Online retail is seeing tremendous growth in Latin America. This trend cannot be attributed purely to a consequence of the pandemic. Consumers have begun to embrace online shopping as part of their daily lives.
Online retail shopping is becoming customary in Latam
Latin America’s big cities are known for their frenetic pace of life. People spend much of their time commuting to work and do not want to travel long distances to buy clothes or groceries. Nowadays, people prefer to shop online to avoid traffic, find better deals and for the convenience it brings.
Retail and digital products and services are booming in Latin America. And this trend can no longer be attributed solely to a consequence of the pandemic. Consumers have begun to embrace online shopping, online gaming and streaming, among other online services, as part of their daily lives.
This growth is helped by the fact that the region has high rates of hours spent using the Internet for different purposes. And above all the high use of cell phones connected to the internet. This has convinced merchants to expand their business into e-commerce.
According to Americas Market Intelligence data, Latin America is the second fastest growing e-commerce market in the world, with an expansion of 25% per year over the past year. These numbers, which speak of the great growth of online commerce and online retail, lead to the conclusion that more than a trend of the period of confinement, online retail has already become a habit among consumers. Online retail volumes are expected to grow by 40%.
What is a marketplace payment?
There are a number of factors influencing the growth of online retail in Latin America. It is true that consumers have become accustomed to shopping online, but this goes hand in hand with companies of all sizes selling online, expanding their offerings. Not only are Latin American consumers more accustomed to shopping online, but more companies are selling via the web and expanding their potential.
Considering the increase in online retail sales, it is not at all surprising that online sales have been growing steadily and increasingly. According to AMI, e-commerce now accounts for around 10%.
Experts speak of three drivers of online retail in Latin America. First, there is the emergence of giant marketplaces, which not only sell their own products, but also serve as a showcase for small and medium-sized companies entering the online world. Secondly, there are the physical stores that enter the online space and open small web stores. Thirdly, there is what is known as “social e-commerce”, which refers to when social networks are the showcase for individual entrepreneurs and small businesses.
According to Statista, there are around 300 million digital shoppers in Latin America, a number that is expected to grow by more than 20% by 2025: “although e-commerce adoption in this part of the world is still lower than in other emerging regions, online retail sales in Latin America are expected to reach 160 billion by 2025.”
In 2022, according to EMarketer, more than half (51.1%) of online retail sales in Latin America will take place for the first time on mobile devices, a figure equivalent to US$75.65 billion. By 2025, a growth of more than 55.5% is expected, equivalent to US$106.25 billion.
The expansion of Internet access, even for consumers in the most remote areas, has enabled consumers in Latin America to shop anytime, anywhere from their mobile devices. The rise of m-commerce will be one of the main drivers of future retail e-commerce growth.
Defining e-commerce in Latin American markets
This is a key issue, as the definition of what constitutes “e-commerce” in Latin America can be loose or restricted to specific business sectors or specific payment methods. For the purposes of AMI’s analysis, e-commerce was defined as follows:
- Cross-border purchases made with locally issued credit or debit cards.
- Domestic e-commerce with internationally enabled credit cards and all local payment methods.
- B2C or B2B sales processed by any payment gateway or e-commerce gateway
- E-commerce purchases made with PC, mobile devices (tablet, smartphone)
- Purchases within home delivery, transportation and other apps
- Sales of physical products and services, e.g. retail (physical products purchased directly from the merchant or in a marketplace)
- Travel: airline tickets, car rentals, hotels, etc.
- Digital products: streaming, video games, and online casinos
- Other services, including utility payments, insurance, education and taxes.
Excluded from this analysis were person-to-person (P2P), QR code payments made in physical stores and cross-border purchases made with internationally issued cards.
See also: What is an Automated Payment System?
AMI forecasts that by 2024 e-commerce will account for 14% of total retail spending in Latin America, more than doubling its share of retail spending in 2019. The benefits of the boom go beyond the large online retail chains (known as e-tailers) as Latin SMEs have been forced to sell online to make up for lost revenue due to quarantines imposed in different countries.
Increasing partnerships between the retail sector and payment service providers is critical to successfully serving shoppers’ needs. These partnerships are driven by the demands of the marketplace to deliver game-changing solutions, improve their business models and results. In Latin America today, the new speed of e-commerce is not limited by geography, i.e., shopping movements are becoming faster, safer, and more efficient, thanks to payment processors such as PayRetailers.
Online shopping sites in Latin America
If you are wondering which online stores ship internationally we have a short list for you to get in the know, also yes, amazon is present in Latin America, so get that credit card ready if your are traveling there and want the best promos.
1. Linio
Linio is part of the German group Rocket Internet and is considered one of the largest online stores in Latin America. It began operations in 2012 and currently has presence in Colombia, Peru, Venezuela, Argentina, Chile, Ecuador and Panama.
In addition, Linio has an app where users can buy all kinds of products, such as: cell phones, video games, clothes, shoes, gadgets, tablets, home and office items, watches, books and much more.
2. Mercado Libre
Mercado Libre is an Argentinean company whose online business is based on the intermediation of buying and selling products; as well as for auctions. Also, the products you can sell in Mercado Libre can be new or used, very similar to eBay.
Mercado Libre is considered one of the pioneers in Latin America and currently has millions of users who can shop online safely.
The main countries where it operates are: Brazil, Argentina, Peru, Chile, Colombia, Ecuador, Mexico, Panama, Portugal and Uruguay.
3. Dafiti
If you are looking for the best online clothing store in Latin America then Dafiti is what you are looking for. This online store was founded in Brazil and is considered one of the largest in Latin America. In just 5 years it has managed to expand in Argentina, Mexico, Colombia and Chile. It works with more than 400 brands from different countries around the world.
One of the elements in which it stands out and which has probably led it to success is the trust it generates in users, since it allows you to exchange and return products free of charge.
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