generates cash. The payments business is very interesting because of all that float it generates.
All that stored balance that's going into accounts and that positive working capital is money that we still bear the yield on. As that business scales and grows, it becomes a very interesting financial turn for us. The float is ours. Continue to manage the asset base and the cash base we have efficiently. You get very good returns for a very conservative and risk-free investment of our cash. Part of that is because Brazil is a country where you can get very good yield at a risk-free rate. Part of that is the fact that we've also outsourced a lot of the U.S. cash management to people who know how to do this a lot better than we do. Tax, which I think has been somewhat of a challenge to model and to understand.
I think the good news here is that we have in place our tax planning strategy. We have consumed most of the loss carry forwards, or we will consume most of the loss carry forwards by the end of this year, which means that you will begin to see less oscillation in our tax rate. It should settle at a much smoother rate than in the past, somewhat below or a little below what the weighted average corporate tax rates for Latin America would be, given the fact that we have an Argentine tax relief, a tax holiday for being a software developer and a software exporter in Argentina, and our tax planning team optimized to take advantage of that. That tax relief has been extended for another five years.
The bottom line of all this is we have delivered, and we are committed to continuing to deliver strong earning growth, continuing to convert net income to free cash flow in a fairly straightforward manner. Our property, plant, and equipment or CapEx expenditures, because of the business model, are mainly servers and software licenses, so have historically been between 5% and 10% of revenue and should continue to be so going forward, leading to a balance sheet that is increasingly stronger and that gives us increasing flexibility to invest in the existing business, plant seeds for the future, get more aggressive in terms of M&A, remain committed to our dividend payments, and grow that level of dividends in line with our growth and earning powers. If need be, work on our capital structure, whether that be share buybacks or whatever makes sense at any given point.
Just wrapping up this part before we move over to Q&A, I think this is something that I've heard Marcos say a few times, and we all share, which is during those first 10 years, a lot has happened. We've built the preeminent e-commerce platform in Latin America. The interesting thing is that today, e-commerce is poised to take off in the region. If you look back at how we felt about our business and our chances in 2001, I think we feel a lot better today. The growth opportunity ahead of us is even bigger. We're a better capitalized company with a strong balance sheet and access to capital markets as necessary. We have a very strong brand that is synonymous with e-commerce throughout Latin America.
We've recently launched, after about a year of hard work, and you can even say a slowdown in short-term growth, a new technology platform that's incredibly flexible and that we're all very, very excited about within the company. We have an ecosystem of businesses that are more diversified and that generate stronger network effects between them than ever before. When we look at all that, we honestly feel a lot more optimistic about the company today than we have ever before. We think that the long-term prospects for Mercado Libre are very, very strong. I think with that, the most interesting part and where I really think these guys shine is Q&A. I really encourage you to ask all the questions you have. Hopefully, we'll be able to answer them.
Any questions?
Thanks, guys. Just the first question on payments. How big of an opportunity do you think payments is? I mean, you gave us a growth rate, and you gave us market size for total e-commerce. How big of a business continues to be at Mercado Libre if we go out five years? Can you talk about the strategy around the take rate for on Mercado Libre and off Mercado Libre? On the financing example that you guys gave where in Brazil, if you can't break it up into installment payments, if you take a $100 transaction, how does Mercado Libre generate revenue on the financing side or on the installment side?
Okay. With respect to the opportunity, we have a roughly 30% penetration of our Marketplace business. We intend to drive that to 100%. As Osvaldo was mentioning during his presentation, we see some very fluid marketplaces around the world where buying and paying are synonymous. That's not the case on our Marketplace today. The objective there is to get to 100%. It's obviously a challenge because we have created the market, and we have educated the consumer in one way. Therefore, we need to gradually transform that to make buyers understand that buying and paying should be the same. That's a 3x growth just in the Marketplace business. When you look at other payment platforms, the opportunity of our Marketplace business should be 2x- 3x what it is on the Marketplace business. That's what's happening, for example, with PayPal and eBay.
Our Marketplace business is growing really rapidly, and all that is simply addressing web payments. We believe there's going to be a huge opportunity in mobile and offline payments. It's hard to quantify exactly today, and we don't like to give projections. We just think it's a huge opportunity that we are the leader, that we have a very strong team, a very good technology, a very good brand, and we intend to capture as much as we can. Osvaldo, you want to take the other parts of the question?
Yeah, if I don't want to say the answer, [if we have a less secret].
Sure. I think, as Osvaldo mentioned and also implicit in the gross margin profile I just walked through, when we decided to bundle Marketplace and payments and offer single pricing for the usage of Mercado Pago, the decision was a user-driven decision and the conviction that if all transactions on the Marketplace close through payments that we control, our points of control on the transaction are enhanced, and we can deliver a much better buying and selling experience. The obvious offside to that is as you grow penetration and you take on more and more interchange fees, unless you price upwards and you increase your take rate to offset some of that margin compression, you begin to hit against more gross margin compression than necessary.
What we've always said is if you look at our take rates today and you just look at the Marketplace take rate, the bundle take rate, ballpark, let's call it 500 basis points, and you compare that to what an eBay charges or an Amazon charges or many other marketplaces charge around the world, there's still significant room for pricing power. We have said that as penetration grows, and it's what we've been doing, we will raise those take rates to offset some of that margin compression. As I said, we don't manage the business to take rate targets, so there's nothing that we have in mind right now. We know there's room to increase take rates significantly. That's one of the implied financial decisions when we decided to bundle the Marketplace fee and the payment fee.
Moving on to the specific of even balancing transactions, suppose somebody is buying a laptop for $1,000. If you buy it on a country-by-country basis, but typically that person will pay an extra, roughly, let's say 15% in direct interest since they will, when they are paying that over 12 months, and when somebody pays over 12 months, the duration of the transaction is six and a half months, so they're paying 15%. Or for a loan, on an average last six and a half months, so they're paying roughly 2%, 2.2%, 2.3% per month. We get a significantly lower rate when we discount those coupons from the banks, and that's where we make our profit in financing. This is for buying specifically.
Let me just complement the take rate question. We, as you know, are a public company, and we would like to grow our revenues at least in line with e-commerce in the next several years. When we look around the world and see different situations, we believe that driving take rate excessively is probably the biggest mistake we can do. We really believe we are in day one. We see a huge opportunity going forward. We see what happened to eBay in China when competing against Taobao. We believe that that is something we should never be tempted to do. We have a relatively low take rate, and we like that. We don't intend to get ahead of ourselves trying to drive short-term revenue because we believe there's a huge opportunity going forward. We try to keep take rate as low as we can.
That's more or less the objective, with the objective of growing revenues at least in line with e-commerce and at least keeping our market share. We believe it would be a big mistake to drive take rate so rapidly.
Hi. Good morning. I have two questions kind of revolving around the payments business. The first one is, how does your team assess the competition or potential competition from PayPal entering Brazil? How does this affect your relationship with eBay? The other question kind of revolves around enabling users to leave balances in their Mercado Pago account, specifically to enable in-house transactions, which I imagine are higher margin than offloading over the credit card rail.
Okay. Let me start with the second half. Let me talk about enabling users to leave balances on their account. They have always been able to do that, and many of them do that. It's great for us, for tourism first, because of the flow that generates, but also because the next payment they do, most likely they will use their account balance, and that's a zero funding cost for us. We have been encouraging them to leave those balances. On the other hand, it's probably counterintuitive, but the easier they have access to those balances, the more likely they have to leave them there because they know that whenever they want them, they can get them. In that aligned with that is that we are adding means to withdraw payments, for example, to mobile phones.
With respect to competition, let me just first tell you how we look at competition in general in all of our business units. We've been competing intensely since we started 12 years ago. So far, we've been doing that quite well. We believe we will continue to face intense competition for many years. The situation that we've described of a rapid and growing market, both in our payments platform and our marketplace in e-commerce in general, is not one that we only see ourselves. Many people see that and are attracted by these markets. We believe we will continue to see lots of competition. We try never to focus on one competitor. We look at everyone. We analyze the market and what things others are doing that we like and what things others are doing that we don't like. We focus on ourselves.
We look at everyone, but we focus on ourselves and trust that if we continue executing well, and leveraging on the ecosystem that we have built, we will be all right. Particularly in payments, having a marketplace business to grow from is something that is very helpful. In general, we have created an ecosystem: marketplace, payment, storefronts, search, all these things leverage on each other. I think the beauty of what we are creating is a very powerful ecosystem. We have a very good relationship with eBay. They are our largest minority shareholder. We exchange views all the time. We compete with them in payments. You know they are one in many competitors that we have today. Particularly in payments, we will see lots of competition, as you are seeing here: carriers, search engines, social platforms, banks, credit cards. Everybody is looking at that segment.
It's going to be a very intense segment.
Thank you, Mr. Schatz. I have just a couple of questions. I wonder, if you looked at the people who are online today for not shopping on the platform, if you've done any research as to why they're not in Mercado Libre and how you would address that. Also, you hit briefly on the difference as of listing categories you guys know: diamond, silver, et cetera. Can you talk about the trends you're seeing by class in terms of, are you seeing migration up or down that funnel? Where you're seeing the majority of growth?
Let me start with the second question first. We have been moving more and more, as I mentioned, towards some more back-ended pricing, removing the barriers for people to list, particularly the insertion fees, but also allowing those sellers that are looking for some freemium placement to be able to do so. When we look at that, it's basically a freemium model where the majority of our sellers are opting for what we call the bronze listing, which has no insertion but has higher commissions. Typically, that caters to either a smaller seller, a one-time seller, or an occasional seller. When we talk about our professional sellers, our medium to larger sellers, those guys do look for prominent positioning.
Typically, we'll buy these silver, gold, and diamond listing types. We're seeing growth in both, but clearly, the largest group is bronze, where people have lower barriers to list. The first question again? Sorry. Yeah. Okay. Research on people who are not in the Marketplace. Yes, we do carry out research on our markets, typically on a yearly basis. One of the things that we ask people continuously is why they don't buy on the platform. There are issues around payments and trust. People still find that whether they have to leave credit card information or provide some sort of personal information, for many people, is still an issue. The way I look at it is we're still also at a generational change, if you will, in many of our countries. If you look at Brazil, for example, about half of the population is under 30 years of age.
Many of those people are digital natives, people that were born with the Internet, and I feel that they have much less of a barrier to transact online. As those people become customers and grow to have buying power, we see that those barriers typically will tend to go away. As we also saw here today, I think we work extensively in lowering what we consider the frictions, the barriers, for people to transact, whether it has to do with payments or with the shipping. Providing a better user experience, I think, is also forefront for us and will drive more and more purchase from our users.
Just one final complimentary note. I think part of the brand we've built is that consumers use Mercado Libre as a starting point for a purchase, and that's part of the thinking behind the advertising business, is that literally, users will come on the site, as they do on shopping comparison sites in some cases, to research reviews, to compare prices, and to sort of get a feel of what's going on. That is a big reason why we realized that there was a non-cannibalizing opportunity to monetize a lot of that usage of the site just as part of your even offline shopping, by having the advertising business. When you look at more than 30 million unique visitors per month and a fraction of those converting into buyers, millions, but a fraction of that, I think it's testament, perhaps even more than that there still are friction points to solve.
As Daniel Rabinovich showed in third dimension, we're working on solving those, but that Mercado Libre is a starting point for shopping in general, not just shopping on Mercado Libre.
Hi. I just had a question on fulfillment and shipping. If you can help us understand exactly how big of a friction point that is, maybe just some idea of how onerous shipping is in aggressive regions and just help us understand what kind of efficiency gain you're getting both in terms of cost but also delivery times, relative to what sellers have the option sellers have today. Do you think at some point you're starting to see e-commerce players in China having to invest more in warehouses and last mile? Do you see that as something that you'll have to do over time?
Let me give you a little bit more color into shipping. First question, I guess, is cost, and we'll give a sense of how big that is and how much of a friction point that is. Of course, it does vary by category and type of product, but typically, you will find that shipping costs can be 20% or even more of the product cost itself. When you're looking at countries like Brazil, Argentina, Mexico, that are large countries, clearly there are issues around getting product to remote locations. I think one of the great benefits of Mercado Libre has been really to open the markets for people who are in those remote locations and didn't have access to goods until then. Those guys, in many cases, are willing to pay because the alternative is much more expensive for them.
In many cases, they're also more patient than your average urban buyer who has, I think, less tolerance for the sort of time frame that they have to endure. I mean, someone who lives in the remote locations in one of our countries may be waiting something like two weeks before they can get a product. Clearly, there are efficiency gains, particularly as we talk about people who are away from the centers. When we talk about the urban centers, people's expectations are, I think, probably in line with what you see in more developed markets. People expect to get things overnight, in some cases even within the same day.
I think a testament to people's creativity in entrepreneurship in our countries is that in many cases, people get product even faster from Mercado Libre than they would get otherwise because some of our sellers do provide a last mile capability, if you will, with motorcycle delivery or in some cases, in-store pickup as well. This is just to give some color. As to your other question about investing in warehouses, we don't see that as our primary objective. I think there are experts and people who have these sort of assets and know-how with whom we can work, with whom we can partner.
We've begun to talk to some of those people in different markets, particularly in the case of Brazil, and we do see working with them and providing fulfillment and warehousing services through third parties is something that can add value both to our sellers and also to the buyers.
Hi. Thank you. I was hoping we could dwell down a little bit more on the e-commerce trend in some of your key markets. You gave us what you thought the growth rates compounded would be for your Latin American key markets, but I was wondering if we could specifically about Brazil, which I believe is a little bit less than half your GMV. Your growth rates decelerated in the third and fourth quarters of last year on a local basis, and then they've been accelerating since then. I'm wondering, can you continue in that market specifically to outpace e-commerce growth? Secondly, regarding Pago, I believe about 80% or 85% of Pago is from Brazil, if my numbers, if my memory serves correctly. I was wondering how Pago is going to be growing in the other regions. Lastly, regarding the real, it's made some big swings versus the U.S.
dollar recently. I was wondering if you could talk about the changes in the sellers and their buying habits for U.S. goods, etc., and how that impacts just the dynamics of the platform going forward. Thanks.
Hi. Let me briefly comment on the e-commerce growth in Brazil. Brazil is a country where we see most activity going on, really, perhaps even too much activity. I think people are playing China through Brazil, and there's all sorts of VC investments going on and startups, etc. We've been seeing very strong growth. In general, I wouldn't look at our growth rate in Brazil as if the market is growing faster or we are growing faster. What we see all the time is every time we improve our product, our growth rate goes up. We see our growth rates much more impacted by our ability to continue to simplify and upgrade our platform than about the competition in e-commerce. In general, when I say that Brazil is the most active market, perhaps it's a must.
We see most of these retailers, if not all of them, as clients of ours because as a Marketplace, what we do is put buyers and sellers together. Even though we intend to grow as fast as other retailers are growing, if not faster, in many cases, these retailers are clients of ours either through Marketplace or through deal of the days or eventually by listing on our platform. Again, our growth rate in Brazil, as in the other countries, has been more impacted by our ability to roll out product upgrades to that platform than by e-commerce in general. E-commerce has been growing very healthy across the region. I don't know, Stelleo, do you want to add a little bit more?
I think I agree with what Michael was saying. I think I can go to your third question probably and address that question, and I'll let Osvaldo take the second question. The question was, if sellers are changing their buying habits, what sort of effect has the recent real appreciation had on their habits? Actually, you know, currency, as we know, is very volatile, particularly in these days. Our sellers and our clients and our buyers as well, I think, are very adept to those changes. When we talk about sellers, I think typically their buying habits are around smaller quantities. They don't stock up for long periods, and they change their patterns very quickly. Prices generally in the platform also vary somewhat according to currency appreciation or depreciation, but not really by that much.
I think in some cases, they're able and willing to accept changes in their margin structures as well, according to these currency fluctuations. I don't think it's any different from what you see in other marketplaces in other parts of the world. In the case of Brazil, it's not any different.
I think just to be consistent, let me complement or qualify that somewhat in that what we do notice, if we look back at previous oscillations in currencies, is that prices are much less immediate to change when the currency fluctuation works in favor of the seller than it works against the seller. That's probably, I think, the most we can comment without getting on any specific about what's happening now. When we were asked these questions in 2008, when there was a significant devaluation of the real and also as the real rebounded, I think what we've always seen in the numbers when you look at average selling prices and currencies is that a strengthening of the real will lead to very consistent pricing, as Stelleo said, essentially improving margins for those sellers. It takes about three or four quarters of time before prices find their U.S.
dollar levels again. That was a lot of what was happening in the back end of last year when we were looking at deceleration in our Brazilian growth rates. A lot of that was really currency fluctuations that had happened a year earlier. I think when we look at 2009, right around Lehman, where the real also took a significant hit, what you saw is a much quicker adjustment of sellers, particularly sellers that were selling imported goods, because as Stelleo mentioned, their inventory bases are typically not very deep, and they know that they need to go back to China or the U.S. to replenish that inventory at a dollar base.
Moving on to the payment question. It has been the case historically that Brazil has represented roughly above 80% of our volume. What has happened in the last few quarters is that there has been an acceleration in typical growth in Mexico and in Argentina, in Mexico driven by the launch of MP3 in April this year, and in Argentina driven by adding more free installments with different banks. If you look at the numbers for the first quarter, Brazil represented 81%, and was roughly 79% in the second quarter. I would expect Brazil, sorry, Argentina and Mexico to continue to grow at a faster pace than Brazil in the next coming quarters.
I have a question for Nicolas. I was hoping you could explain a little bit more about the third-party inventory coming into the Marketplace and the example you used to use Groupon. It looked like you had several other large retailers on that slide. I'm curious if you're expecting that inventory to be listed on the Marketplace here coming forward and how quickly you're thinking about ramping up the strategy. What are some of the opportunities? What are some of the risks? Just delving a little bit more into the strategy there with that line.
We are planning to start with Groupon companies, but we are already talking with some large retailers that are very interested in also getting into this kind of integration. We are going to experiment with them and start ramping up as they decide to bring more of their inventory to our core Marketplace. We feel that it's a great way of bringing more supply from external sellers and giving our users the ability to find more items within Mercado Libre. What we like the most is that this is going to be a seamless experience for our customers, as they will find the items and with just a few clicks get into the checkout process, as they already know Mercado Libre's checkout process and complete the transaction. It's a follow-on step to bringing all these large retailers into the ecosystem so that they can also sell to our sites.
Hello. Two questions, if I may. The first one is a follow-up regarding take rate. I mean, I guess, Marcos, let's see, if you just push back a little bit regarding the take rate. You know, net of credit card processing fees, you're below 350 basis points in terms of take rate, which, you know, would, I guess, put you slightly above Taobao in China, but other than that, basically nobody in the world. Your relative market share is extraordinarily high, and your volumes are actually quite low relative to where Taobao is. Your service is quite high. When you work it out, I'd like to understand a little bit more about the science behind, if there is a science behind, choosing a 350 basis points take rate in this market, which is below half of what these prevailing similar marketplaces have around the world. That's the first question.
The second one is around shipping and how e-commerce is evolving. When it comes to shipping, when it comes to logistics and so forth, the ability to get onto a marketplace and purchase from multiple different merchants at the same time and build an experience that is more like an offline retailing experience is increasingly important. I want to understand a little bit about how you think Mercado Libre can evolve to be able to be a sort of one-stop shop in that type of manner so a person can very simply purchase from multiple merchants and have a seamless experience like that. Thank you.
Great, thanks for the question. Let me give an overview again with respect to take rate and then perhaps dive deeper. Stelleo is going to talk about the fulfillment, and then perhaps as well. The situation you described is one that we definitely like a lot, particularly given that we think that the market is in a very early stage. Our margins are roughly 35% operating margins, so we believe we have very healthy margins. We'd rather keep the take rate low and grow our market share and grow our top line. When we price individually, we again think in the same way. We introduced free listings. We thought that even the bronze listing, which has zero insertion fee but a higher final value fee, was a barrier to certain people to list.
During the next three to five years, we will have tens of millions of new people buying for the first time online. We wanted to make sure that these people had no—I'm sorry, I'm selling for the first time online. I want to make sure that these new sellers had no reason not to try our platform first. We saw free classifieds gain a lot of traction in certain parts of the world like the U.S., and we believe we have been able to avoid that by enabling free listings on our platform and providing a much better buying and seller experience than what free classifieds do. When we price the different buckets, we look at what's the best way that we can have the greatest number of sellers possible inside our platform. Obviously, the more you pay, the more traffic that you will get.
What's the maximum we can charge for a diamond placement is also a matter of elasticity. It varies by country. Philosophically, we like to have good margins. We believe we have very good margins, and we would like to keep those margins, but we'd rather err on the side of having the margins lower and the growth rate higher at this stage.
I think that answers it. We had an early investor that their name was Ariel, so I think it meant art and science. Mark, it's not a science. I think it's driven, as Marcos said, by understanding that we're, as I said, it's a balancing act between investing in growth and in delivering value for our clients. Part of that is simply returning some of the benefits to them and keeping price as low as we can, and at the same time, making sure that the business is delivering on growing earnings, over the short and long run.
Let me address your second question, about shipping. First of all, I completely agree with the view you expressed that e-commerce is evolving and evolving very quickly into an experience where people expect less and less friction, so a much more seamless experience where they buy in a Marketplace from several merchants and that's their destination for purchases. As we, I think, have been expecting here today, we are already a destination site and want to continue being a destination site. Bringing more sellers onto the platform is clearly an objective. We'd like to be that one-stop shop for buyers. Clearly, as far as the experience of a buyer who navigates the platform today and where we want to be, I think there is a long way to go. The first stop will be in addressing what we call dropship integration.
From the seller perspective, we want them to be able to receive orders from Mercado Libre, be able to produce tags that are trackable, and that tracking information to be available for buyers to know where their product is. No science fiction there. Very basic requirements in line with what you were expressing, which is the expectation that people have when they buy online. Easier said than done. We're in the process of doing so and building some of the back end for that. It requires integration with the largest carriers in the region. We're starting with Brazil. We're starting with Correios, which is the National Postal Service, which basically covers the entire country.
In summary, what we want is to provide a much more controlled experience within Mercado Libre, where we know who shipped and when they've shipped, where we'll be able to free up Mercado Pago payments as we know the buyer has received the product. Really, a more complete experience. For that goal, going forward, I imagine a shopping cart where you're able to buy from several sellers at once and where you can figure out shipping of different items. That's something that is to be expected. We're a few steps before that, clearly going in that direction.
As I was looking at your mix of product categories and seeing you've got a table of seven men with about 20 consumer electronic devices, I'm wondering if your mix of buyers skews materially towards males and if the brand skews that way towards males and consumer devices, and if that's a challenge for you as you try to build out additional verticals like fashion.
I'll give you the first part, and I'll leave Stelleo what I think is the second part. We've been very open and very straightforward about saying there's a huge opportunity for us as we move into these new categories. Apparel is one that we've identified because when we look at where e-commerce is, especially in a cut market like Brazil, apparel is more of Brazilian e-commerce than it is of our Marketplace in Brazil. I don't think it's a branding issue or it's a consumer issue. I think we've been very straightforward about the fact that it's a product issue and it's a feature issue.
We have tailored, with the exception of classifieds, which were our first foray into verticals, most of our other categories where the feature set and product development, which is very much sought out for the way the company started and grew, which was first computer electronics and then CE in general. If you try to buy something in apparel on Mercado Libre today, it's not that great of an experience. It will be once we launch out the vertical, and then we can go after tickets and others. I think it's much more about simply self-inflicted design than demographics or how the brand resonates. The brand, and I said this a couple of times, really is synonymous with buying and selling anything online because that's a lot of how the brand was generated.
When you look at the volume numbers, you realize that there's a lot more CE going on, but there is apparel sales, which is important to clarify. I'd even go as far as saying despite the fact that the experience really isn't that great, apparel after consumer electronics is probably within the next two or three categories there.
Maybe addressing the first comment you made, sort of complimenting on what Pedro just said. When we look at our demographics across different markets, we don't really see them skewing towards males. I think really Mercado Libre, in many ways, is a reflection of the internet in the region. We've been around for 12 years and have seen how that demographic has changed over time. If anything, I think more and more women are shopping online in the region, and we're seeing that reflected in our demographics as well. That's gender. If you look at where people are located, for example, and typically where our sellers are coming from, where our buyers are coming from, I mean, as I said, that clearly reflects what is the general demographics of the region. Trends like people moving more towards cities is something that we can identify even in our numbers as well.
Just one hard data point. Nicolas had showed this. It's 46% female, 54% male. If there's a skew, it's a very slight skew.
You filled out your presence in some of the higher take rate verticals such as apparel. Is there an appetite for you guys to selectively take down take rates for some of the higher volume categories to capture additional supply? Additionally, on the fulfillment side, is it possible for you to more quickly scale a service for your sellers by partnering with either distribution or logistics companies so that it becomes more OpEx as opposed to CapEx for you guys?
Just one clarification on the take rate issue. Although it's true at the margin that the lower ASP categories are higher in take rate, it's not a function of differentiated pricing. I think we've been very conscious to keep pricing the same across different categories and reduce complexity for sellers. That happens to be the case because when you look at the placement fees that have flat pricing, you're diluting those placement fees on lower ASPs, and the final math is that the lower ASP categories have higher take rates, but it's very marginal. I would say that more importantly for us has been to maintain the simplicity of pricing and not get too complex, I'd say, for a while. That does perhaps leave marginally some money on the table, but I think you gain in user adoption and in simplicity of communicating your pricing model.
I don't see us, and it's not something we're talking about over the next few quarters, going to a more complex category differentiated pricing model with the exception of classifieds, which obviously have an insertion fee model, hence classifieds, and not a final value fee model.
That covers your second question, if I understood it correctly. Correct me if I'm wrong. As we scale our services there, I did address drop ship first, but fulfillment is also something that we see as a service that we can provide to our sellers and also as an enhancement to the controlled e-experience I was mentioning before. Partnering with these distribution or logistics providers is something that we have discussed and entertained. The way we should do so is not by investing in CapEx, definitely not. That's not where we see our strength. There are people who know and understand, and have themselves already made heavy investments in CapEx, with whom we can partner and provide this as a service for our users.
I would think that with the low-cost smartphones coming out, and better cell phone networks, like mobile is a fantastic opportunity. I'm wondering, as you've kind of come up with a great experience for your customers, have you worked at all with eBay because of the probably more experience working with the smartphone apps and things of that nature? What sort of challenges on the technology side have you encountered? How much of your time are you spending on that? Anything you can comment on that, some more colors, that would be great.
Thank you. eBay has been very successful with their mobile e-commerce operation. They announced yesterday. We exchange views with eBay consistently, and we are doing great progress on our mobile experiences as well. To date, we are at a much earlier stage than that. Danny, why don't you give us some greater detail?
Yeah, absolutely. We just started. I mean, we started eBay, you know, mobile application as well as Amazon, another one. Our primary goal right now is to keep the application simple and easy to use because adoption is quite important for us. The next step, of course, is to set up payment. You cannot pay within the mobile application right now. It's the obvious next step. We have to onboard selling on our platform, just taking a feature and merge the buying and selling applications. We are just in step one. We need to complete the first two steps where you can only buy within the platform. We're adding the most basic functionalities of our Marketplace and our payment system to pay and to sell. Of course, we want to keep the application simple.
Another challenge is to maintain the three versions of our application, meaning the iOS, the Android, and the BlackBerry. We are still exploring the HTML5 opportunity, because right now it might not be the greatest choice, but I think there is true promise in HTML5. If that comes true, we might come to a moment that we don't need to maintain many different versions.
A follow-up on a mobile question. Are you seeing, I know it's early, but only a couple of weeks. Do you think you're seeing already any incremental buyers or incremental signups upon mobile at this point, or do you think that'll be a big driver in the future given the limited PC or internet adoption? Secondly, would you look at any kind of digital offerings, whether it's movies or music at some point, or can we leave that to maybe the larger global players? Thanks.
With respect to digital, there are clearly opportunities there. There are some global payer centers in the region that we are partnering with, trying to offer payments, etc. Eventually, this could be an opportunity for us as well as we can distribute that very efficiently, but it's not something that is on our radar screen for the next year or two, I would say.
In terms of the business impact from mobile, I think it's important to stress that smartphones in the region are still an extremely low install base. Our decision to start developing on mobile was because we understood what a game changer that can be in a region where vast portions of the population might leapfrog the PC access to the internet and go straight to the mobile phone. We need to make sure that we're on the cutting edge of that. We've always said mobile commerce in the region is still a few years away. What's incredible about technology is that I think a year ago we were saying and we were citing, you know, a lot of banking studies it's five years away. Now it's years away. The pace at which adoption occurs is tremendous.
Honestly, when we looked at the amount of downloads we've had in the first, what, month, and it's close to half a million, that's way more than we had anticipated. No business impact yet in terms of actual transactions, but it's amazing how quick everything is happening.
Most of them are existing users that actually logged in and not registered within the applications. That was not a surprise. We had a huge user base within the region when the mobile applications came out one day. We've had this unanticipated, huge volume of downloads. What we know from analyzing other markets is they start slow, but when they hit the critical points, the phase of adoption in mobile raises too quickly. We need to be installed in as many phones as we can because the cell phones, in particular in Argentina, are prepaid, and the data packages are expensive. Let's say that from one year to another, this really might change. The switch from being that expensive to use a mobile phone to be almost free could be almost overnight. It's not only the cell phones.
The cellular signals, some cities are providing free Wi-Fi, and even more people are using the cell phones within the Wi-Fi signal. That barrier might also be eliminated.
There's one more question.
All right. Daniel, I think earlier you talked about the importance of data as opposed to the algorithms. I think something to that effect. Sorry if I misinterpreted you, but I think is there a move inside the company to produce some sort of a recommendation engine based on the consumer data that you have now? If so, what would be the time to roll out? You mentioned gaming as Mercado Pago being used by gamers to pay for, I guess, game sessions. Is there an appetite to roll out a platform for virtual adult training?
I love your question, 'cause actually, on the homepage of Mercado Libre Argentina today, we released the first recommendation widget. Yes, the actual recommendations algorithms are quite public today, and many of them are open source. The real struggle for us has been how to structure data, 'cause unlike other marketplaces, most of our listings are unstructured. They don't have a related SKU, and that is quite harder for recommendation engines to work with because they have to cluster listings. We use the standard ones, and we started playing, as of today. I'm really getting anxious because I was writing an email today to the folks there, so that gave me the numbers. What was the second question?
I thought we see, before we answer, we also have been experimenting with related searches, which is in a way a recommendation as well, and it's been very successful. It's something we launched like a month ago, and that has been very successful. With respect to digital markets, I think it's an opportunity overall, but it's not something that is on our radar screen again in this, in the coming year at least. We're happy to provide payments to, you know, digital, to games, digital downloads, and things like that. So Pedro, you wanna close up?
We more than welcome all of you who can and are interested in staying for lunch to join us down the hall. We'll try to split up in as many tables as possible so you can continue the conversation. Just very quickly to wrap up, you've heard all this, so I'll go through it quickly. Again, we feel the company is in great shape and in a fantastic position. Very strong macro in the region. The region as a whole has a GDP that's similar to the size of China. Very positive demographic and income trends. Very young population, very digitally savvy population. Strong growth in internal markets. This isn't an export-driven, on the consumer side economy. There are growing internal markets.
I think for those of us that are older than we look, it's remarkable the general stability on a macroeconomic level and macroeconomic policies that many of the large countries in the region have had over the last 10, 15 years given the previous 10, 15 years. Macro is doing very well. Very powerful secular trends, still early days of internet and e-commerce adoption. As I said, retail less than 2%, less than 1.5% of commerce, of retail is happening online. We've built the undisputed market leader throughout the region with coverage of over 98% of GDP. We have this growing ecosystem of business units that are very synergistic among themselves, that generate network externalities and that feed off each other very well in terms of reach and how much share of wallet of retailers and customers we can capture.
A financial model that continues to be very compelling with a great margin profile, great ability to continue to scale, positive cash flow, and a very strong balance sheet. We really do feel that this is a fantastic time for us. I think maybe most importantly of all, if you look at all of us here, we've been with the company for more than 11 years, and there are a lot of people there that have been with the company for that much time. I think we continue to have tremendous fun at what we're doing and think that the next 10 years will be more interesting than the previous 10. With that, thank you, and thank you to everyone who's been listening online, and we'd love for you to stay for lunch.