Internet Retailing in Latin America

Economic difficulties,weak exchange ratesagainst the US dollarlimit growth in Braziland at the regionallevel

The regional growth CAGR of approximately 16% reflects weak exchange rates againstthe US dollar and economic challenges faced by markets like Brazil and Venezuela overthe previous five years. While smaller than Brazil’s internet retailing markets, mostcountries in the region grew at two to three times that rate. Colombia is a standout, with a45% sales CAGR. Mexico and Peru also saw very strong growth, at 29% and 24% salesCAGRs, respectively.

Cross-border sales arelevant component inmost countries

In many of the economies in the region, cross-border e-commerce is the dominant type ofinternet retailing purchase. The motives for this vary by market, but include factors suchas limited product availability locally, low levels of domestic e-commerce competitiveness,and local prices that are much higher than those available via the internet from othermarkets.

Competitive landscapefor internet retailingvery fragmented inLatin America

Marketplaces, namely Amazon and MercadoLibre, are the largest players in e-commerceacross Latin America. After these two, however, the competitive landscape fragmentsconsiderably. This reflects the growing level of interest in digital channels by domesticplayers as well as by international ecommerce retailers looking to expand. The market isexpected to consolidate in the years ahead.

Payments, logisticsenvironment a barrierto growth

As in many emerging markets throughout the world, the challenges to growing ecommercesales in Latin America differ from the challenges found in developed markets.In particular, payments and logistics present some unique difficulties that often come as asurprise to foreign players seeking to enter this market.