The pandemic accelerated digital transformation all over the world and the eCommerce industry was one of the sectors that benefited the most from it. Unsurprisingly, Latin America was not left behind in terms of eCommerce growth and internet adoption. In fact, it has shown significant progress and generated great expectations among experts.
Brazil, Mexico and Argentina are standing out
Brazil, Mexico and Argentina have established themselves as the countries with the highest percentage of eCommerce growth in the Latin American region and among the fastest growing countries in the world, due to a strong rise in connectivity and the promise of a greater banking access to the population (Except for rural areas and people over 65, the “unbanked” have almost disappeared in Latam, with the banked population reaching almost 90% in Brazil). In fact, after a record 2020, the eCommerce industry of the three aforementioned countries grew further last year by 21% to 27%. According to the new 2022 We Are Social and Hootsuite report, the internet adoption in South America reached 75%. As a comparison, the internet penetration reached 72% in Southeast Asia, 73% in Oceania and 66% in South Africa. When looking closer, there are still disparities within Latam as the internet adoption has reached 83% in Argentina, 77% in Brazil, and 74% in Mexico.
Latin America is in the midst of an eCommerce boom
Another factor explaining the growth of eCommerce in Latam is the rise of female entrepreneurship. Already facing challenges in terms of labor inclusion pre-pandemic, women have lost their jobs faster than their male counterparts during the health crisis. This has led to women turning to social media and eCommerce to seek other sources of employment or extra income. As a result, a majority of eCommerce entrepreneurs are now women in the region, with micro, small and medium-sized companies being led by women entrepreneurs who see technology as a useful tool to boost the growth of their businesses. When looking closer at the different countries within Latam, Brazil and Mexico are not the only countries in the region to experience hypergrowth. Some studies even go as far as to state that eCommerce sales in Latin America would maintain a yearly growth rate of 30% until 2025, making the region’s eCommerce sector a hypergrowth market, and causing international companies to move their focus from already-saturated eCommerce markets – such as China and the United States – to Latin America. Looking at the developments of Mercado Libre’s activities and investments in the region gives good insights on the region’s potential. From purchasing a Chilean payments service provider to boosting its investment in Brazil by 70% ($3.4 billion), to increasing its investment in Mexico to almost $1.5 billion, Mercado Libre is looking to expand and consolidate business in a region that is in the midst of an eCommerce boom.
Smartphone is key in the new eCommerce world
The eCommerce through smartphone trend in Latam is also getting traction and is becoming the key element in the new post-COVID-19 eCommerce world. Out of all devices, smartphones gained the most users during 2021, with an increase of 11% worldwide. For its part, Mexico is the country with the highest volume of weekly purchases through smartphones in Latam, with an average of around 44% of purchases made on a smartphone. Online merchants in Latin America will continue to implement technological developments in order to improve users’ shopping experience and the security of payment methods and customer data. If they want to be successful in the region, online merchants need to test and try new things in order to constantly improve the customer journey and the checkout conversion. Latam is a very specific region, so a global approach will not work. Companies that want to expand into Latam need to roll out a local strategy and remove friction throughout the whole customer journey. From the introduction of local payment methods in the key markets’ carts (Such as Mercado Pago, Boleto in Brazil, Rapipago in Argentina, RedCompra en Chile, etc.), to adding local preferences such as the possibility to pay by instalments or BNPL, to adding local trust marks and using local language and local events in the marketing copy, the array of optimizations to focus on is wide. The good news is that Softline Ecommerce allows you to focus on all of this. Our Global Payment Solution for Digital Sales makes cross-border digital sales easy and safe, so that online merchants can reach new customers and grow their business easily in Latin America. We take care of everything: payment processing in local currencies, invoicing, tax management, compliance with regulations, securing transactions and AI-based fraud minimization. So, if you want to see what we can do together, don’t hesitate to contact us on our website, via Linkedin or email (email@example.com).