Latin America remains solidly on the radar of eCommerce leaders taking their brands global—at the same time, local players are rolling out sophisticated offerings of their own to compete with the growing number of international players in the region. Which trends will propel eCommerce forward and how big will these markets be in five years? Our newly published forecast addresses both topics for the three largest markets in Latin America: Brazil, Mexico and Argentina. We find that:
Young, increasingly digital shoppers are driving eCommerce across the region… The markets of Latin America boast not just a rising middle class, but also a young, digitally savvy population. Indeed, while the average age in the US is 38, in Brazil and Argentina it’s 31 and in Mexico just 27. These young consumers are accelerating the shift to online shopping and embracing mobile just like their counterparts around the globe. Still, business leaders that are eagerly eyeing the region must bear in mind that mobile commerce is still at an early stage—it does not yet represent the same high percentage of online sales as in some Asian markets.
…yet countries remain at very different stages. We often try to dispel the myth that the size of eCommerce markets correlates with GDP, as some markets rocket forward much faster than others. In Latin America, we see this dynamic in full force. Brazil, for example, plays an outsized role in eCommerce: Brazil’s $18 billion B2C and C2C eCommerce market in 2014 was more than 6x the size of Mexico’s, despite the fact that Brazil’s economy is less than 2x the size. The Mexican eCommerce market is rapidly gaining momentum, but has not approached the stage of Brazil’s market today.
Brands are making Latin America a top priority… The past year has seen many global brands prioritizing Latin America. Mexico’s eCommerce market, for example, has drawn the attention of a number of US-based retailers: Lowe’s and Home Depot both launched eCommerce sites for Mexico last year while Williams-Sonoma partnered with local retailer Liverpool for eCommerce. Additionally, Amazon is widely reputed to be preparing for a robust rollout in the country in 2015. Brazil, too, has seen several eCommerce players taking the plunge, with brands like Nikon and Quiksilver targeting the market. Over the next five years, a growing number of brands will prioritize the region as sales in the top three markets more than double, reaching over $55 billion in 2019.
…but markets in the region come with challenges. Despite the attention paid to Latin America, some brands continue to struggle in their attempt to penetrate the region. Nintendo, for example, just halted operations in Brazil due to “challenges in the local business environment”. Import restrictions in Argentina have resulted in the country dropping down the list of target markets for many global brands. Business leaders interested in the eCommerce markets of Latin America must go in with their eyes wide open and be prepared for a bevvy of challenges as they attempt to take a piece of these fast-growing markets.