latin america e-commerce

Latin America is the second largest user of social

media worldwide

Latin America 600 Million people region has the fastest-growing Internet penetration worldwide. In the past year the Internet population in Latin America has increased 15 percent to 112.7 million visitors as the region’s digital ecosystem continued to grow and develop.

E-Commerce & Social Media – The Next Big Thing:

Latin America

May, 2011 Ivonne Kinser

A 600 MM people market with the fastest Internet growth-rate worldwide

Reasons to expand into latin america

Consumers are 5 times more likely to buy on a site written in their own language.

According to researches consumers are 5 times more likely to buy on a site written in their own language. In spite of the predominance of English in terms of languages online web users still prefer to use their own language when surfing the web. A Latin American consumer is therefore more likely to buy from a platform offering Spanish or Portuguese versions than one offering English only.

Can’t read, won’t buy. Why language matters in

global websites

No one could deny at this point that we have arrived at an unprecedented stage where globalization is making the world “one large market”. Companies worldwide are recognizing the need to “globalize" their business models in order to grow. Within the global marketplace, Latin America is in the crosshairs of many global companies. Below are five reasons that make the region a no-brainer for companies considering new markets to expand their businesses. Source: http://www.portadaonline.com/article.aspx?aid=7954

Consumers are 5 times more likely to buy on a site written in their own language. Source: http://goo.gl/OLDnE [email protected]

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May, 2011 Latin America E-Commerce opportunity

Latin America online buying population per country

The results of this research conducted in 2007 shows the unleashed potential of the Latin America e-commerce market. Although Latin America lags behind most developed countries regarding the adoption of online shopping habits, at some point it catches up. With the current staggering penetration of Internet and mobile technologies in the region, the e-commerce shopping has already increased significantly.

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The most populous country in Latin America, Brazil is also the country with the largest number of people with Internet access – 76 million people representing 38% of Latin American web users are Brazilian. With almost 60% of web users using social networks, Brazil surpasses the US and the UK in sheer volume.

Source: http://goo.gl/KxGcV

Brazil e-commerce opportunity, bigger than the

UK

Brazil E-commerce Speeds Up Expansion

Online retail sales are expected to grow 19.4% per year in the 2010-2013 period, jumping from US$ 572 billion to more than US$ 1 trillion.

In Brazil sales went up 40% in 2010 year-on-year, to US$. 9.25 billion. Of the new global consumers, the Brazilians are specially impacted by the digital media and have been particularly prone to try and use them. And the positive economic scenario leverages this behavior.

Online retail sales have been growing worldwide, and studies forecast this year they may rise to US$ 680.6 billion, more than doubling from the US$ 273.05 billion five years ago.

In this same period, in the US, the number of online shoppers have gone up from 130 million in 2006 to around 176 million this year, indicating the consumer base has been growing slower, but average sales have been going up. Total online sales have gone up from US$ 126 billion in 2006 to US$ 204 billions. And all this process may be boosted once again, as the use of the web for shopping becomes more usual, due to the mobility. Especially in Brazil, where in many residences there are only mobile phones and no fixed lines, stimulating a more intense browsing in the mobile environment.

In the Brazilian reality, the number of e-consumers reached 23 million in 2010, from 17.6 million one year earlier. This growth was leveraged by the new e-commerce concepts, specially in Social Shopping and Purchase Clubs, and by the growing presence of the mid-class consumers, who rose from 36% of the market in 2006 to 53% last year.

The expansion of e-commerce, online or via mobile, will be in the next years the fastest-growing sales channel, and the e-consumers shopping experience stimulates the growth of businesses, average sales and frequency of shopping. The e-commerce figures in Brazil and worldwide will be the biggest factor to make retailers and industries devote growing attention to this channel, creating a new universe of experiences and relationships, in a digital environment.

Source: Brazilian Retail News. May, 2011

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E-COMMERCE SPENDING IN LATIN SET TO ALMOST DOUBLE IN THE NEXY FIVE YEARS

E-commerce sales in Brazil will reach $22.0 billion in 2016, up 178% from $7.9 billion in 2010, according to a new study from Forrester Research Inc.

The report notes that the country’s 81 million web users are active in social networks and expect free shipping offers and interest-free payment plans for their online retail purchases.

Forrester cautions that selling online in Latin America is different in several ways from e-commerce in the United States, Europe and Asia. Import taxes, for example, are steep, especially in Brazil. Online retailers hoping to target the online consumer in Brazil need to understand that installment payments are extremely common, both online and offline: Visa estimates that some half of all credit card purchases in the country are done through a series of installments. Additionally, Boleto Bancario, a local bank transfer service, is a popular online payment option for those consumers who do not own credit cards—a significant portion of the population. In conclusion, to build a successful in international e-commerce business technology is just half

of the equation. The other half is a solid market experience and local culture understanding.

internetretailer.com

Knowledge and Expertise are Key to Succeed

Brazilian E-commerce Spending Set to Jump 187% by 2016

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BRAZIL E-COMMERCE LANSCAPE

• 71% of Brazil e-shoppers are employed/Professionals

• From 20 to 45 years old • 56% are female • Only 15% shopped in international websites in

2007, likely because of the lack of solutions to pay with debit card, (back then), and the in-language website

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Chile • Among the most

prosperous countries in Latin America

• Leads electronic commerce transactions

• Triples the average euro per capita

• 40.6 % Internet penetration

• Highest penetration of credit cards in latin America

• Ranks 39th out of 139 economies estimated in terms of technological readiness

Today, Chile is one of the most stable and prosperous countries in South America, and seems to be the leading country of Latin America when it comes to electronic commerce transactions. Chile triples the regional average of 31,22 euro per capita, with sales equal to 107,85 euro a year per person. Brazil is a good second, with 36,89 euro per capita. Internetworldstats.com confirms that since the millennium change the Internet use has grown, up to 320,2%. Chile had an initial amount of 1.757.400 (or 26,2 %) users in 2001 and reached 7.387.000 (44,9 %) users in 2008. In conclusion, 40,6% of Chileans used the Internet). As for the e-commerce development, today Chile seems to be the most developed Latin America country. This does not only concern IT, but for online business industry as well since Chile has the highest penetration of credit cards, personal computers and Internet access. For 2010/11 Chile ranked 39th out of 139 economies estimated in terms of technological readiness, still well ahead of it’s nearest regional competitor, Brazil, which occupied the 46th position. E-commerce in this country has been growing 100% year-over-year as retail businesses around the world are expected to draw their attention towards the Chilean market.

http://goo.gl/RGVTM

E-commerce in Chile has been growing 100% year-over-year

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E-commerce revenues in Argentina have increased by over 48 percent in 2010 to USD 1.9 billion, according to a report by the Argentinean E-commerce Chamber (CACE). The growth was mainly due to the increasing Internet customer base, which reached 26.5 million users at end-2010. The study also shows that around 32 percent of Argentina's Internet user-base make online purchases. The report forecasts that Argentina's e-commerce sector revenues will grow by nearly 43 percent this year to USD 2.7 billion.

Argentina e-commerce revenue jumps 48% in 2010

Source: http://goo.gl/inRIJ

Argentina, along with Venezuela were the markets which achieved the strongest Internet retailing growth in 2010, reaching almost 40 percent in current terms. Argentina was also the fastest growing market historically, posting over a 57 percent CAGR between 2005 and 2010. Rapid growth of Internet usage is one of the reasons behind the sustained growth in Argentina, another reason being that consumers are using the Internet to

shop for better prices. The current economic situation is helping as “people are turning to shopping online because it is a 'rational buy' which avoids temptation. The most successful Internet sites are those of store-based retailers, which already benefit from consumer confidence. Pure e-commerce companies are few and far between, have not yet found a successful way to reach consumers and depend mainly on word of mouth. Retailers need to look at how they can use social media, which is increasing their number of users significantly in Argentina. Source: http://goo.gl/RJ0YA

LEADING THE GROWTH

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ARGENTINA E-COMMERCE LANSCAPE

• 73% of Argentinean e-shoppers are employed/ Professionals

• 33% are within the 25 to 34 years old bracket • 64% are female • 27% shopped in international websites in

2007, vs. 79% in national websites

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Mexico is the fastest growing and second largest technology market in Latin America next to Brazil. In the last eight years, Internet access in Mexico has grown 774% with only a quarter of the population, (approximately 110 million) currently using the Internet.

Internet commerce is expected to grow steadily as more Mexicans convert to online shopping and as online bank services and large online retailers increase their ecommerce offerings. The potential for healthy growth makes Mexico one of the most attractive ecommerce markets in the world right now. Concurrently, the demand for cross border products by the Mexican consumer has also experienced substantial growth. As an emerging market, Mexico offers opportunities for global-minded e-tailers to meet this demand for U.S. products. In 2009, more than half of the largest online retailers in the U.S. accepted international orders – a sales channel that was virtually non-existent 3 years ago. With the arrival of alternative payment methods replacing credit cards and advancing logistics solutions, more and more merchants have warmed up to cross border customers and are looking towards international markets to increase their sales. Mexico is one of those markets and is ready for business.

MEXICO, AMONG THE MOST ATTRACTIVE E-COMMERCE MARKETS IN LATAM

Mexico Poised for Significant Growth

• Online sales in Mexico will reach $3.4 billion in 2016, up 209% from $1.1 billion in 2010.

• About a third of the Mexican population, or about 40 million consumers, are online.

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• 69% of Mexican e-shoppers are employeed/ Professionals

• 40% are within the 25 to 34 years old bracket • 81% are female • 44% shopped in international websites in

2007, (much higher than Brazilians)

MEXICO E-COMMERCE LANSCAPE

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Brazil

Worldwide e-commerce spending – forecasted growth

By 2014, global e-commerce spending is projected to increase more than 90 percent. In Latin America, the amount spent online is projected to more than double.

• Brazil is — and will remain — the powerhouse in the region. With more than 40% of the

online users in the region and a steadily growing economy, it’s not surprising that Brazil’s eCommerce

market will outpace all others by a wide margin. Brazil’s projected 2011 sales of almost $10B put it

behind other major online retail markets like France and South Korea but ahead of smaller ones such as

the Netherlands and Italy.

• Mexico’s online retail market is small today — but growing by a CAGR of almost 20%.With

less than half of the online users of Brazil and limited online spending, Mexico’s online retail market

remains a small fraction of the size of Brazil’s. Average online spending per buyer will not increase

significantly over the next five years, but the sheer number of online buyers will.

Technology purchases will be major drivers in both countries. While some eCommerce

markets have seen notable categories emerge as online leaders — e.g., grocery in the UK, clothing in

France — in newer online markets, it’s often technology purchases that dominate online. In both Brazil

and Mexico, for example, online purchases of consumer electronics and computer hardware will be the

two categories propelling these markets forward. [email protected]


Latam Rank City (Country) Current

Population

2010 GDP World Rank

2025 GDP World Rank

GDP per Capita (by city)

1 Sao Paulo (Brazil) 20.800.000 8 6 $18.654

2 Mexico City (Mexico) 22.800.000 9 7 $17.105

3 Buenos Aires (Argentina) 14.800.000 12 10 $24.459

4 Rio de Janeiro (Brazil) 12.500.000 30 24 $16.080

5 Santiago (Chile) 6.050.000 51 50 $19.835

6 Brasilia (Brazil) 3.925.000 55 51 $28.025

7 Lima (Peru) 9.200.000 56 52 $11.848

8 Belo Horizonte (Brazil) 5.700.000 61 89 $10.702

9 Monterrey (Mexico) 4.350.000 63 58 $23.448

10 Bogota (Colombia) 8.850.000 64 61 $11.299

11 Porto Alegre (Brazil) 4.100.000 66 85 $16.098

12 Guadalajara (Mexico) 4.700.000 81 74 $17.234

13 Medellin (Colombia) 3.625.000 104 103 $13.793

14 Curitiba (Brazil) 3.300.000 113 112 $13.333

Buenos Aires will overtake Boston (12th) and Washington DC (11th) by 2025 GDP

Top 14 Cities of Latin america: All of them will climb in World GDP

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60.8% 12.1%

4.7%

4.2%

4.0%

4.0%

2.9%

2.7% 2.0% 1.3% 1.3%

Brasil

Mexico

Chile

Venezuela

Argentina

Caribe sin PR

Centro Am.

Puerto Rico

Colombia

Peru

Other

Source: :AmericaEconomia Intelligence`

Latin America - E-commerce by country

1.9 3 4.9

7.5 10.6

15.6

21.8

27.6

34.5

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

2003 2004 2005 2006 2007 2008 2009 2010* 2011*

E-co

mm

erce

as

a %

of G

DP

US$

B

illio

ns

E-commerce in LatAm

Sales E-commerce as a % of GDP

E-commerce in

the region has

increased as a

percentage of

GDP at an

average rate of

34% per year.

Internet retailing in Latin

America almost tripled in

size over the last five years

to generate sales of almost

US$12 billion in 2010.

However, the channel is

still almost three times

smaller than direct sales.

There is still enormous

room for growth.

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Travel; 45%

Retail; 34%

International Retail;

13%

C2C; 6%

Taxes; 2%

Travel

Retail

International Retail C2C

Taxes

Source: :AmericaEconomia Intelligence

Latin America - E-commerce categories

The retail category is growing the most in the entire region.

63.8% 61.8%

69.6% 63.9%

Brazil Worldwide

Retail Sites Growth

2009 Reach 2010 Reach

+9% +3%

Source: comScore

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E-commerce does offer considerable hope to consumers and businesses who now pay a high price for multi- layered distribution channels for their products. Why does software from the U.S. cost 150% more in Guadalajara than in Toronto, when both were shipped the same distance from Silicon Valley free of import duties? The answer lies with Mexico’s many IT distribution middlemen. The product is imported by a handful of massive importer/wholesalers whose buying power is fierce and who have the capital to finance stock for distributors all over Mexico. The local distributor may sale to another re-seller before the product touches de end-user. Each re-seller marks up the product 20-to-50%. By buying the products online consumers significantly reduce their cost of the product.

E-Commerce Site Visitors in Brazil Most Likely to Make Purchase

Among those who visited e-commerce sites in Latin America, 79 percent of males reported making an online purchase, while 88 percent of females reported doing so. Across the markets included in the survey, Brazil showed the highest percentage conversion of

Latin Americans do shop online

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40%

50%

60%

70%

80%

90%

2009 2010 2011 2012 2013 2014 2015

Mobile Phone User Penetration by Country,

2009-2015

Argentina Brazil Mexico Latin America

Latin America has seen a significant recent rise in the number of people using the web, driven by investment in infrastructure and broadband technologies. There are an estimated 204,689,836 Internet users in Latin America, representing 34.5% of the population and growing. However, no other region has seen a greater increase in the proliferation of mobile devices than Latin America. According to eMarketer, Latin America has some of the highest adoption rates of mobile devices in the world and overall mobile phone user penetration of 55.4%. A study by Hunt Mobile Ads shows that there has been a 156% growth in mobile traffic in Latin America when comparing the first quarter of 2011 to the same period in 2010. Source: guardian.com.uk

With the increase of mobile penetration, mobile e-commerce will emerge as a strong shopping channel

331.5 354.6 375.5 396.2 415.6 432.7 450.7

57.3% 60.6% 63.4% 66.2% 68.6% 70.7% 72.9%

2009 2010 2011 2012 2013 2014 2015

Mobile Phone Users in Latin America 2009-2015

Mobile Phone Users

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