How Global eCommerce Will Affect Latin America in 2019
The rise of eCommerce retailers and marketplaces like Amazon, Taobao, and eBay are responsible for online shopping habits that account for a yearly spend of over $2.8 trillion USD. In 2019, Amazon will turn 25 years old, marking a major milestone for this eCommerce giant. Since its inception, it has changed the way that people shop.
Previously, malls were the epicenter of commercial life, and auxiliary services like food courts, movie theaters, and even amusement parks were brought on-site to cater to shoppers who would spend hours perusing stores in one central area.
Now, foot traffic in malls all over the world is declining- analysts at Credit Suisse predict that between 20% and 25% of malls in America will close by 2022. That number shows just how many people prefer buying their goods and services online- these once-robust bastions of community are folding into dust.
Overview of the global eCommerce industry today
While it may seem that only larger companies like Amazon and eBay have global eCommerce strategies in place, all businesses regardless of size or scope must update their strategies if they want to compete on a global level. There are some major players in the global eCommerce marketplace that have grabbed a huge market share, but the industry is still young and malleable- 35% of the top 75 online marketplaces launched between 2010 and 2015.
Even though eCommerce is worth trillions of dollars, and is forcing brick-and-mortar stores out of business every day, high-growth companies are still most successful when their in-store experience and eCommerce platform work in concert with each other. One of the best ways that businesses can synchronize the in-store and online experience is through content.
New updates to the Google algorithm are rewarding businesses who offer the most value to customers- most specifically, those who use relevant, engaging content to make connections between their products and consumers. Global eCommerce growth is all about removing the distance between the online and in-store shopping experience.
The eCommerce industry has also become adept at using social media to connect to potential customers. In June 2018, Instagram hit 1 billion monthly active users, and their numbers will only continue to rise. Social buying – purchasing products without having to leave the social platform- is common in China, and it’s likely that this trend will continue to influence the global eCommerce industry moving forward.
Sectors experiencing global eCommerce growth
While it’s tempting to look at the state of the global eCommerce industry and declare that it’s generally on the rise, there are some sectors where that growth is unparalleled. Fashion and apparel, electronics, and grocery all perform extremely well online. Fashion and apparel benefits hugely from companies being able to house more SKUs than they would be able to stock in retail stores, while comparing prices for costly electronics is easier and more convenient through online retailers.
Grocery eCommerce saw sales triple between 2013 and 2018, and those numbers are only expected to rise as options become more cost-effective for consumers.
In order to better understand the advantages of developing a truly global eCommerce platform, let’s take a look at some companies who have succeeded in building a business that truly reflects our global marketplace.
Case Study: AliExpress
AliExpress, the online retail service based in China, is an extremely popular alternative to platforms like eBay and Amazon. According to Joe Yan, AliExpress’s director of global operations and expansion, mobile has been their “catalyst for international expansion.” Putting the focus on their mobile customers through both their app and their mobile website experience has given them a major global boost – within three years of launching their app, it was downloaded more than 5 million times on Google Play. Putting the focus on their mobile experience allows them to retain existing customers and attract a much larger market share in areas like Latin America, where smartphone penetration is expected to increase to 47% by 2021.
Case Study: Amazon
On the other side of the world, Amazon is currently the 3rd-largest online marketplace, ranked by gross merchandise value. They’ve made a huge effort in the last few years to not only expand their services, but ensure that their global reach gets progressively larger. In March 2018, they introduced the Amazon Rechargeable debit card to Mexico, which allows Mexican consumers – less than a third of whom have credit or debit cards – to shop online. This method creates a bridge to the formal economy and establishes trust between Amazon and local customers. If it’s successful, look for Amazon to roll this out in other countries.
Currently, the only Latin American countries that have been given their own localized Amazon websites are Mexico and Brazil, but their American website attracts hundreds of millions of customers every month. Amazon also facilitates customer’s transition between their sites with ease – one username gives you access any site, regardless of language or currency.
Global eCommerce in Latin America
A company who chooses to focus their expansion efforts on Latin America will find that their efforts will be well rewarded. Some of the biggest trends in eCommerce are extremely visible in South America. Internet penetration is set to expand to 65% by 2021, and in that same year, smartphone usage is expected to jump by more than 10% to 47%.
This matches global trends of shopping on mobile apps and PWAs (Progressive Web Apps), a hybrid of website and app that loads faster than a mobile browser, but doesn’t force consumers to opt into a download like an app.
Stereotypes about global development have led some people away from investing in Latin American eCommerce platforms and advertising, but key markets like Brazil, Mexico, and Argentina continue to climb the World Bank’s Logistics Performance Index, with all three countries scoring in the top 70 for 2018, accompanied by other Latin American countries like Chile (#34) and Panama (#38). Companies who want to tap into the $118 billion USD that’s expected to be generated by eCommerce in Latin America by 2021 should invest in strategies and advertising now. It’s difficult to operate in Latin America without a local strategy. If retailers and businesses are not able to establish relationships with banks and other electronic payment solutions, they’ll be left behind as global eCommerce giants like AliExpress and Amazon dominate the market.
What comes next?
Global eCommerce giants like AliExpress, Amazon, Walmart, and LightInTheBox realized both the potential and challenges of targeting customers in Latin America – which requires to adapt their eCommerce strategy accordingly. This means improving mobile performance, taking advantage of social media, and acting globally while crafting a nuanced strategy for local markets. It’s difficult to penetrate local markets without a local strategy, but the advantages to developing it are clear.