The Opportunities for Canadian Ecommerce Merchants are Rising Latin American Market

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By Nicholas Ghitti, Sales Manager at EBANX

Latin American is on the rise when it comes to ecommerce. Being home to over 30 countries, and more than 650 million people, the region has a market that grows in a fast pace, expected to double in value by 2019, reaching $118 billion US dollars. Over 155 million people are expected to buy online by then. 

It is no surprise that two of the three fastest-growing ecommerce markets in the world are Latin American countries – Argentina and Colombia, as reported by Focus Economics.

Internet penetration and mobile penetration are two of the factors leading this growth. Almost 50% of Latin American population have at least one smartphone. In the largest economy of the region, Brazil, this rate is much higher: 80%. 

October/November shopping frenzy illustrates the point

The most recent example of this acceptance of online shopping in Latin America is the success of November shopping season around here. Just like many other countries, Latin American ones also have a lot of promotions  happening in November.

Either for Christmas shopping, or just to simply enjoy this month’s sales, Latin Americans are all about buying in this time of the year. Let’s take a look at the numbers of October/November shopping seasons in the three largest economies in the region – Brazil, Mexico, and Argentina.

Black Friday online sales in Brazil surpassed 2017’s edition by 23%, reaching $2.6 billion Brazilian reals, over $674.3-million US dollars only on Friday, 23rd. If you consider all four days of the special event in the country, from Thursday to Sunday, the rate goes to $3.5 billion Brazilian reals, which accounts for over $907.7-million US dollars, an increase of 25% in comparison to 2017.

In Mexico, El Buen Fin, a four-day event which is Mexico’s own version of Black Friday, is one of the main shopping dates. This year’s edition happened from November 16 to 19, and generated more than $100 billion Mexican pesos in both brick and mortar and online sales, around $4.8 billion US dollars. This year’s El Buen Fin was expected to enhance online sales in the country is 50% in comparison to 2017’s event.

In comparison to 2017, Argentina saw an increase of 39% on its online sales during CyberMonday, one of the country’s most important shopping dates. This year, it took place in the end of October, from 29th to 31st, and generated over $7.2 billion Argentinian pesos in revenue, which is over $191.5 billion US dollars.

A market of this size and with so much potential, has to be on the international expansion plans of all businesses. Including Canadian ones. Latin America’s second largest economy, Mexico, is one of the top 5 countries to which Canada exported the most in 2016. Bilateral trade with Brazil last year reached $6.4 billion Canadian dollars.

Okay. But, besides the size of the market and the growth pace, what else does Latin America offer as opportunities for Canadian merchants? Many other positive aspects.

Similar purchasing habits

One of them would be the similarity in consumption habits. Despite having differences in the order of the top 10 products to purchase online, Latin American countries and Canada have many of them in common.

Latin Americans like to buy electronics, mobile phones, home appliances, books, fashion & accessories, and clothing on the internet, just as Canadians.

Appetite for imported goods

The other aspect is how open Latin Americans are to imported goods, which points to an open market for Canadian goods. In percentage terms, according to an Inter-American Development Bank (IADB) study, in Latin America there are more online consumers that buy exclusively abroad.

In 2016, 44% of online purchases made in Latin America were imported. And guess what region the majority of these imports came from? North America, with nearly 60%.

Compared to the US, there’s much more room to grow

As I said previously in this article, Latin America’s ecommerce market is expected to reach $118 billion US dollars by 2021. Yes, this is what the US sold online in the first quarter of this year.

Bad news?

No at all. Because whereas in the US almost 69% of the population is shopping online, in Latin America the proportion is 23% – the region is expected to have more than 155 million online consumers by 2019. Considering that there are over 650 million people in Latin America, and 325 million in the US, it is obvious that Latin America has much more room for online consumption growth. 

Lower marketing CAC = more reach

Speaking of non saturation, let’s analyze marketing Client Acquisition Cost rate (CAC). At EBANX, we recently conducted a study that showed that the cost to advertise on Google and Facebook in Latin America is much lower than the cost of doing this in the US & Canada and in Europe.

Considering rates in these regions such as cost per click, clicks to visits, order over visits, and others, it was possible to see that marketing CAC is much cheaper around here. To be more precise: in the US & Canada, it is $81.84 US dollars. In Europe, $46.08 US dollars. And in Latin America, $12.26 US dollars. It is more than 6 times cheaper to acquire a client in Latin America through advertising in Google and Facebook than it is in the US & Canada. 

Wrapping it all up, next time you think about expanding your business internationally, strongly consider Latin America. The region has an ecommerce market ready and eager to buy from abroad. For countries that already have similar online consumption habits as Canada, it is much easier to adapt products and services to the Latin American market. And, if the cost for advertising is lower, your business will have more room to engage more consumers.

Nicholas Ghitti

Nicholas Ghitti is a sales and payments specialist with deep knowledge and proven track record on the Latin American market. He already developed and managed inside sales strategies for great Latin American tech companies, besides being a mentor for startups at InovAtiva Brasil.

Ghitti is the head of Inside Sales at EBANX, a global fintech headquartered in Brazil that helps international merchants to increase online sales to the Latin American ecommerce market, by offering end-to-end Latin American local payment solutions. EBANX also provides marketing consultancy to its merchants and a 24/7 local customer support team, ready to answer all questions of its merchants’ clients – in their own language. Differentiations like these elevate EBANX to a complete market entry solution.

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