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Sounding Off: BRUNO ALMEIDA: 8 Insights about E-Commerce in Latin America
March 04, 2013
Published in Portada magazine, this analysis from Bruno Almeida, Chief Commercial Officer of US Media Consulting, highlights key points about e-commerce in Latin America.
It’s pretty obvious that e-commerce has taken off in Latam and in fact, in July we reported that online sales in the region will reach US$69 billion in 2013.
However, what may be more relevant to professionals in media, advertising and marketing is how Latin Americans are buying online. Recently comScore published a study about this—focusing on online consumers in Argentina, Brazil, Chile, Colombia, Mexico, Peru and Venezuela—and below we highlight 8 key insights to consider.
- 1: MOST RESEARCH ONLINE BEFORE BUYING
According to comScore, every week 8 of 10 Latin Americans search for and research products online before buying. This figure isn’t exactly surprising, since it dovetails with other studies that have reported similar results. For instance, a study from Google, IAB Europe and TNS Infratest indicated that between January and May of this year, 57% of online consumers in Mexico and 63% of online consumers in Brazil researched products online before buying. And according to the Cámara Argentina de Comercio Electrónico (Argentine Chamber of E-Commerce), 75% of Argentines research products online before buying.
In addition, another study done by Google and D’Alessio IROL in 2011—focusing on more than 3,500 online shoppers from Peru, the Dominican Republic, Puerto Rico, Costa Rica, Panama, Ecuador, Colombia and Chile—indicated that 6 out of 10 shoppers first become interested in a product after finding it online and the same amount said they ended up buying a product after finding it via an Internet search.
- 2: THEY SPEND A LOT
Of the Argentines surveyed by comScore, 75% said they spent between US$100 y US$1,000 in online purchases during the past 3 months, with the majority (31%) spending between US$100 and US$250. For their part, 66% of Brazilians spent between US$100 and US$1,000 in online purchases in the past 3 months, with 14% spending more than US$1,000. It’s also worth noting that 17% of Venezuelans reported that they spent more than US$1,000 through e-commerce in the past 3 months, with 73% reporting that they spent between US$100 and US$1,000 in the same period. The same high percentage reports spending in the latter range in several other countries, including Chile (76%), Colombia (69%), Mexico (78%) and Peru (78%). That said, in Chile, Argentina, Colombia, Mexico and Peru, most people reporting spending between US$100 and US$250 on e-commerce purchases in the past 3 months.
- 3: MOST USE CREDIT CARDS
Despite the relatively low penetration of credit cards in Latam, in comScore’s study, 74% of the Latam Internet users surveyed said that they use credit cards to buy online. Among the other payment methods they reported using were electronic funds transfer (41%), debit card (41%) and cash on delivery or COD (26%).
- 4: WHAT THEY BUY THE MOST ARE CLOTHES AND ELECTRONICS
The comScore survey found that 43% of Latin American online consumers buy clothes and 41% buy electronics. Among the other hot products for Latam e-commerce shoppers are music/movies/videos (36%), appliances (35%), and computer hardware (33%), tickets to shows and events (31%) and apps (31%).
These results are similar to those reported by other sources, including the Brazilian Chamber of E-Commerce, the Argentine Chamber of E-Commerce, the Mexican Internet Association (AMIPCI) and the study from Google/D’Alessio IROL cited earlier.
- 5: ONLINE ADVERTISING INFLUENCES E-COMMERCE IN LATAM
According to the comScore study, there are 4 factors that influence in the online purchase process for Latin Americans. In order of importance, the first is going directly to an e-commerce site, the second is putting in a keyword into a search engine, the third is online advertising and the fourth is recommendations from family or friends.
- 6: MERCADO LIBRE CLOSES MORE SALES
Mercado Libre (known as Mercado Livre in Brazil) attracts 81% of Latin American online shoppers and 55% buy on the site. This makes Mercado Libre the most popular international e-commerce site in the region. While 53% of Latam consumers surveyed by comScore say that they visit Amazon, only 22% buy on it. And while 35% visit Wal-Mart, only 10% buy on it. The same happens with Carrefour: 28% visit it but only 8% buy on it. Based on these results, it seems that Mercado Libre is the market leader for e-commerce in Latin America among international sites targeting the region’s shoppers.
- 7: THEY TEND TO BUY LESS FROM LOCAL SITES
Based only on the purchase rates, it appears that Latin Americans do more of their e-commerce transactions on international sites rather than local sites. For example, even though 55% of Latin Americans buy on Mercado Libre, just 23% buy on Garbarino, an e-commerce site in the Argentine market. And Garbarino seems to have a higher rate of purchase than other local Argentine e-commerce sites, such as Fravega (17%), Falabella (17%), Sodimac (3%) and Netshoes (4%). In Brazil, consumers buy the most from Americanas (27%), while in Chile the top local e-commerce site in terms of purchase rate seems to be Falabella (41%). In Colombia, the site with the highest reported purchase rate is Éxito (31%). However, Falabella is the local site that Peruvians most buy from (41%), while Mexicans buy the most from Liverpool (25%).
- 8: 90% USE THEIR SMARTPHONES FOR E-COMMERCE
Now, it’s important to note that this doesn’t mean that 90% are buying with their smartphones. In fact, only 23% of the Latin Americans that comScore surveyed reported making online purchases with their smartphones. However, Latin Americans are using their smartphones in other parts of the e-commerce process. For example, 60% use them to take photos of products, 56% send text messages to family or friends about products, 42% look for nearby stores, 40% read comments about products from other consumers and 39% use their smartphones to compare prices. In addition, 34% click on mobile ads and 24% scan QR codes to compare prices.