Nearshore Americas
e-commerce in Latin America

How to Use E-commerce in Latin America to Grow Your Business

A region as economically diverse as Latin America should be on your expansion radar. As you look to expand your business beyond developed markets, e-commerce in Latin America is attractive for several reasons. Home to 642 million people, from Mexico to Chile, the potential to service untapped markets is huge.

E-commerce is a great starting point to achieve that. Online sales are estimated to increase by 19% in the region over the next five years, which is 11% above the global average. While Latin America’s e-commerce market is much smaller than the North American and the European, the growth potential is much more exciting.

Smartphone and internet penetration continues to grow. Low-cost technology gives lower socioeconomic groups greater access to the e-commerce economy. So, you need to be on the ball and understand the advantages and challenges of e-commerce in Latin America. You can’t afford not to be online when it comes to growing your business in this exciting region.

Do you accept cash and card?

Most countries in Latin America still rely heavily on cash. It is common for those working in the informal economy to be paid in cash and not having a bank account. Therefore, when exploring online selling platforms, you need to consider alternative payment methods. Many consumers distrust online stores and dislike paying for a product before they receive it. Transactional security is at the forefront of consumers’ minds. Eshopworld reported that Cash on Delivery is the preferred payment method for 35% of online consumers in Latin America. Here, transactions work similar to that of Uber or Rappi and heighten consumer trust as they can check the products and verify the quality of delivery, before paying.

However, the expansion of “neo-banks” that offer easy sign-up bank accounts, low fees and access to digital cards through smartphones will see the banked population grow. Brazilian and Mexican consumers preferred payment method is still a credit card. The successful fintech startups such as Nubank have made e-commerce more inclusive and accessible for consumers in Latin America. That’s a good thing when you consider the reach e-commerce can give your products and services when growing your company.

Logistics is everything

Using e-commerce to boost your business has many advantages over a traditional store model. For the company, lower operational costs can provide higher profits or more capacity for reinvestment. For the customer, the ease of purchasing a product through their preferred technology channel and having it arrive straight to their workplace or home is nowadays an expected service. What happens in the time between the completed transaction and delivery of that product to the end consumer may be another issue altogether. Order fulfillment is inhibited by low access to quality services, logistics infrastructure and efficiency of customs clearances. This presents challenges for businesses operating online in the region.

E-commerce will only benefit your business if you’re able to deliver your product or service to the end-user. Many large Latin American cities are known for their traffic congestion and less than ideal infrastructure. This means exploring what delivery options are open for your product or service. It may be that you need to contract out individual couriers to give flexibility and offer quick deliveries in a city with short notice. Alternatively, you might choose to invest in a relationship with a bigger freight forwarder, who can offer more competitive rates in return for guaranteed consignments. This may be attractive when trying to reach rural areas where multiple transport providers are necessary.

It’s important to define what kind of logistics solution your product or service requires. You also need to look at the market standard for your industry and consider customer expectations. A logistics provider that is digitally integrated can offer tracking services and provide delivery visibility and cost transparency. Adapt and define your delivery expectations according to the country you choose to operate in. As mentioned, logistics and transport infrastructure vary within Latin America, so you must communicate realistic delivery timelines to your customers.

Get Social

In 2019, social media had a 78% reach among the population in Uruguay, 77% in Chile and 76%  in Argentina. These figures are impressive and continue to grow. Social media needs to be a marketing target for your company if you want to increase your presence and visibility. Social media drives website traffic and at times can result in more views than engine searches. Furthermore, two-thirds of Latin American internet users are under the age of 35. E-commerce platforms need to be marketing themselves on social media platforms if your target market falls within this age range.

Products aimed at older groups may find it beneficial to continue with some advertising on social media. Family members and friends may be likely to buy or recommend a product for someone else, such as an older relative, after seeing it advertised on social media. Consider installing a chatbot on your website to quickly solve common customer queries. Additionally, providing customer service through social media will engage your customers. Clients who have had a  positive experience through a company’s social media platform are three times more likely to recommend that brand. Given how much time the average consumer spends on social media per day (2+ hours), you can not ignore how powerful social media can be for your company.

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Localize products and services

Remember Latin America is a large and diverse region so it’s important to strategize how you can best use e-commerce for your business. Look to other leading e-commerce retailers to get an idea of channels that work, and those that don’t. Then, adapt your product and service offerings as well as your website to appeal to the local market. You must consider the devices that are most commonly used to shop online as you may need to have a website that can fit desktops, tablets, and smartphones. Internet speed may affect the size of files and photos

Craig Dempsey

Craig is the Managing Director and Co-Founder of the Biz Latin Hub Group. Craig holds a degree in Mechanical Engineering, with honours, a Master’s Degree in Project Management and various other diplomas covering logistics, personal management and government administration. Craig is also a military veteran, having served as an Australian army officer on numerous overseas operations and is also a former mining executive with experience in various jurisdictions, including, Canada, Australia, Peru and Colombia.

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