How ultra-fast internet delivery works

It was around 11 am on a Wednesday when the representative Letícia, 23, received a new batch of orders for same-day delivery on her portable device (handheld). Working for ten months at the Mercado Livre distribution center (DC) in Cajamar, 29 kilometers from the capital of São Paulo, she needs to be quick: all orders in this category must leave the DC by 12:59 pm sharp.

Wielding a hollow stainless steel trolley, with the capacity to accommodate six large yellow plastic boxes, she moves with agility through some of the 202 streets of the 1,500 m² CD, which houses 800,000 items of different products, in just over 1 million ” addresses” – barcode boxes that identify the stock.

Mercado Livre’s warehouse management system (WMS) tells the representative which route to take to pick up all 30 or so products from that batch in the most efficient way possible: walking a maximum of 12 streets, in a of up to 30 minutes.

The flow on the streets of the largest e-commerce CD in Latin America is intense: at each “corner”, she taps the handles of the cart to warn colleagues that she is passing by and thus avoid accidents. There are 3,000 on-site employees who work shifts 24 hours a day, seven days a week.

Once she finishes filling the boxes with orders, each for different locations, she deposits the boxes on a conveyor belt that goes to the packing section. There, another representative has up to 18 seconds to package and label each product, according to the specifications informed in the system: self-assembling cardboard box for fragile items, yellow plastic bag for the others.

The product returns to a conveyor belt and goes to a section with toboggans: as soon as they descend, items with same-day delivery receive priority and are separated by zip code and stored in containers, allocated inside a trunk truck. The order finally leaves for delivery, before 1pm.

The routine may seem banal, but it represents the new stage of the dispute between the big e-commerce retailers in the country: the ultra-fast delivery, made on the same day, increasingly crucial to define a sale in the growing e-commerce, which invoiced around BRL 220 billion in 2021.

Mercado Livre has just doubled the number of cities in which it promotes this ultra-fast delivery, from 50 to 100 in Brazil. The effort consumed part of the R$ 17 billion investments announced this year in the country, an amount 70% higher than last year, involving operations, technology and finance (the company also owns the fintech Mercado Pago).

The new level of same-day delivery was also achieved thanks to the partnership announced in April with Gol, involving the charter of six GolLog cargo planes, exclusive to Mercado Livre.

“Speed ​​generates conversion into sales”, says the logistics director of Mercado Livre, Luiz Vergueiro. The current 12 DCs in Brazil are “fulfillment”: they are equipped to store and manage the stock of virtual retailers, the “sellers”, which range from small companies to large industries that sell within the company’s platform.

Americanas leads same-day delivery, reaching 900 cities

With 100 cities with same-day delivery, Mercado Livre surpasses Via, owner of retailers Casas Bahia and Ponto, which offers the service in 65 cities across the country. But it still lags behind Magazine Luiza – where consumers in 150 cities can receive their purchases made on the site on the day – and remains far from Americanas, which offers the service in 900 cities across the country.

The three major retail chains in the country (Magalu, Via and Americanas) currently have more than half of their sales made over the internet.

Americanas has just announced the integration of 100% of its logistics network, after the merger between Lojas Americanas and B2W (Americanas.com, Shoptime and Submarino), promoted last year. “Today, 35% of our deliveries are made within three hours and 59% within 24 hours”, says Welington Souza, director of Americanas’ logistics platform. Until last year, three-hour delivery represented 14% of the total, he says.

With 25 DCs in 11 states, the company has an extensive network of 3,500 stores and franchises, which serve as small distribution centers, storing part of its own inventory and 132,000 sellers.

“We are investing to deliver to 100% of Brazilian homes, including alleys and alleys in the favelas,” says Souza, noting that the company should reach up to 53 microbases in communities by next year, with partners such as the logistics startup Favela Brasil Express.

Magazine Luiza, which owns 24 DCs in 15 states and the Federal District, has been dedicated to implementing the technology that will transform all distribution centers into fulfillment, in order to accommodate the inventory of 180,000 sellers.

“With this, we are going to speed up ultra-fast delivery throughout the country, today still very concentrated in the South and Southeast”, says Luciano Telesca, manager of ultra-fast delivery at Magalu. “The customer is very time sensitive.”

The area gained momentum last year after the purchase of Sode, a digital platform specializing in urban logistics for ultra-fast deliveries. As soon as the order enters, the system sends work orders to the store’s stockist and to the delivery person, a partner motorcyclist, who takes the order within an hour.

With 30 DCs in 22 states, Via is able to deliver within 24 hours in 2,500 cities. According to Fernando Gasparini, executive director of logistics at the company, the implementation of fulfillment technology in distribution centers is gradually evolving: today it is already present at points in Jundiaí (SP), Barueri (SP), Extrema (MG) and Serra (ES) .

“Earlier this year, Via purchased logtech CNT, officially marking our entry into fullfilment and fullcommerce services,” says Fernando Gasparini, Via’s logistics director. In the fullcommerce business model, the retailer is responsible for the marketing and delivery of a manufacturer’s online operation.

The first contract was signed in April with Mallory, for small appliances: Via took over the entire operation of the company’s ecommerce site, which includes its planning, operation, service, digital security, sales and deliveries.

Condensed milk was the best seller at Mercado Livre in 2021

Having CDs at strategic points ensures fast delivery. At Mercado Livre, same-day delivery is offered in cities close to the current 12 fulfillment centers (by the end of the year, the 13th will open in Belo Horizonte). The customer visualizes the product on the website and the one with the “full” seal is stored on the CD, ready for immediate shipment. If the consumer orders until 11 am, it arrives on the same day. If it is after this time, it arrives until the next day.

“Today, about 40% of our sales are full”, says Julia Rueff, Mercado Livre’s marketplace director. Brazil represents just over half (54%) of the sales of the Argentine multinational, present in 18 Latin American countries and which recorded gross sales last year of US$ 28.35 billion (R$ 138.8 billion).

In Brazil, the company has 4 million sellers. The best-selling category last year was electronics, while in product it was condensed milk.

The company subsidizes part of the sales in some chosen categories, offering coupons and discounts in partnerships with shopkeepers.

Today, Mercado Livre has 4,000 open positions in the areas of technology, operations and finance, and should have 17,000 employees by the end of the year. “Even with the reopening of physical stores, the post-pandemic consumer has changed and wants the convenience of buying online”, says Julia. “It’s a change that’s here to stay. In 2019, e-commerce represented about 6% of general commerce sales. This year, it should reach 14%.”