E-commerce Latin America 2024

Similarly to trends observed in other regions worldwide, Latin America has been undergoing substantial growth in digital commerce. Although in 2022 only Peru and Brazil exhibited notable growth rates, influenced by the pandemic’s adverse effects on the sector, the entire region has seen a swift rise in online shoppers and retail sales through e-commerce.

If in 2022, the number of e-commerce sales recorded in Latin America was approximately 122 billion US dollars, it is estimated that by 2027, this figure will reach 200 billion US dollars, according to data extracted from Statista.

Why this Growth in Latin America?

As we have mentioned, the pandemic had a negative impact in 2022, causing a slowdown in e-commerce growth. Today, we can assert that it has definitively changed the way and habits of buyers, who now opt for a digital market.

Another factor that explains the upward trend in this region is the good performance in the development of technological infrastructure, population banking, and last-mile logistics. Factors that previously held back Latin America and made its development slower in this sector compared to other regions such as North America, which, with a smaller population, recorded online sales nine times higher than Latin America.

This commendable performance is evidenced by the increase in the internet penetration rate, which stood at 70% in 2018 and now exceeds 78%, outpacing countries such as China with a rate of around 74%. The data presented by Statista further substantiates this trend. The graph below illustrates that Brazil, Mexico, and Argentina, three Latin American countries, are among the top nations in global e-commerce growth.

Market Insights & Forecasts

Therefore, if we consider the outlook for 2024, we can expect that this sector will continue to rise and further expand in the Latin American region. The trends and forecasts are clear, with Latin America holding the greatest potential for e-commerce growth in the coming years. While e-commerce grew by 42% in 2022, reaching a 12% penetration in retail sales, it is projected that by 2026 this penetration will rise to 20%.

The trends are particularly positive in the following countries that we will discuss, where significant momentum will be noticeable. As mentioned, this growth will be reflected across all of Latin America. Firstly, Brazil is expected to remain the largest e-commerce market in Latin America. In 2023, Brazil generated around 37 billion USD through retail e-commerce, according to estimates by the Brazilian Association of E-Commerce (ABComm). This figure is anticipated to steadily increase over the next four years, with a projected reach of 41 billion USD by 2024, representing a growth of approximately 10%.

Following Brazil is Mexico, the second largest e-commerce market in Latin America, showing significant growth in previous years, as previously mentioned. Forecasts for Mexico indicate a rise in the importance of marketplaces within B2B e-commerce. By 2024, participation in these marketplaces is expected to increase by 22.5%, reaching 30%.

Countries like Argentina, Chile, and Peru are poised for significant growth in the sector in the coming years. These countries are projected to nearly double their retail sales of physical goods by the year 2028. In the case of Argentina, it is even expected to surpass Colombia in this ranking.

Argentina, the third largest economy in Latin America also in terms of e-commerce, is expected to grow in this sector by 20% annually until 2025, the same as Brazil and surpassing the growth expectations of India, Japan, and Mexico.

Colombia, one of the major players in e-commerce, is expected to continue growing, but not at the same pace as countries such as Chile, Peru, or Argentina, which will grow at a fierce pace.

Tech Trends, Challenges & Strategies

While the penetration of digital commerce in retail sales grows, companies must prepare to face the new trends and developments that this sector brings with it.

For example, there is an increased use of artificial intelligence. This is expected to be the new ally of online shopping, changing the way and methods of purchase for users. AI can be used to develop product recommendations or find online offers for the consumer, so one of the strategies to follow is to improve the shopper’s experience on the web by incorporating a personalized chatbot to take the personalization process further. In short, all developments that improve the personalization of the offer will be very well received in 2024.

Augmented reality will also take center stage in the coming year. This update seeks to reduce the purchase decision time and improve the consumer experience by reducing the barrier between the virtual world and the physical shopping experience.

Another interesting format that will take center stage is video marketing, which is the inclusion of videos not only in social media content but also within online stores. This will improve conversion rates and sales on the website.

If we want to be more precise and focus on the Latin American market and consumers, one of their habits is omnichannel and promotion-driven shopping. In 2023, 72% of online purchases were driven by a promotion. In addition to being cautious consumers due to inflation in many Latin American countries, companies must also take care of their logistics and reduce waiting times for this consumer.

The main challenge for retailers and marketplaces, despite having experienced a great improvement in the relative ability to create a perfect ecosystem to promote online commerce during these years, is to continue improving online payment methods and security in transactions. There is still some distrust in making online purchases due to users’ concerns about fraud and theft of personal information and financial data. Therefore, companies and e-commerce platforms should work to ensure sober security measures such as data encryption, two-factor authentication, and fraud protection.

Conclusion

After a few years in which Latin America lagged in digital commerce due to its lack of infrastructure and poor resources, it is now facing a bright and promising era. The number of users and sales has grown at an increasing pace, and Latin America is positioned as the territory with the greatest potential for growth in this area.

Of course, if you are a retailer or a marketplace, now is a great time to bet on this growing sector. Although this trend is more pronounced in some countries, such as Brazil, Mexico, Argentina, or even Peru, it is a pattern that is repeated throughout Latin America.

However, getting into this sector means keeping up to date with new trends and updates, which are many and constant. The use of AI, or digital marketing, is a new trend that users must keep up to date with. It is also important to know the Latin American consumer. Although it is very complicated to encompass the whole territory of one type of consumer, we can determine that it is a consumer concerned about their spending and persuadable through offers.

The fight against fraud and guaranteeing secure payment methods and transactions are the real challenges to underpin a market experiencing an authentic boom in Latin America.