How Smartphones Transformed E-Commerce in Latin America

LATAM observers are making the point that the region has dramatically changed over the last 20 years, with economies enjoying explosive growth and although they now appear to be pausing for breath, what has marked this period has been the rapid advancement of the e-Commerce sector.

What makes it even more remarkable, is that 20 years ago, the idea that e-Commerce could have grown so quickly, would have been mocked. Back then the region was beset by a wide range of problems, not least being very limited internet access, deep seated mistrust from the population about buying online, worries over security and traditional business models based on numerous staid cultures and customs.

Given this background, it’s incredible to think that e-Commerce now has such a grip in the region and one that is exerting more influence than ever. The picture looking forward is indeed rosy, highlighted by the fact that recent figures suggest that by 2016, some 53% of the region’s population will be enjoying an internet connection. This is up 13% on last year, but, perhaps more importantly, it is higher than any other region in the world.

If you accept that the infrastructure is now available to the majority of the population, what’s really driving growth is the rise of the LATAM middle classes who aspire to be able to shop online. Add to that the influence of the millennial generation (who live their lives online) and you have the recipe for impressive expansion.

Now the populations of LATAM have come to except the wide choices available by shopping online, with the clothing and footwear, furniture, and electronic goods all up their as the favourite choices. These are closely followed by the travel sector.

However, challenges remain, especially for those companies who want to exploit the full potential of the market. Not least is that the market demands easy access and distribution of the products. One company making the most of this is Amazon.

Other e-Commerce platforms which are also in the ascendancy include Mercado Libre (already operating in 12 countries) and Linio which, although only three years old, is the fastest growing e-commerce site in the region.

The countries which stand out in the e-Commerce sector are Brazil, Mexico and Chile which combined, account for half of the market. Whilst the fastest rates of growth are being seen in Colombia, Argentina and Chile.

But what really marks out the e-Commerce sector going forward, is the rise of the smartphone. In LATAM the number of smartphones has nearly reached 400 million units (66% penetration) and their acceptance as not only a mobile phone, but also as an internet portal, is increasing dramatically. For many countries, it is the smartphone which is leading the e-Commerce push. In Mexico a third of all transactions are made via a smartphone; in Chile and Colombia it’s a half.

By the end of the decade, the smartphone could account for most e-Commerce transactions.

In all, the e-Commerce sector in LATAM looks extremely healthy and by 2018, it is estimated to be worth $140 billion, rising from the likely $88 billion this year.

It is definitely the age of e-Commerce within LATAM.

About allpago

allpago is the leading payment provider for the LATAM region. allpago provides the most relevant local payment methods through one API and one single platform. allpago offers the best conversion rates ensuring state-of-the-art technology and legal advice necessary for a successful e-Commerce operation in LATAM.

allpago enables start-ups to Fortune 500 companies to offer the necessary local payment methods in the LATAM market, which account for around 80% of their revenues. Current clients include Art.com, Intel Security McAfee, Paylogic, Sumup, Teamviewer and many other leading payment and digital companies.

Reference: MadBox