TRENDS IN LATIN AMERICA (LATAM)
B2C E-COMMERCE IN LATIN AMERICA IS STILL DEVELOPING, WITH SALES REACHING $36.82 BILLION IN 2012 (SOURCE: EMARKETER).
Consumers in Latin America are some of the most active internet users when it comes to entertainment sites and social networks, but Latin Americans are still reluctant to purchase products online. eMarketer estimates that only 31.7% of internet users in Latin America will make online purchases in 2012. So far, the travel industry and the entertainment industry (e-Tickets) have benefited most from e-commerce and m-commerce, followed by computer electronics, clothing & footwear and books.
Brazil has a large internet population, a very high mobile penetration and an increasingly accessible broadband infrastructure, which accounts for the fact that over 50% of Latin America’s e-commerce sales come from online shoppers in Brazil, Latin America’s largest economy. The top products sold online included tickets for entertainment or travel, purchased by 30% of respondents, computer accessories (22%), clothing/footwear/accessories (22%) and books (16%). B2C e-commerce sales in Latin America, is expected to grow from $43.34 billion, in 2013 to $62.42 billion in 2016.
Source: Forrester Research inc.
Brazil’s online retail market is expected to increase by a compound annual growth rate of 17,5% over the next five years, Forrester Research predicts. That would bring online sales to $22.0 billion in 2016, up from $7.9 billion last year and $9.8 billion projected in 2011. Source Forrester Research inc., April 2011.
Source: Forrester Research inc.
Despite Brazil’s dominance, Argentina and Mexico will be the driving forces behind Latin America’s e-commerce growth throughout the forecast period, though Brazil will continue to record double-digit increases through 2014. This is partly due to the fact that LATAM has a very high Social Media penetration. 114.5 million Latin Americans regularly visit a social networking site in 2011, representing 96% of the entire online population in the region. Five of the top 10 markets ranked by Facebook.com reach are in Latin America. Venezuelans have a strong preference for Twitter, while Facebook is generally popular all through LATAM and Brazil ranks as the 6th largest market for the Google+ globally. Social media penetration stimulates e-commerce and m-commerce as whole, as users share reviews and tips about special deals with their online peers, via Blogs, Facebook and Twitter. The popularity of social media networks offers e–retailers great business opportunities, once they have put a solid multichannel marketing strategy in place.
An analysis of consumer preferences regarding purchasing at international versus local e-commerce websites revealed that consumers in Argentina have the strongest preference to shop at local websites with 3 out of 4 consumers preferring this option. More than half of consumers in Brazil and Colombia also preferred shopping at local websites, while slightly more than half of consumers in Mexico, Chile and Peru preferred international websites for online shopping (comScore).
Mexico has the fastest growing internet penetration in the world, with an online population, double that of Argentina’s has the fastest growing internet penetration in the world, but its online retail industry is still developing, due to slow technological adoption, a developing infrastructure, challenges related to delivery and a relatively low credit card penetration. Chile, on the other hand, has a very high card penetration. Average Chileans own four credit cards and 70% of Chileans and Uruguayans shop Online. Chilean leading retailers Falabella and Cencosud own 40% of Chilean online retail. In Brazil B2W and Magazine Luiza own 30% of Brazil’s online retail market.
MercadoLibre is Latin-America’s answer to e-Bay. It is an e-commerce payment platform which facilitates transactions between persons and businesses. Created in Argentina, Mercado- Libre now has operations in twelve Latin American countries and Portugal. Brazil remains the most advanced and largest e-commerce market. Brazil represented more than half of MercadoLibre‘s total revenues of $83.7 million in Q1 2012.
Online retailers worldwide need to consider the huge opportunities offered by a LATAM Market in which one common Spanish language interconnects most of Latin America. This reduces the scope of challenges which large online retailers, interested in cross-border e-commerce have to face in multi-lingual markets across Europe and Asia. In a highly monopolized market, emerging online retailers can make a difference by partnering with global Card Processors with a network of internationally connected payment service providers, within one worldwide acquiring network of connected Banks in the different regions. An online payment expert in card processing with knowledge of local legislation and the ability to provide consumers with a variety of payment methods, with multi-currency options, will help such online retailers connect and grow their footprint within Latin America and beyond.
TRENDS IN NORTH AMERICA & CANADA
In the US, online retail (e-Retail) sales figures are expected to reach $279 billion, in 2015. U.S. online retail spending reached a record $161.5 billion in 2011. In the final quarter of 2011, online retail spending in the US reached $49.7 billion, 14% up against the last quarter of 2010. Forrester projects that US online retail sales in 2015 will grow from $278 billion in 2014, to $327 billion in 2016. The top-performing online product categories were: Digital Content & Subscriptions, Jewelry & Watches, Consumer Electronics, Toys & Hobbies, and Computer Software. Each category grew at least 18 percent vs. year ago (source: comScore).
In an analysis of data retrieved from U.S. retailers ranked in Internet Retailer’s “Mobile 400” Guide, US mobile commerce (m-commerce) sales will grow 98.6% this year over 2011 to reach $20.85 billion. Giant online retailer Amazon tops the chart; its mobile sales will reach $4 billion in 2012. Apple Inc. conquers the second place in the chart, hitting $1.17 billion in web-only sales of apps, music, video and e-books. Internet Retailer projects that in the US, 281 retailers are on track to grow their combined mobile sales by 83.2% to $7.99 billion, from $4.36 billion in 2011.
SMARTPHONES AND TABLETS PLAY AN IMPORTANT ROLE IN THE GROWTH OF ONLINE RETAIL
where consumers increasingly use their smartphones to check prices, read customer review and product features and purchase products. According to a Javelin Strategy & Research report, tablets accounted for about $5 billion of mobile purchases. Even though m-commerce increasingly dominates online retail sales figures, there are retail categories which attract more e-commerce than m-commerce traffic; online computer & electronics (16% growth), online apparel & accessories sales (12.30%), food & drugstores (2.31%), hardware & home improvement (2.42%) and office supplies accounting for 4% in e-commerce sales.
By 2020, successful online retailers will have to be fully digitally integrated, data mining consumer understand purchase behavior of their audience, employing social media, and leveraging two-way communication channels with their workforce. Social media will have become a powerful business enabler and supply chains will be transformed at the back end, leading to fast home delivery, less working capital, greater efficiency and higher profitability.
American and Canadian online retail will have boomed through business models promoting its convenience and efficiency in urban and in rural areas, miles away from crowded business centers. Customer loyalty will be achieved through social media strategies and inbound marketing and traditional retail department stores will be transformed into strategically-located showrooms. American and Canadian online retailers should analyze consumer behavior in maturing markets such as South Korea and Japan and in giant Emerging Markets, such as China and Brazil. This can provide them with key-indicators, to understand how other markets will develop within the next decade.
Canadians would rather prefer domestic online shopping, but Canadian retailers have struggled to provide consumers with multichannel shopping options. During an economic recession, American online retailers grabbed the opportunities offered by entering into the Canadian market. eMarketer estimates that by 2015, Canadians will spend $30.0 billion (CAD30.9 billion) on online retail. 75% of Canadians live within 100 miles of the US-Canadian border. Even though shipping costs are high, 60% of Canadian online shoppers have purchased goods cross-border, from US online retailers. This may account for the fact that 37% of the world’s cross-border power shoppers live in Canada. Canadian retailers should invest in omnichannel strategies and partner with experts in card payment solutions; a global Card Processor, which allows Canadian retailers to expand both domestically and cross-border, through one global acquiring network of banks and iPSPs.