Latin America e-commerce

E-Commerce & Social Media – The Next Big Thing:
Latin America
May, 2011 Ivonne Kinser
A 600 MM people market
with the fastest Internet
growth-rate worldwide

Latin America 600 Million people region has
the fastest-growing Internet penetration
worldwide.
In the past year the Internet population in Latin
America has increased 15 percent to 112.7
million visitors as the region’s digital ecosystem
continued to grow and develop.

Latin America is the second Reasons to expand into
largest user of social latin america
media worldwide
Consumers are 5 times more likely to buy on a No one could deny
site written in their own language. at this point that
we have arrived at
According to researches consumers are 5 times an unprecedented
more likely to buy on a site written in their own stage where
language. In spite of the predominance of globalization is
English in terms of languages online web users making the world
still prefer to use their own language when “one large market”. Companies worldwide
surfing the web. A Latin American consumer is are recognizing the need to “globalize" their
therefore more likely to buy from a platform business models in order to grow.
offering Spanish or Portuguese versions than one Within the global marketplace, Latin
offering English only. America is in the crosshairs of many global
companies. Below are five reasons that
make the region a no-brainer for companies
Can’t read, won’t buy. Why considering new markets to expand their
language matters in businesses.
global websites Source:
http://www.portadaonline.com/article.aspx?aid=7954

Consumers are 5 times more likely to buy on a
site written in their own language.
Source: http://goo.gl/OLDnE Ivonne.kinser@gmail.com

May, 2011 Latin America E-Commerce opportunity

Latin America online buying
population per country

The results of this research conducted in 2007 shows
the unleashed potential of the Latin America e-
commerce market. Although Latin America lags behind
most developed countries regarding the adoption of
online shopping habits, at some point it catches up.
With the current staggering penetration of Internet and
mobile technologies in the region, the e-commerce
shopping has already increased signiﬁcantly.

Ivonne.kinser@gmail.com
2


Brazil e-commerce
opportunity, bigger than the
UK
The most populous country in Latin America, Brazil
is also the country with the largest number of people
with Internet access – 76 million people
representing 38% of Latin American web users are
Brazilian. With almost 60% of web users using social
networks, Brazil surpasses the US and the UK in
sheer volume.
Source: http://goo.gl/KxGcV

Brazil E-commerce Speeds
Up Expansion

Online retail sales are expected to grow 19.4% per year in the 2010-2013 period, jumping from
US$ 572 billion to more than US$ 1 trillion.
In Brazil sales went up 40% in 2010 year-on-year, to US$. 9.25 billion. Of the new global
consumers, the Brazilians are specially impacted by the digital media and have been particularly
prone to try and use them. And the positive economic scenario leverages this behavior.
Online retail sales have been growing worldwide, and studies forecast this year they may rise to
US$ 680.6 billion, more than doubling from the US$ 273.05 billion five years ago.
In this same period, in the US, the number of online shoppers have gone up from 130 million in
2006 to around 176 million this year, indicating the consumer base has been growing slower, but
average sales have been going up. Total online sales have gone up from US$ 126 billion in 2006 to
US$ 204 billions. And all this process may be boosted once again, as the use of the web for
shopping becomes more usual, due to the mobility. Especially in Brazil, where in many residences
there are only mobile phones and no fixed lines, stimulating a more intense browsing in the
mobile environment.
In the Brazilian reality, the number of e-consumers reached 23 million in 2010, from 17.6 million
one year earlier. This growth was leveraged by the new e-commerce concepts, specially in Social
Shopping and Purchase Clubs, and by the growing presence of the mid-class consumers, who rose
from 36% of the market in 2006 to 53% last year.

The expansion of e-commerce, online or via mobile, will be in the next years the fastest-growing
sales channel, and the e-consumers shopping experience stimulates the growth of businesses,
average sales and frequency of shopping. The e-commerce figures in Brazil and worldwide will be
the biggest factor to make retailers and industries devote growing attention to this channel,
creating a new universe of experiences and relationships, in a digital environment.
Source: Brazilian Retail News. May, 2011


3


E-COMMERCE SPENDING IN LATIN SET TO ALMOST
DOUBLE IN THE NEXY FIVE YEARS

internetretailer.com

Brazilian E-commerce Spending Set to
Jump 187% by 2016

E-commerce sales in Brazil will reach
$22.0 billion in 2016, up 178% from
$7.9 billion in 2010, according to a new
study from Forrester Research Inc.

The report notes that the country’s 81
million web users are active in social
networks and expect free shipping offers
and interest-free payment plans for their
online retail purchases.

Knowledge and Expertise are Key to Succeed

Forrester cautions that selling online in Latin America is
different in several ways from e-commerce in the United
States, Europe and Asia. Import taxes, for example, are
steep, especially in Brazil.
Online retailers hoping to target the online consumer in
Brazil need to understand that installment payments are
extremely common, both online and ofﬂine: Visa
estimates that some half of all credit card purchases in
the country are done through a series of installments.
Additionally, Boleto Bancario, a local bank transfer service,
is a popular online payment option for those consumers
who do not own credit cards—a signiﬁcant portion of the
population. In conclusion, to build a successful in
international e-commerce business technology is just half
of the equation. The other half is a solid market experience and local culture
understanding.

4


BRAZIL E-COMMERCE LANSCAPE

• 71% of Brazil e-shoppers are
employed/Professionals
• From 20 to 45 years old
• 56% are female
• Only 15% shopped in international websites in
2007, likely because of the lack of solutions to
pay with debit card, (back then), and the in-
language website


5


Chile
• Among the most
prosperous countries
in Latin America
• Leads electronic
commerce transactions
• Triples the average
euro per capita
• 40.6 % Internet
penetration
• Highest penetration of
credit cards in latin
America
• Ranks 39th out of 139
economies estimated in
E-commerce in Chile has been terms of technological
readiness
growing 100% year-over-year

Today, Chile is one of the most stable and prosperous
countries in South America, and seems to be the leading
country of Latin America when it comes to electronic
commerce transactions. Chile triples the regional average of
31,22 euro per capita, with sales equal to 107,85 euro a year
per person. Brazil is a good second, with 36,89 euro per
capita.

Internetworldstats.com conﬁrms that since the millennium
change the Internet use has grown, up to 320,2%. Chile had an initial amount of
1.757.400 (or 26,2 %) users in 2001 and reached 7.387.000 (44,9 %) users in 2008. In
conclusion, 40,6% of Chileans used the Internet).

As for the e-commerce development, today Chile seems to be the most developed Latin
America country. This does not only concern IT, but for online business industry as well
since Chile has the highest penetration of credit cards, personal computers and Internet
access. For 2010/11 Chile ranked 39th out of 139 economies estimated in terms of
technological readiness, still well ahead of it’s nearest regional competitor, Brazil, which
occupied the 46th position.
E-commerce in this country has been growing 100% year-over-year as retail businesses
around the world are expected to draw their attention towards the Chilean market.
http://goo.gl/RGVTM Ivonne.kinser@gmail.com

6


Argentina e-commerce revenue jumps
48% in 2010
E-commerce revenues in Argentina
have increased by over 48 percent in
2010 to USD 1.9 billion, according to a
report by the Argentinean E-commerce
Chamber (CACE). The growth was mainly
due to the increasing Internet customer
base, which reached 26.5 million users at
end-2010. The study also shows that
around 32 percent of Argentina's Internet
user-base make online purchases. The
report forecasts that Argentina's e-
commerce sector revenues will grow by
nearly 43 percent this year to USD 2.7 billion. Source: http://goo.gl/inRIJ

LEADING THE GROWTH

Argentina, along with Venezuela were the markets
which achieved the strongest Internet retailing growth
in 2010, reaching almost 40 percent in current terms.
Argentina was also the fastest growing market
historically, posting over a 57 percent CAGR between
2005 and 2010.
Rapid growth of Internet usage is one of the reasons
behind the sustained growth in Argentina, another
reason being that consumers are using the Internet to
shop for better prices. The current economic situation is helping as “people are turning
to shopping online because it is a 'rational buy' which avoids temptation.
The most successful Internet sites are those of store-based retailers, which already
benefit from consumer confidence. Pure e-commerce companies are few and far
between, have not yet found a successful way to reach consumers and depend mainly
on word of mouth. Retailers need to look at how they can use social media, which is
increasing their number of users significantly in Argentina.

Source: http://goo.gl/RJ0YA



ARGENTINA E-COMMERCE LANSCAPE

• 73% of Argentinean e-shoppers are employed/
Professionals
• 33% are within the 25 to 34 years old bracket
• 64% are female
• 27% shopped in international websites in
2007, vs. 79% in national websites



MEXICO, AMONG THE MOST ATTRACTIVE E-
COMMERCE MARKETS IN LATAM

Mexico Poised for
Signiﬁcant Growth

Mexico is the fastest growing and
second largest technology market in
Latin America next to Brazil.
In the last eight years, Internet
access in Mexico has grown 774%
with only a quarter of the population,
(approximately 110 million) currently
using the Internet.

Internet commerce is expected to grow steadily as more Mexicans convert to online
shopping and as online bank services and large online retailers increase their
ecommerce offerings. The potential for healthy growth makes Mexico one of the most
attractive ecommerce markets in the world right now. Concurrently, the demand for
cross border products by the Mexican consumer has also experienced substantial
growth. As an emerging market, Mexico offers opportunities for global-minded e-tailers
to meet this demand for U.S. products. In 2009, more than half of the largest online
retailers in the U.S. accepted international orders – a sales channel that was virtually
non-existent 3 years ago. With the arrival of alternative payment methods replacing
credit cards and advancing logistics solutions, more and more merchants have warmed
up to cross border customers and are looking towards international markets to
increase their sales. Mexico is one of those markets and is ready for business.

• Online sales in Mexico will reach $3.4 billion in
2016, up 209% from $1.1 billion in 2010.
• About a third of the Mexican population, or
about 40 million consumers, are online.



MEXICO E-COMMERCE LANSCAPE

• 69% of Mexican e-shoppers are employeed/
Professionals
• 40% are within the 25 to 34 years old bracket
• 81% are female
• 44% shopped in international websites in
2007, (much higher than Brazilians)



Worldwide e-commerce spending – forecasted
growth

Brazil

By 2014, global e-commerce spending is projected to increase more than 90 percent. In Latin
America, the amount spent online is projected to more than double.

• Brazil is — and will remain — the powerhouse in the region. With more than 40% of the
online users in the region and a steadily growing economy, it’s not surprising that Brazil’s eCommerce
market will outpace all others by a wide margin. Brazil’s projected 2011 sales of almost $10B put it
behind other major online retail markets like France and South Korea but ahead of smaller ones such as
the Netherlands and Italy.
• Mexico’s online retail market is small today — but growing by a CAGR of almost 20%.With
less than half of the online users of Brazil and limited online spending, Mexico’s online retail market
remains a small fraction of the size of Brazil’s. Average online spending per buyer will not increase
significantly over the next five years, but the sheer number of online buyers will.
Technology purchases will be major drivers in both countries. While some eCommerce
markets have seen notable categories emerge as online leaders — e.g., grocery in the UK, clothing in
France — in newer online markets, it’s often technology purchases that dominate online. In both Brazil
and Mexico, for example, online purchases of consumer electronics and computer hardware will be the
two categories propelling these markets forward.


Top 14 Cities of Latin america:
All of them will climb in World GDP

2025
Latam Current 2010 GDP GDP per
City (Country) GDP
Rank Population World World Capita
Rank (by city)
Rank

1 Sao Paulo 20.800.000 8 6 $18.654
(Brazil)

Mexico City
2 22.800.000 9 7 $17.105
(Mexico)

Buenos Aires
3 14.800.000 12 10 $24.459
(Argentina)

Rio de Janeiro
4 12.500.000 30 24 $16.080
(Brazil)

5 Santiago (Chile) 6.050.000 51 50 $19.835

6 Brasilia (Brazil) 3.925.000 55 51 $28.025

7 Lima (Peru) 9.200.000 56 52 $11.848

Belo Horizonte
8 5.700.000 61 89 $10.702
(Brazil)

Monterrey
9 4.350.000 63 58 $23.448
(Mexico)

10 Bogota (Colombia) 8.850.000 64 61 $11.299

Porto Alegre
11 (Brazil) 4.100.000 66 85 $16.098

Guadalajara
12 (Mexico) 4.700.000 81 74 $17.234

Medellin
13 (Colombia) 3.625.000 104 103 $13.793

14 Curitiba (Brazil) 3.300.000 113 112 $13.333

Buenos Aires will overtake Boston (12th) and Washington DC
(11th) by 2025 GDP



Latin America - E-commerce by country

2.0% 1.3% 1.3%
Internet retailing in Latin 2.7%
Brasil
2.9%
America almost tripled in Mexico
size over the last five years 4.0% Chile
to generate sales of almost 4.0% Venezuela

4.2% Argentina
US$12 billion in 2010.
Caribe sin PR
However, the channel is 4.7%
Centro Am.
still almost three times 60.8% Puerto Rico
12.1%
smaller than direct sales. Colombia

There is still enormous Peru
Other
room for growth.

Source: :AmericaEconomia Intelligence`

E-commerce in LatAm 34.5 1.20%

1.00% E-commerce as a % of GDP
27.6
E-commerce in 0.80%
US$ Billions

21.8
the region has
0.60%
increased as a 15.6

percentage of 10.6 0.40%
7.5
GDP at an 4.9 0.20%
1.9 3
average rate of
0.00%
34% per year. 2003 2004 2005 2006 2007 2008 2009 2010* 2011*
Sales E-commerce as a % of GDP



Latin America - E-commerce categories

Taxes; 2%

The retail C2C; 6%
category is
Internation
growing the al Retail;
most in the 13% Travel; Travel
entire region. 45%
Retail

Retail; 34% International
Retail
C2C

Taxes

Source: :AmericaEconomia Intelligence

Retail Sites Growth
Source: comScore
+9%

69.6% +3%
63.8% 63.9%
61.8%

Brazil Worldwide

2009 Reach 2010 Reach



Latin Americans do shop online
E-commerce does offer considerable hope to consumers and businesses who now pay a
high price for multi-layered distribution channels for their products. Why does software
from the U.S. cost 150% more in Guadalajara than in Toronto, when both were shipped
the same distance from Silicon Valley free of import duties? The answer lies with
Mexico’s many IT distribution middlemen. The product is imported by a handful of
massive importer/wholesalers whose buying power is fierce and who have the capital to
finance stock for distributors all over Mexico. The local distributor may sale to another
re-seller before the product touches de end-user. Each re-seller marks up the product
20-to-50%. By buying the products online consumers significantly reduce their cost of
the product.

E-Commerce Site Visitors in Brazil Most
Likely to Make Purchase

Among those who visited e-commerce sites
in Latin America, 79 percent of males
reported making an online purchase, while 88
percent of females reported doing so. Across
the markets included in the survey, Brazil
showed the highest percentage conversion of



With the increase of mobile penetration, mobile e-
commerce will emerge as a strong shopping channel

Mobile Phone User
Penetration by Country,
2009-2015
90%

80%

70%
Latin America has seen a
significant recent rise in the number 60%
of people using the web, driven by
50%
investment in infrastructure and
broadband technologies. There are 40%
an estimated 204,689,836 Internet 2009 2010 2011 2012 2013 2014 2015
users in Latin America,
Argentina Brazil Mexico Latin America
representing 34.5% of the
population and growing.
However, no other region has seen Mobile Phone Users in Latin
a greater increase in the America 2009-2015
proliferation of mobile devices than
Latin America. According to
eMarketer, Latin America has some 68.6% 70.7% 72.9%
63.4% 66.2%
of the highest adoption rates of 60.6%
57.3%
mobile devices in the world and
overall mobile phone user 415.6 432.7 450.7
375.5 396.2
penetration of 55.4%. A study by 331.5 354.6
Hunt Mobile Ads shows that there
has been a 156% growth in mobile
traffic in Latin America when
comparing the first quarter of 2011
2009 2010 2011 2012 2013 2014 2015
to the same period in 2010.
Mobile Phone Users

Source: guardian.com.uk Ivonne.kinser@gmail.com

Latin America e-commerce

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