E-commerce continued to see positive growth in Latin America in 2022, in spite of the recent massive sales spike already seen in 2020 due to COVID-19 restrictions. Further growth is also expected in the coming years, given the now expanded customer base for this types of shopping as well as the expected rises in financial inclusion across the region.
This report comes in PPT.
In spite of most countries in the region seeing major sales spikes in 2020, when COVID-19 restrictions saw people spending a lot more time at home than usual as well as the closure of non-essential retail outlets, the e-commerce channel continues to record positive growth, generally outperforming offline retail across the region. Sales are being driven both by online marketplaces as well as the continued development of formerly store-based retailers.
MercadoLibre is not only the biggest online marketplace in Latin America, but also the clear leader in overall e-commerce in the region. As well as its solid infrastructure, enabling it to offer speedy last-mile delivery, it also has its own financial arm for online payment transactions in MercadoPago. As they try and compete with pure-play companies like MercadoLibre Marketplace, specialist retailers are increasingly using their physical stores as fulfilment centres for online orders.
One problem standing in the way of e-commerce growth in the region, is the still relatively low levels of financial inclusion among consumers in some countries. Greater financial inclusion makes digital payments easier when shopping online, although smartphone apps and BNPL options can also allow unbanked consumers to make online purchases.
With more consumers having become accustomed to shopping online during the pandemic, the potential customer base for the e-commerce channel has been permanently expanded. The wide range of options and prices online will also continue to attract shoppers, as will the offer of free delivery or pickup. Retail e-commerce will therefore continue to outperform retail offline and overall retail over the forecast period.
Retail is the sale of new and used goods to consumers from a business for personal or household consumption from retail outlets, kiosks, market stalls, vending, direct selling and e-commerce. Retail is the aggregation of Retail Offline and Retail E-Commerce. Excludes specialist retailers of motor vehicles, motorcycles, vehicle parts. Also excludes fuel sales, foodservice sales, rental transactions, and wholesale sales (e.g. Cash and Carry). Sales value excluding or including VAT/Sales Tax. Retail also excludes the informal retail sector. Informal retailing is retail trade which is not declared to the tax authorities. Informal retailing encompasses (a) sales generated by unregistered and unlicensed retailers, i.e. retailers operating illegally, and (b) any proportion of sales generated by a registered and licensed retailer that is not declared to the tax authorities. Unregistered and unlicensed retailers operate predominantly (although not exclusively) as street hawkers or operate open market stalls, as these channels are harder for the authorities to monitor than permanent outlets. Activities in the illegal market, which is usually understood to refer to trade in illegal, counterfeit or stolen merchandise, are included within our definition of informal retailing. Activities in the “grey market”, which is usually understood to refer to trade in legal merchandise that is sold through unauthorized channels – for example cigarettes bought legally in another country, legally imported, but sold at lower prices than in authorized channels – will be included as informal retailing if no tax is paid on sale by the retailer. However if the retailer pays tax – for example on cigarettes bought legally in another country but sold at a lower price than standard – the sale is included within formal retail.
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