Colombia may be Latin America’s third largest e-commerce market, but it has not yet gone through such an exponential online sales boom as its giant predecessors Brazil and Mexico. This means a lot of untapped potential for merchants willing to explore the country, worth more than US$19 billion in 2021 and growing at 24% annually.
With Colombian consumers actively becoming digitized, willing to purchase more often, and from a great variety of online merchants, it’s a great moment to start selling to the country and its 33 million internet users – of which more than 60% are e-shoppers.
To help you better navigate them and tailor your strategies to reach the best possible successes in the Brazilian market, we’ve prepared this article, with exclusive data from our Digital Renaissance in Latin America white paper. Enjoy your reading!
Colombia’s steady rise of e-commerce
With 20 million e-shoppers and a 51% rate of e-commerce penetration, online shopping is still building up in Colombia. This makes the country a much different market than its predecessors Brazil and Mexico – and also a very interesting target for cross-border sellers.
Even if Colombia is only behind Brazil and Mexico when it comes to e-commerce volume in Latin America, it’s definitely a much different market: like we said in the introduction, the number one variance here is that Colombia’s has not yet gone through such a shift to the online world when it comes to consumption.
However, albeit slowly, e-commerce is surely rising in the country – alongside a movement toward more instant, innovative payment methods. This represents major potential for all businesses, including cross-border merchants: cross-border purchases represent 17% of all e-commerce volume in the country, making Colombia the fourth-biggest representation in Latam when it comes to foreign purchases.
Rising in all segments, Colombia's e-commerce should reach U$ 45 billion in online sales by 2025, with an annual growth rate of 24% from 2021. Since the Covid-19 pandemic, buying varied products online has become common for more and more Colombians, leading retail to be the segment with the most significant level of growth.
Representing almost US$ 15 billion in 2023, retail will almost double in volume by 2025, when it should reach U$ 30 bi – from 2021 to 2025, the vertical shows a 26% annual growth rate, the highest among e-commerce’s most usual segments.
The major role of local payments
Local alternative payments play an important role in today’s Colombian payment landscape, since credit card access in the country is very low – even with high banking penetration rates. This gives plenty of space to options such as PSE to rise fast: the digital bank transfer method represents 40% of all online sales in Colombia.
According to official government sources, as much as 90% of Colombians own a credit card. However, as we go into detail in our white paper, usage of credit and debit cards is low and does not follow the level of banking access. In this context, cash still represents more than 70% of all purchases in brick-and-mortar retail.
The situation in online sales is different, though: 48% of the total e-commerce volume in 2023 will come from cards, most of which (34%) are internationally-enabled. This demonstrates that most online purchases are made by the banked population.
An instant payment movement
As mentioned above, PSE is one of the rising stars of Colombia’s payment scenario – so much so that the country has the highest share of bank transfers for online purchases in Latin America (40%). It should continue to rise by 25% per year until 2025, when PSE should represent 41% of all e-commerce volume.
This shows Colombian consumers’ openness for quick, secure online transactions, even amidst an e-commerce scenario not yet as consolidated as in Latam’s biggest markets. However, cash and cash-based payments such as Efecty and Via Baloto are still quite popular, representing 6% of e-commerce but with a higher share among younger consumers, who may not have their own bank account.
Colombia is an exciting market, presenting ever more opportunities for merchants willing to create a robust, engaging strategy to reach the country’s consumers. With rising e-commerce volumes and a growing opening of innovative payment and shopping experiences, Colombia shows the importance and the potential of Latin America’s smaller markets for a successful business strategy in the region.
We go into more detail about the e-commerce and payments landscape in Colombia and in the other five main Latam markets in our exclusive Digital Renaissance in Latin America white paper, which you can download for free by clicking below. Enjoy your reading!
