Etsy, an online craft marketplace, hopes Latin America will be a growth engine for its e-commerce business with the acquisition by Elo7 of the Brazilian online marketplace.Etsy shares rose 7% Monday following the announcement of its $217 million acquisition of Elo7. Josh Silverman, Etsy CEO, called Elo7 "the Etsy Brazil."In an interview with Mad Money, he stated that "this is all about growth potential over medium and long term." We believe that Brazil's ecommerce sector has the potential to grow more quickly than the U.S. over time.Latin America's e-commerce market has a lower penetration rate than 10%. According to Euromonitor, the market is expected to generate $29 billion in revenue this year. It also has a projected growth rate of 26% annually.Elo7 is similar to Etsy. It allows merchants to create an online shop and then sell to buyers. It is one of the most popular online marketplaces in Brazil with over 56,000 sellers and nearly 2 million customers.He stated that Brazil is one of the most important economies in the world. However, its ecommerce sector is still very much in the early stages of penetration. Therefore, he believes that ecommerce has the potential to grow in Brazil. It's well-positioned, we believe, to capitalize on this, so it's a perfect match.This Elo7 acquisition follows Etsy's announcement of a $1.6 billion purchase of Depop, a London-based marketplace, just weeks before. It will allow Etsy to increase its European presence.Depop targets millennials and Gen Z customers through social shopping. This leverages technology to duplicate parts of the in-person shopping experience.
