E-commerce in South America, a model like no other.
The unsuspected power of local digital shopping
Every other Wednesday, h/commerce provides in-depth analysis of the most impactful trends reshaping retail.
Like everywhere else in the world, covid had a large impact on Latin American consumers.
New habits were born, others were accelerated. And some of them are expected to stay…
Because Latin American consumers had to switch to an online consumption during months of lockdown, digital platforms are now part of consumers daily life.
Now, even if everything is coming back to its usual state, LATAM consumers prefer to carry out their purchasing process digitally.
Another characteristic of Latin American consumers is their ability to adapt quickly to new digital habits. They are constantly connected to the internet thanks to the growth in mobile ownership and the availability of mobile internet (Business Insider 2021).
Although we observe that Latin America is in the wake of major global trends, and particularly regarding digital shopping and consumption, local countries are not always prepared to sustain them. Taking the example of the metaverse sector, it is not yet completely integrated into the business models of local companies due to its complexity, and the amount of economic and digital resources it requires.
Who’s taking the lead in the e-commerce sector across Latam?
Another characteristic of Latin American consumers is their ability to adapt quickly to new digital habits. They are constantly connected to the internet thanks to the growth in mobile ownership and the availability of mobile internet (Business Insider 2021).
Although we observe that Latin America is in the wake of major global trends, and particularly regarding digital shopping and consumption, local countries are not always prepared to sustain them. Taking the example of the metaverse sector, it is not yet completely integrated into the business models of local companies due to its complexity, and the amount of economic and digital resources it requires.
First, if we want to understand how ecommerce works in the region, we must consider the market breakdown by countries.
If we have a close look at South America ecommerce market distribution, we identify, based on the graph below, 3 main groups of countries:
- Brazil and Mexico are the great leaders in the region in terms of technological and digital capacity, whose growth in recent years has attracted the attention of local and global retailers who have decided to develop and expand their businesses in these two countries.
- Then, we observe two main countries following these two leaders: Argentine and Chile, which are developing e-commerce at a slow pace.
- Finally, we note Colombia, Peru and the remaining of Latin America lagging as tech trend-followers.
Now if we take a closer look at the main players of the ecommerce market in LATAM we can notice an unusual phenomenon.
What is striking to observe in LATAM ecommerce is the success of local marketplace platforms which is quite an innovative market trend.
In the graph bellow, we distinctly notice that Mercado Libre is the biggest retailer of the region being even ahead of Amazon in the ranking by number of visits. It is quite an unusual ranking.
In European countries such as France, Italy, Spain, Germany and England for example, Amazon is systematically appearing as the leading marketplace in the rankings.
Some examples bellow indicate that the e-commerce market in Latin America has strong local know-how. This distribution of local and global e-merchant players in the region highlights its independence in terms of technology and logistics resources.
MERCADO LIBRE CASE: the local marketplace taking the lead in LATAM
Mercado Libre is the largest marketplace in LATAM region. The retailer has today a whole ecosystem enabling it to be almost independent throughout its entire value chain: Mercado Pago, Mercado Envios, Mercado Shops, the app.
Mercado Libre capacity to generate employment is also a good indicator to understand its impact in the region, it’s a powerful leader and even a major economic player in Latin American countries.
Why is it interesting?
The interesting thing about the Latin American e-commerce model is the strong presence of local retailers and platforms competing directly with global platforms such as Amazon and Walmart, especially on the digital side. Indeed, Latin American consumers have a strong attraction for online shopping. It’s quite inspiring to observe that local platforms can take over commerce in some regions.
Nevertheless, two big countries stand out in terms of commerce development: Brazil and Mexico. They are followed by Argentina and Chile, which are also seeing online platforms and new digital trends flourish.
The other countries of the continent are mostly lagging for the moment.
LATAM e-commerce model tells us that it is almost fundamental today for local commerce player and merchants in all regions of the world to think about their global future of course but also their local future. Local know-how, even in terms of digital shopping, is not dead.
Subscribe to our monthly newsletter covering the hottest retail topics. Each newsletter is part of a collection of thematic reports that aims at providing keys to understand new trends and retailers’ strategies.
Sources:
https://files.walmex.mx/upload/files/2021/es/trimestral/4T21/Walmex_Overview_4T21.pdf
Statista
Mikaela Barbosa mikaela.barbosa@havas.com
29/30 quai de Dion Bouton
Puteaux Cedex 92817 France
Follow us:
