Ecommerce in Latin America: Challenges, Opportunities

Latin America presents a paradox to ecommerce merchants. It includes a fast growing middle class eager to find a larger choice of quality goods, but the area has unreliable shipping operations and limited customer usage of banks and credit cards.

The World Bank estimates that over 50 million Latin Americans joined the middle class between 2000 and 2010. About 30 percent of the Latin American people is now considered middle class and most the growth — 35 million people — has happened in Brazil. However, at about $57.7 billion in online sales in 2014 according to eMarketer, Latin America has the second lowest level of digital sales worldwide, surpassing only the Middle East and Africa.

Latin America: Market Size

Forrester Research’s 2015 report,”Latin America eCommerce Forecast, 2014 To 2019,” forecasts that business-to-consumer ecommerce sales in Brazil will increase from $17.8 billion in 2014 to $40.8 billion in 2019. However, the year-over-year growth rate will fall to single digits by 2016. The quantity of online buyers is expected to grow from 33.5 million in 2014 to 61.8 million in 2019. Brazil has the most mature ecommerce market in the region and with a 2014 population of 202 million people — 62 percent of whom are under 30 years old — it features an appealing market.

Brazil has the most mature ecommerce market in the region and with a 2014 population of 202 million people — 62 percent of whom are under 30 years old — it features an appealing market.

In Argentina, the second largest market, ecommerce sales will increase from $3.4 billion in 2014 to $8.3 million in 2019 and the nation will have 12.6 million online customers, up from 7.8 million in 2014. Mexico, with $2.8 billion in ecommerce earnings in 2014, will grow to $6.7 billion in 2019. Mexico had more shoppers than Argentina in 2014, with 10.1 million buyers — they spent .

READ  Ecommerce Product Releases: February 15, 2021 

Forrester forecasts that Mexico will have 21.1 million online customers in 2019. Cumulatively, customers in these three markets will spend $32 billion more online in 2019 than they did in 2014. Chile and Colombia are the other nations showing some traction in ecommerce, but Chile has a small population of 17.4 million and Colombian customers are slow to adopt digital buying.

Ecommerce Efforts in Latin America

In a recent post, “Mexico Poised for Ecommerce? ,” I introduced a number of the challenges of supply and payment in that nation. These expand to other Latin American nations too. Ecommerce merchants must resort to alternative payment methods to reach those without credit cards, debit cards, or checking accounts.

In Mexico and Argentina, some online retailers offer cash on delivery as an option, while in Brazil merchants can apply online for the boleto bancário — a”bank slip” — from EBANX, an ecommerce payment provider. Boleto bancário is a printable, bar-coded statement that is regulated by the Central Bank of Brazil and can be paid by clients offline or online. (An ecommerce merchant can subject a boleto bancário to a customer, who then pays it in ATMs, supermarkets, or online.) Chargeback risk is eliminated and EBANX provides weekly duties to merchants.

Delivery is problematic in Latin America and clients are skeptical about product quality and actual delivery. That’s why they prefer to pay cash on delivery. Several regional ecommerce companies provide their own shipping solutions and have lenient return policies as they try to gain the confidence of consumers.

While mobile shopping is gaining popularity, mobile buying is usually under 5 percent of online sales. Nearly all Latin America has slow 3G networks that aren’t conducive to online browsing or purchasing.

READ  What POS hardware do you really need in a till system?

American merchants can avoid the issues of direct sales by utilizing a market. Traetelo is a cross-border marketplace which enables sellers to publish and advertise their products to customers in more than 20 nations. Sellers list their products, get the orders, send the things to Traetelo’s logistics center in Miami, and get paid directly by Traetelo in U.S. dollars. There’s simply no record fee but Traetelo requires a percentage of earnings. Traetelo handles the taxes, duties, and international shipping. All orders are protected with Traetelo anti-fraud screening.

Traetelo is a market which enables sellers to publish and advertise their products to customers in more than 20 nations.

What Do Latin Americans Purchase?

Online shoppers in Brazil have started to buy in categories like apparel, accessories, and appliances. The most frequently purchased product classes in Malaysian B2C ecommerce are computer hardware and personal electronics; the most popular countries to shop from are the U.S. and China, according to yStats.com, a research firm. Travel products and electronics are the most frequently bought items in Argentina, while music, films, and electronics are popular online purchases in Mexico.

Businesses which run multiple online retail websites do well. Brazil-based B2W operates Americanas.com (consumer products ), Shoptime.com (electronics, bed and bath), and Submarino.com (electronics, games) and is the top rated ecommerce business in Brazil and Latin America.

Second rated Nova Pontocom functions the ecommerce sites of merchants Casas Bahia (furniture, appliances), Extra (consumer products ), Pontofrio (furnishings, appliances), and Barateiro (discounted products). Nearly all the most earnings manufacturers are in Brazil, with two U.S. companies — Dell and Amazon — in the top ten. Global brands are notably absent from Argentina, likely because of import restrictions.

READ  5 Tips For Running A Successful Promotion

The Downside to Selling in Latin America

Both Argentina and Brazil impose high taxes on imports and American merchants considering selling to those nations should consider carefully about whether their product will be cheap. Brazil imposes a level import tax of 60 percent on the cost, insurance, and freight value of merchandise around U.S. $3,000. Duty rates of approximately 35 percent and sales taxes may also apply.

It’s not uncommon for taxes and fees to double the cost of the product to clients. Due to this, digital sales include just four percent of total retail sales in 2015. Nevertheless, these costs haven’t defeated the Brazilian middle class from buying goods online. In Argentina, a value-added tax rate of 21 percent applies as does a duty rate of approximately 35 percent.

In short, Latin America is a relatively small market with unique obstacles. However a growing desire for quality foreign goods is emerging. Merchants that may target the expanding middle class could be successful.

►►► ConnectPOS is a cloud-based POS software compatible with multiple platforms including Magento, Shopify & Shopify Plus, and BigCommerce.

►►► See our products: Magento POSShopify POSBigCommerce POS , Woocommerce pos, Multi source inventory management , Magento 2 pos and START A FREE TRIAL NOW !

►►► Other ecommerce apps : BigCommerce Automation App Platform, Bigcommerce Backorder Management, Automation App for Shopify

►►► Other Japan Marketplace Products : マジェント | サイトコア | ECWebデザイン


Our Feature Posts:

  1. Best Restaurant POS systems
  2. Cashier training tips
  3. Pos system 2020

►►► Zoho : Dịch vụ zoho, Phần mềm quản lý nhân sự, Phần mềm quản trị nhân sự cao cấp

Cloud POS

Cloud POS software for your retail store. Cloudbasepos.com is a powerful cloud-based POS to sell your products in-store & on-the-go using any device, for any outlet.