The digital revolution has been rewiring retail for years. The COVID-19 pandemic accelerated this transition as e-commerce became the default setting for many homebound consumers. The crisis-inspired surge in e-commerce is leading to a permanent shift in retail, creating both new challenges as well as new opportunities for retailers and consumer brands alike. This report explores those opportunities and challenges in Latin America.
Delayed investment in the e-commerce channel has meant that over the crisis the immature nature of the Latin American market has become more apparent. Despite these challenges, the fast adoption by consumers of the digital channel and important efforts by companies of all sizes have meant that 2020 closed with great dynamism with the region posting the fastest growth.
Marketplaces in the region are one of the main reasons behind the great influx of new products in the market. Traditional store-based retailers, such as Falabella, and pure players, such as Mercado Libre, have expanded the categories on offer, including everything from medical care products to supermarket-like products by finding new sellers and buyers.
The explosion of e-commerce demand led to greater innovations relating to the final steps of the path to purchase, including payment methods. These efforts have helped consumers increase their interaction with retailers. Logistics, while having received increased investment during 2020, still needs to become a focus area, as consumers have become accustomed to low-price shipping and fast turnaround times.
Latin American consumers have been greatly affected by the economic downturn and as such have taken advantage of the increased promotional activity driven by brands online. As such, shoppers are interested in finding solutions online that allow for shopping that is not only cheaper, but also convenient, with fast delivery and varied payment methods.
While Brazil and Mexico stand as key markets to observe and invest in, interesting prospects are being noted in up-and-coming Chile, Colombia and Peru, all having experienced some of the greatest e-commerce growth in 2020. These countries have also expanded greatly on the infrastructure of e-com, meaning that prospects ahead continue to be positive.
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