Online retail in Latin America faces a number of challenges: a troubling economy, rising unemployment, high inflation, and regulatory and infrastructure problems. The recently published Forrester Research Online Retail Forecast, 2015 To 2020 (Latin America) explores the impact of all of these factors. Some of the key findings are as follows.

  • Brazil remains the largest, but slowest-growing, online retail market. The online retail market in Brazil is double the online retail markets of Argentina and Mexico combined. But the ongoing economic crisis in Brazil is hurting its online retail market and causing a slowdown. We expect online retail in Brazil to grow at a compound annual growth rate (CAGR) of 10.5% from 2015 to 2020, compared with the CAGR of 28.3% witnessed from 2010 to 2015. Customers are spending less on both offline and online retail, which affects the overall growth rate and penetration of online retail, particularly in non-metropolitan areas. A lack of regulations and an unfavorable tax regime make it difficult for online retailers to expand beyond metropolitan areas.
  • Mexico is attracting investment and will grow the fastest. Mexico was one of the fastest-growing economies in Latin America in 2015, and we expect it to follow this recovery path in 2016. According to the International Monetary Fund, Mexico’s GDP will grow by 2.6% in 2016, powered by healthy private domestic demand and spillovers from a strong US economy. This is leading to investment by online retailers like Amazon, which launched full retail operation in Mexico in June 2015. Amazon is also working with local retailer Oxxo to solve payment issues by accepting the Oxxo prepaid card for payments and allowing customers to use Oxxo retail stores to pick up products purchased online. For the next few years, we expect Mexico to be the focal country for investment in online retail in Latin America.
  • Sales via tablets and smartphones are low compared with those in Asia Pacific countries. Purchasing via smartphones is one of the key drivers of online retail in countries like India and China. In India, the percentage of online buyers making shopping queries from a mobile device has grown from 24% in 2012 to 57% in 2014. However, in Latin America, the high availability of PCs and broadband has cemented the consumer preference for buying via desktop and laptops. Just 17% of online retail sales in Argentina, Mexico, and Brazil came from smartphones and tablets in 2015. We expect this to increase in coming years, with more and more retailers investing in mobile sales platforms and driving traffic to the mobile channel.

For more on the Latin American online retail market, ForecastView clients can download the Forrester Research Online Retail Forecast, 2015 To 2020 (Latin America).