By Jason Kohn, Contributing Columnist
If analysts are right, the world of e-commerce is going to get a big Christmas gift this year: a massive surge in online shopping by consumers throughout Latin America.
According to the Latin America B2C E-Commerce Report 2013 by research firm yStats.com, total business-to-consumer e-commerce sales in Latin America reached $30 billion Euro in 2012 (more than US$41 billion), with double-digit growth expected this year and over the next several years. Another study conducted by VISA with América Economía forecasts that e-commerce sales in Latin America will surpass US$69 billion this year and reach US$100 billion by 2014.
The driver for this amazing growth: an emerging middle class and booming Internet usage. As I discussed in my previous blog, Latin America now leads all regions worldwide in Internet usage growth. The European Travel Commission reports that Latin America’s online population grew by 12 percent, reaching 147 million unique visitors in March 2013. Online shopping grew even faster, at a rate of 16 percent. Walmart alone saw its number of Latin American online shoppers spike 163 percent, to 11.7 million.
In a recent article for Latin Link, Juan Pablo Suarez cited an ESET Latin America study stating that nearly 80 percent of Latin Americans now shop online. He described how this trend is translating this holiday season, when more than a third of Latin Americans are expected to buy Christmas gifts online:
A recent survey from Deloitte surveyed 3,250 people from Brazil, Peru, Argentina, Colombia and Chile. Although department stores (61 percent) and malls (50 percent) are still the main options for Christmas shoppers in Latam, 38 percent of those surveyed said that they would buy Christmas gifts online. This is a 46 percent increase compared to 2012, in which 26 percent of Latin Americans said that they would buy Christmas gifts online.
Another interesting fact is that social media are playing a role during Christmas shopping in Latin America. According to the results, 47 percent of Peruvians said they plan to use social media as part of their Christmas shopping process, compared to 45 percent of Mexicans, 37 percent of Colombians, 36 percent of Argentines and 28 percent of Brazilians.
Profiling Online Shopping in Latin America
So how do Latin American consumers behave when shopping online? A comScore study earlier this year detailed some key Latin American shopping trends:
- Apparel and accessories are the most popular online product purchased in the region, with 43 percent of Latin American online shoppers having purchased apparel within the past three months. Electronics follow close behind.
- Around 80 percent of Latin American consumers research products online before buying.
- Among online shoppers in Latin America, 8 in 10 have searched the Internet for at least one travel-related product in the past three months.
- Shoppers in Argentina, Brazil, and Chile tend to shop at local retailers’ websites, while consumers in Mexico and Venezuela prefer international sites.
- Online shoppers in Argentina are the most engaged in the region, with nearly half of Internet consumers shopping or researching products online almost every day.
- Consumers in Brazil and Venezuela show the highest online spending, with 66 percent of online shoppers in Brazil and 73 percent of those in Venezuela having spent between US$ 100 and $1,000 in the past three months.
The biggest engine of e-commerce growth in region is Brazil. The yStats report forecasts more than 50 million online shoppers in the country by the end of this year, representing double-digit growth from 2012. According to e-commerce analyst Internet Retailer, 248 of the top 400 Latin American retailers by sales are based in Brazil, and collectively realized US$9.6 billion in sales in 2012—an increase of nearly 20 percent over the previous year.
Clearly, this is exciting news for online retailers and consumers throughout Latin America. But there are still steps that can be taken—by government, by service providers, and by online retailers themselves—to propel growth even further. Camila Carreno recently outlined some of the remaining barriers in Pulso Social and provided several recommendations, including:
- Improving online payment services to address the relatively small rates of credit card usage that persist in several Latin American countries
- Taking steps to increase user confidence through security certification from independent bodies
- Improving cross-border logistics to work through problems of payment methods, currencies, and deliveries among Latin American countries
- Embracing mobile and making sure that e-commerce sites are optimized for mobile purchases
- Taking concrete steps to provide an excellent customer experience across shopping, payment, and delivery
The fact that e-commerce is growing so rapidly in Latin America—and that there is still room for improvement—is great news for online retailers, consumers, and economies worldwide. Consider it an early Christmas present from Latin America to the rest of the world.