Cynthia Evans, Regional Director of Strategy & Research, MEC Global.
These days, when looking for inspiration on the application of developments in technology and marketing it can sometimes be most instructive to look at what’s happening in markets that may have lagged in the last wave but are jumping ahead in the next.
The lack of legacy systems and processes that can inhibit seemingly more ‘mature’ markets means that emerging markets have the potential to more easily install the next generation of technology infrastructure.
A great example of this is Kenya’s M-Pesa mobile payments system where despite lacking the more sophisticated banking system of other markets (and even the levels of smartphone adoption), it remains one of the globe’s best examples of a successful and widely used mobile payments system.
In Latin America, where e-commerce is on an upswing, there is no lack of aspiration for development.
Where there is a will there is a way: expansion is less direct than economies with strong credit card penetration and established traditional mail delivery mechanisms.
Latin America credit card ownership is at 36%, while mail services and logistics of online purchase delivery are complex, relatively expensive, if available at all. However, alternate business models are developing rapidly to offset downside impact of ‘plastic’ payment options.
And high cellular telephone penetration managed largely via pre-paid phones favors e-commerce – 80+% of the population have mobile phone service and over 50% are covered by pre-paid data plans or cards (source: TGI Latina WI&II, 2013 February Release).
Overall, mobile phone commerce developments in Latin America show world class levels of purchase patterns with eMarketer reporting entertainment (cinema, theater tickets) and music downloads at 4% of mobile online purchases, equivalent to Asia Pacific figures and world averages. For less ‘digital’ product categories, delivery of items ordered online – by computer or mobile device – is still one of the biggest challenges faced by marketers operating in the B2C arena.
Some progressive retailers are taking matters into their own hands. Department store owners, such as Falabella and Cencosude, solved the payment issue by forging relationships with local banking institutions. This opens a wide array of cross category, cross-brand promotional opportunities to encourage online shopping behaviors, but also identifies a key differentiation in consumer behavior between shopping and buying.
Across Latin America, online penetration has grown, social media have democratized social exchange, and the C2C, second-hand market has expanded rapidly with offers of OLX, Segundamano.com, and eBay among the larger .com entities. Going forward the reality of e-commerce increasingly is likely to be omni-shopping.
Consumer behavior will expand from seeing an ad in media and going to the shop to purchase, to seeking out multiple shopping touchpoints, electronic and not, then making the actual purchase – online, on the phone, in the store, or through another consumer.
This raises the question of what really will be ‘e-commerce’ – the full circle of behaviors or the ‘last click’ or the ‘last tap’ on the phone keypad?
This piece is an adaptation from MEC’s annual global report, “Review Preview.” You can read the full report here.