Latin America is where it’s at. The continually increasing middle class and the growing trend of buying goods online in the region are just two reasons why expanding your business into Latin America is a smart idea. In fact, according to WorldPay, a US payment processing company, e-commerce sales in Latin America are likely to reach a staggering USD$118 billion by 2021. Interested in reaping the rewards of this booming market? Here are just a few more reasons why you should expand your e-commerce business to the region.
Growing Digital Literacy
“E-commerce in Latin America was predicted to generate a whopping $79.7 billion U.S in 2019. This is huge considering that e-commerce sales in the region were bringing in just $49.8 billion U.S. dollars in 2016.” says Luisa Castillo from MONEDEROsmart. “While Brazil is still leading the way in the e-commerce department, Argentina, Mexico and Colombia are catching up fast.”
Internet use in Latin America is also on the rise due to more accessible cellular data and cheaper broadband prices. Between 2013 and 2019, the number of people with internet access in the region increased from 278 million to 387 million. As customer confidence when buying online increases, e-commerce penetration is expected to reach 61.1% by 2023.
While e-commerce is definitely experiencing huge growth in Latin America, the market is still not saturated. And this is great news, as it means that any new industry players are able to grow the reputation of their brand without the level of competition of other world regions.
Diverse Payment Methods
While you are responsible for making your customers feel comfortable with the payment methods on your website, the good news is that 65% of online shoppers in Latin America are happy to use credit or debit cards when paying for goods and services. Payment wallet platforms, such as PayPal, are also very popular with online shoppers. While not an ideal option as it increases the risk of cancellations or sham orders, ‘cash on delivery’ is also popular in Latin America, with 35% of online shoppers paying for their products upon receipt. It is a good idea to consider accepting payments via a number of vendors to capture sales.
Dominance of the Fashion and Electronics Industries
We all know that choosing the right product is key to a profitable business venture. As such, it is crucial that you research the shopping habits of your market before making your investment. If in doubt, however, fashion might just be the ticket. E-commerce has taken the fashion world by storm and Latin America is no exception to this trend. People in the region are increasingly choosing to shop for their clothes and accessories online. In 2017, fashion in Brazil accounted for 14.9% of all online orders. The same year, 59% of Mexico’s online shoppers purchased something in the fashion and accessories category. The prediction is that the fashion industry will be valued at USD$17 billion in Latin America by 2022, just ahead of electronics which is expected to be valued at USD$14 billion.
No Need to be on the Ground
If you are currently living in the United States, or anywhere else in the world for that matter, there is absolutely no need for you to move to Latin America to run a successful business in the region. The reality is that you can easily sell your products in Latin America without being physically present there. Many foreign business owners are partnering with distribution companies based in Latin America to handle the delivery process in the region.
Holidays Can be Profitable
Latin America is famous for its public holidays, and these are often used by merchants to drive sales. Depending on your line of business, this can be very profitable. While it is held on different dates depending on the country, Children’s Day is a great opportunity to increase online sales of toys. Some other important e-commerce days in Latin America include Black Friday, Cyber Monday and El Buen Fin. All you have to do is tie your promotion with the specific holidays in your country of operations.
While product-based businesses usually come to mind first when thinking about e-commerce, there are other industries that can reap the rewards of the area’s growth in Latin America. Considering that the World Bank has rated Latin America’s logistics as poor, one of these is the logistics sector. The growth of digital literacy and online banking in Latin America is also likely to spur demand for fintech (financial technology) companies. The recent government incentives in some areas of Latin America have already resulted in the growth of the fintech industry in a number of countries. Mexico, for example, is currently home to over 270 fintech ventures.