The Major e-Commerce Trends for Latin America in 2021
It’s no surprise to anyone that e-Commerce grew a lot everywhere in the last few months due to the COVID-19 pandemic. Latin America is no exception, and its history shows that it’s not only because of the quarantine that people are having to face. Throughout the last few years, the population in this region have become more connected digitally. In 2018 and 2019, way before the Coronavirus outbreaks, latin Americans spent more than $100 billion only on e-Commerce.
The consumption behavior is changing and it is opening space for a lot of entrepreneurs to invest, as we can see below, the numbers are only growing.
The Coronavirus pandemic affected everyone around the world and a lot of consumers had only one option: online shopping. For example, even though Brazilians are in the rankings of the most connected people in the world, a lot of them had never shopped online before. According to eMarketer, 10.8 million consumers will make their first digital purchase in 2020. There’s a research that says 82% of the consumers in Brazil (Latin America's first economy) are willing to keep shopping online after the pandemic is over.
These statistics show that Latin America is a region with tremendous force and potential for the online consumption market.
What are the major trends in e-Commerce in Latin America for 2021?
1. Augmented Reality
One of the major problems that keep customers from shopping online is not being able to see the product firsthand, whether it’s furniture or a clothing item. Augmented Reality (AR) is a major game changer and it’s something that is still missing in the Latin American market. Of course you can find it in some websites, but it’s not as popular as it should be. With AR, shoppers can visualize how their home would be nicer with a new couch, check if that bookcase fits in their living room, or even see how they would look like with that pair of glasses that they really want. It’s a technology not be underestimated, especially when the number of online customers continually grow.
2. Social Media
A study conducted in January 2020 shows that at least 65% of the population actively uses social media in countries like Bolivia, Brazil, Cuba, Mexico, Ecuador and Colombia. Some other countries - Argentina, Uruguay and Chile - have even more social media users, at least 76% of the population. Social media has a major force in Latin America and it can’t be looked away. The most popular social media sites in Latin America are:
Latin American people spend a lot of time online, especially on these websites or apps. They can not be underestimated and your product or brand has to be present too. Not only you can sell through these social networks, but also you can advertise on them.
Green consumers are rising everywhere in the world. Latin America is not an exception. People are looking for eco-friendly brands more than ever before. Vegan products, zero waste and plastic free products are extremely popular, especially among millennials. Consumers are getting to feel more responsible for the planet, and therefore they search for brands that connect with their values. If you don’t have a product that it’s considered “green”, make sure to let your audience know what your company is doing to help the world.
4. Customization & Personalization
If you want to satisfy your customer, customization is an incredible way. It has a huge impact to have a product that it’s “made for you” and it’s missing in Latin America. If you look Nike’s website in the United States, you can build your shoe however you like. Now, for example, the Brazilian store doesn’t have that option. Brands are failing to make customization accessible for Latin Americans customers.
Humans value experiences and personalization has a big effect on brand-customer relationships. It’s difficult to implement a personalized experience on-site, but if possible, highly consider it. Your customer will feel like the website is made for them, to help them find what they want/need. Something that is lost when you’re self-service shopping online.
The main eCommerce business opportunities in Latin America
ReCommerce, or second-hand commerce, can be a potentially profitable way of online shopping. Recent research predicts that the second-hand market will double its size in the next five years. Due to the worldwide pandemic economic crises, and local political crisis happening in some countries of Latin America, some consumers may start buying second hand products.
Not only thinking financially, but also it helps environmentally. Sustainability is here to stay and more people are buying less. Resale is an opportunity to reach to those people who want to spend less and don’t want to generate more disposal.
Fashion and technology are businesses that can benefit from that. Companies have to start paying attention to this movement and even maybe build their own reCommerce store.
2. Cross-border products
A lot of Latin American customers prefer to import goods online. It can happen because the product doesn’t exist in their country or it’s too expensive to buy locally (because of high taxes). There are many ways to help these customers on their wishes. But always remember to check local regulations and how you can make that possible for your company. Don’t forget to do a research of the market that you’re entering, especially on the logistics of shipping to that country or region. And here’s another tip to increase your sales: try to offer local payment methods.
3. Digital Products
Particularly after the pandemic, people are getting more used to the digital life. Streaming services, eBooks and online courses have never been more popular. Digital goods are growing everywhere and there’s plenty of space to grow digitally in Latin America. If you want to know more about this topic, we have a full article about digital goods.
Challenges to address in 2021
Always keep in mind that Latin America is not a country. It’s a very large region, with different countries, different cultures, habits and languages. In Brazil, they speak Portuguese, which is different from the one spoke in Portugal. In the other countries, the main language is Spanish, but remember that the Spanish spoke in Argentina is different from the one in Mexico. One big failure for companies is trying to treat Latin America as one, or sometimes as two (Brazil and the others). People enjoy experiences built for them as they want or need. Don’t treat all of LatAm consumers as one. It may push them away because they may not feel safe buying from you. Treat every country differently, respecting their own context and regionalism, and more importantly: their language. You can have some extremely positive response.
Languages can differ and so payment methods. Not everyone has access to Credit Cards, in fact, only 19% of Latin Americans own them. When you build a store, search for local payment methods that are accessible for everyone.
Below are some of the most used payment methods in Latin America:
Domestic Credit and Debit Cards
Most people don’t have an international credit card. It means that they can only pay through credit if the currency is their own.
It’s very common to make cash-based payments in Latin America. When the customer buys something, and selects this method, a voucher with a barcode is generated for the customer to pay it. It’s the most common method.
Installment plans are extremely popular in Latin America due to its economic history. It can be through credit card or voucher. If you have this option, it’s most likely for the consumer to buy from your company.
Bank transfers, e-wallets and Servipag are commonly used to make online payments. In Brazil, there is also a new method called PIX.
How will the PIX payment change the Brazilian consumer behavior?
PIX is the new system created by the Brazilian Central Bank to create instant payments in Brazil. It is through PIX that all wallets that use QR Codes will be interoperable, meaning transfers and payments will be allowed from one e-wallet to another in real-time, 24/7.
It will change the consumers behavior in Brazil because payments will be able to be done 24/7 without charges. It will increase the financial inclusion and simplify how everything’s done. People will be more willing to buy online because the amount of information that they have to give to the seller is minimal, and there’s no maximum or minimum amount for the process to happen.
What are the key factors you should know in expanding and growing a business in Latin America? Each week we’ll unlock a new content guides to help you navigate the market and localize in the region.