The Steady Growth of Ecommerce in Latin America
Ecommerce in Latin America is accelerating, making it the fastest-growing online shopping market in the world.
By the end of 2023, eCommerce in Latin America will be worth 509 billion USD. This makes the LATAM market a great opportunity for international sellers, specifically US companies expanding to the region.
Even though the LATAM market is growing, expanding to Latin America isn’t as simple as listing your products for sale. The region has its strengths and challenges, and sellers should understand the best practices when selling in LATAM.
Plus, selling on Amazon may not be your best option since Latin America also has Mercado Libre, its own eCommerce solution.
Here’s a guide to the growing eCommerce market in Latin America, how to sell your products, and when to hire an expert agency to accelerate your expansion.
Overview of eCommerce in Latin America By Country
Between 2021 and 2027, retail eCommerce sales will double in Latin America. By 2025, the number of online buyers will increase by 25% in this region.
While the Latin American market is promising, this region comprises multiple countries with their own markets, consumer buying habits, and even language.
So before expanding to Latin America, it’s essential to look at each country individually and focus on the most promising ones.
Brazil
In 2022, online shopping in Brazil generated 170 billion reals (34 billion USD). In January 2023, there were 181.8 million internet users in the country.
38% of Brazilian adults purchase online goods from foreign retailers, and most of these consumers are young adults. Regardless of age, most Brazilian buyers spend 981 USD on online goods yearly.
Is selling on Mercado Libre or Amazon worth it in Brazil? Even though Mercado Libre purchased the Brazilian e-commerce platform, Kangu, foreign sellers will have more success selling on Amazon Brazil.
Amazon now sells 50 million products in the country, making this the best eCommerce platform for Brazil.
Mexico
In 2022, retail eCommerce sales in Mexico reached MX$528 billion (30.9 billion USD). By the end of 2022, there were 64 million eCommerce users in Mexico.
This makes Mexico the second-largest Latin American country for eCommerce, with the fourth-fastest growing market in the world.
More people are also using the internet in Mexico; between 2024 and 2028, internet users will increase by 28.9 million. The average user spends $1,559 pesos (88.67 USD) yearly on online purchases.
While Mercado Libre is Mexico’s most popular eCommerce platform, Amazon is right behind. Selling on Amazon Mexico is easy for foreign sellers since the whole North American market uses the same platform.
Argentina
In January 2023, 39.79 million people had access to the internet in Argentina. 90% of these users have made an online purchase at least once.
In March 2023, eCommerce sales amounted to 2.846 trillion pesos (15.3 billion USD) in Argentina. Clothing and consumer electronics are the two most popular online shopping categories in the country.
In 2022, the average user in Argentina spent $420 on online goods, but this number is expected to decrease due to the struggling economy.
Colombia
In 2022, Colombian eCommerce sales reached 55.1 million pesos (13.6 billion USD). 51.4% of internet users make an online purchase every week.
Clothing and shoes are the two most popular eCommerce categories in Colombia.
Chile
16.99 million Chileans use the internet, and the country has 12.7 million eCommerce users. The average user spends 1,500 USD annually on online products.
The Appeal of Selling in LATAM
Because of the growing landscape for eCommerce in Latin America, this region is attracting foreign sellers.
There are many benefits of selling in this market, notably because of the young population, growing economy, popularity of online shopping, and more marketing opportunities.
Younger Population
The Latin American population has a high share of young adults–one-fourth of the LATAM population are Gen Zers. This market has a mobile phone adoption rate of 79%. And since a large percentage of this market has internet access, these users favor mobile shopping.
Foreign sellers can attract a massive consumer base when expanding to eCommerce in Latin America by taking advantage of mobile-first platforms, specifically marketplaces with shopping apps.
More People Have Bank Accounts
There was a time when the Latin American population didn’t have a bank account. In fact, more than 50% of Mexico’s population still doesn’t do banking.
However, this changed during the pandemic, when eCommerce in Latin America became more popular. Since most people need a bank account to purchase online products, the number of people who started banking has increased.
Marketing Opportunities
Because more consumers in Latin America are using the internet, there are more low-cost marketing opportunities for foreign sellers.
SEO and content marketing are two of the most favored options for eCommerce in Latin America. By ranking for keywords on Macho Libre and Amazon, you can increase traffic to your online store.
Challenges When Selling in LATAM
Even though eCommerce in Latin America is growing, expanding to this region comes with its challenges. These issues include building consumer trust, the LATAM economic state, and logistics.
Building Consumer Trust
Unfortunately, many cybercriminals target the Latin American market.This makes building trust with LATAM consumers a difficult task.
The most common causes of online fraud in LATAM include phishing, unauthorized brands and use of products, and malicious apps.
Solution: Social media
You’ll need to connect with a LATAM audience on social media to stand out as a foreign seller. The Latin American and Caribbean populations are the fifth-largest group to use social media platforms.
Be wise when choosing your social media platform. TikTok is the fastest-growing social media app in the region, with Facebook and X (previously known as Twitter) losing their appeal among this audience.
Posting on social media isn’t enough. Between 2022 and 2028, the influencer marketing value will rise at a CAGR of 30% in this region.
Therefore, collaborating with influencers will not only increase your brand awareness but will also enhance your social credibility.
Economy
Because of high inflation and interest rates, LATAM’s economic growth is only increasing at 2%. This will influence what consumers buy and how they use their hard-earned dollars.
As stated previously, a large chunk of the Mexican population doesn’t have a bank account. This is a common problem in Latin American regions. Many local banks impose high fees, notably in Brazil.
Since an online bank account is integral to ordering products online, brands must think outside the box when accepting payments.
Solution: Get creative with payment options
Most online stores in the US and Canada offer credit and debit card payments, but that may not be an option for most Latin American individuals.
Fortunately, there are other options. eWallets and mobile payments are popular choices, specifically via PayPal and AliPay. Businesses can also accept local credit cards or voucher payments, specifically when they offer in-store pickup.
Because of the slow-growing economic landscape, more businesses are offering an installment payment option. This way, consumers buy the items they need and pay a small price over a term, usually paying an upfront fee instead of interest.
Logistics
While there are more logistics solutions for foreign sellers expanding to Latin America, logistics are still a big issue in this country.
Even though the US shares a close border with some Latin American nations, outdated air travel technology and roads can increase shipping times. Plus, there are limited shipping options for those who live in rural areas.
Solution: Partner with a third party
With the popularity of third-party fulfillment (3PL), there are many options for international sellers to sell their products in Latin America without needing to handle storage or shipping. You’ll ship your products to the 3PL’s warehouse, which will handle storage and shipping.
Amazon and Mercado Libre offer fulfillment services. If you sell on Amazon, note you can choose either remote fulfillment or marketplace expansion, depending on if you choose their FBA service.
Language Barriers
Even though English is the third most spoken language in South America, it’s mainly spoken by immigrants. So, there’s no guarantee your LATAM customers will speak any English.
You’ll miss out on the local market if you don’t offer customer service or product descriptions in Spanish or Portuguese.
And just because Mexico is near the US doesn’t mean the population is fluent in English. Only 12% of Mexico’s population speaks English.
Solution: Translation services
Plan your translation and localization strategy before expanding to Latin America. Many bilingual professionals can assist with your customer service.
You can also find bilingual writers who can translate your existing product descriptions. Or, you can work with an agency that can help with every step of your eCommerce expansion.
Amazon vs Mercado Libre: Which Platform Should You Choose?
The main marketplaces in Latin America are Mercado Libre and Amazon. While some sellers may choose one over the other, they’re both successful and easy to join.
Becoming an Amazon international seller is easy if you own a store on this platform. You can use your same business details and products if you already have a seller account.
And if you don’t know how to sell on Mercado Libre, this company also simplifies the process. To sell on Mercado Libre, you make one account to sell to four marketplaces.
Take Advantage of eCommerce in Latin America
Since eCommerce in Latin America is one of the fastest-growing markets, this is one of the most promising international expansion opportunities.
However, there are challenges when expanding internationally, especially to Mexico. Don’t worry, you don’t have to handle your expansion alone. We can handle major tasks such as compliance, logistics, and marketing.
Click here to take a look at our services.
Author
Stephanie Jensen has been writing e-commerce content for seven years, and her copy has helped numerous stores rank on Amazon. Follow her on LinkedIn for more insight into freelance writing and creating high-quality content.