06/24/2024 – 13:04
After announcing a new partnership with AliExpress Brasil, from the Chinese group Alibaba, Magazine Luiza saw a jump in the value of its shares. Around 12:30 pm, the Brazilian retailer’s shares rose 12% on the Brazilian stock exchange, B3. Investment analysts consulted by This is Money positively evaluate the business.
“Magalu understood that the game is in the growth of the marketplace, which has become their flagship in recent years”, says the retail analyst at Levante Investimentos, Carol Sanchez. “So any growth in this sense is very favorable and should boost the retailer’s 3P sales.”
+Magalu and Aliexpress announce partnership to expand product offerings on their marketplaces
Understand the partner
The term 3P refers precisely to the marketplace model, used by both companies. 1P refers to the production and sale of own products.
The companies’ partnership will occur through sales of their own merchandise on the partner’s marketplace. Thus, AliExpress’ Choice line will be sold on the Magalu app and website. The Chinese group’s sales platforms will receive products from the Brazilian retailer’s 1P line.
“In our view, the partnership is positive, being able to increase Magalu’s 1P, in addition to improving the company’s assortment”, states an analysis by Ativa Research. “However, we do not believe that this alone will resolve Magalu’s competitiveness with players like Mercado Livre and Amazon.” Ativa maintained its purchase recommendation for the share as neutral.
Impact on competition
Sanchez, from Levante Investimentos, highlights that Magazine Luiza is in a better financial and operational situation than national competitors such as Casas Bahia and Americanas.
The analyst also believes that the partnership will be able to increase sales on the marketplace of the two companies involved, “but mainly Magalu”.
The expectation is that sales from the partnership will be available to consumers in the 3rd quarter of 2024.
According to the CEO of Magazine Luiza, Frederico Trajano, the platforms together have over 700 million visits per month, in addition to having more than 60 million active customers. “The chances of conversion from both channels are enormous. (…) We are very excited about the power of the partnership,” he said.
Conversations for the partnership began at the end of 2023 and included dialogues from different areas of the companies, including the technology team. Information about the companies’ expected financial gains has not yet been released, but the objective has been announced to increase the frequency of purchases on both platforms.
#Magalu #shares #soar #partnership #announcement #AliExpress #understand