What: comScore’s Ívan Marchant talks with Portada about the e-commerce landscape in Latin America and what to expect next.
Why it matters: The region is enjoying double-digit e-tailing growth with “real competition” between players and increased mobile internet access driving more and more online purchasing.
Increased internet penetration and availability of credit cards hold the keys to a bright future for e-commerce in Latin America, made even brighter by the recent opening of the cell phone market in Mexico, according to comScore Vice President Ivan Marchant.
A “world of opportunities” is how Marchant, vice president of comScore sales in Mexico, Peru and Central America, describes the e-commerce horizon in the region.
E-commerce in Latin America has lots of room to grow.
E-commerce in Latin America, he says, has “lots of room to grow.”
comScore’s internet usage monitoring platform tracks the internet behavior of an estimated two million users.
From Marchant’s perspective, online retailers in Latin America are engaging in “real competition,” but small- and medium-sized businesses have yet to fully get into the game. A concentration of e-commerce sales to consumers in the upper and upper-middle classes he says, needs to spread to a wider distribution of economic levels.
Internet access driving e-commerce growth
E-commerce starts to take off when half the population in any given market acquire internet access, Marchant said in a recent phone interview with Portada.
And increased mobile phone accessibility in Latin America, he said, is opening up internet access to millions.
In the case of Mexico, recent reforms to laws regulating the country’s cell and fixed-line networks, controlled for years by telecommunications billionaire Carlos Slim, have lowered cell phone service costs and driven e-commerce growth to new highs.
Since telecommunications legal reforms were undertaken in Mexico in 2013, mobile broadband subscriptions increased by 50 million between 2012 and 2016, according to a study by the OECD.
E-commerce in Mexico is being held back, however, by credit card access below that of other Latin American countries, coupled with fewer opportunities to use debit cards to make online purchases.
LATAM e-tailing to grow by 19%
As recently reported by Portada, e-commerce in Latin America is expected to grow by 19% in the next five years – well above the global average of 11%. Online sales in Latin America will double to $118 billion by 2021.
But Latin America has yet to catch up with the US, where online retailing makes up 5 percent of GDP. The average in Latin America is 2 to 3 percent, according to Marchant.
Brazil leads the region in e-commerce thanks to internet penetration of 75 percent, its larger population and higher credit card usage.
Argentina holds second place, followed by Mexico where online sales grew by 30% between 2016 and 2017.
“The entire region is growing in double digits,” Marchant says.
Since telecommunications legal reforms were undertaken in Mexico in 2013, mobile broadband subscriptions increased by 50 million between 2012 and 2016.
MercadoLibre the leader
According to data from comScore, MercadoLibre is the most visited e-commerce site in Argentina, Chile, Colombia, Mexico and Peru. B2W Digital takes first place in Brazil.
“MercadoLibre is way ahead in audience,” Marchant says.
While Samsung and Falabella occupy second place in Argentina and Chile respectively, Amazon now has the second-most visited e-commerce site in Colombia, Mexico and Peru.
“Amazon is growing rapidly,” Marchant said, while MercadoLibre enjoys an advantage from having been in Latin America long before Amazon’s arrival in the region.
Travel purchases, including airline ticket sales, make up 50-60% of all e-commerce in Latin America, according to Marchant.
“It’s definitely a travel market.”
The entire region is growing in double digits.
Purchases of computer hardware and software are also important, with fashion and clothing popular among e-commerce consumers in Mexico.
Seeing into e-commerce’s future in LATAM
Future opportunities for e-commerce growth in Latin America include the sale of groceries and artwork online, Marchant says.
Online sales of artwork are big in the US, but the same has yet to be seen in Latin America.
Both Walmart and Superama in Mexico have begun to sell groceries online, but in general, Latin America “is far from” where the US is in these important e-commerce sales categories, Marchant said.
Walmart, however, has made a lot of personnel changes in Mexico in an attempt to be a bigger e-commerce player.
The “most important opportunity,” regionally, Marchant says, is to get small- and medium-sized business to begin to do business with their customers online.