PagSeguro Blog | Local payments and business in Latin America

The future of e-commerce in Latin America in 2020 - BoaCompra

Written by PagSeguro Team | Jan 15, 2020 3:00:00 AM

Given this promising scenario, will the Latin American region become the golden pot at the end of the rainbow?

It’s an undeniable fact that e-commerce in Latin America is witnessing a steady growth.  During 2019, the region had a sales growth rate of 21.3%, slightly above the worldwide average of 20.7%.  To these encouraging numbers, there are to add two significant drivers:  430 million internet users (Central & South America), 155.5 million digital buyers,  and a social media penetration rate of 64% (Central & South America average).

The expected evolution of LATAM’s e-commerce market

For the next years, experts expect Latin America to continue on the growth path, as they foresee an increase in e-commerce sales:

Of particular note are cross-borders spending numbers, considering that traditionally Latin Americans prefer domestic online retailers.

When it comes to targeting the e-markets of this fragmented region, growth is the common denominator. Overall, Brazil is Latin American’s leading market, ranked #9 in the world’s biggest economies for 2020, with 2.5% GDP growth and USD 2.201 trillion GDP, according to Focus Economic forecast. And this leadership extends to e-commerce.

But Argentina, Colombia, Mexico, and Peru are also standing out, as the performance indicators reveal:

What are the main markets sowing for 2020?

Given the performance of the above set of leading markets, estimates released for 2020 and beyond seem to confirm that e-commerce will thrive:

M-commerce will boost the market

Considering that Latin America is the leading region with a 36.03%  m-commerce sales growth in 2019, above the worldwide average of 27.5%,  the social media usage and the expected smartphone penetration rate of 71% in 2020, m-commerce is the driver that will boost Latin American e-commerce.

Another business opportunity lies within the increasing cross-border spending, not only for retailers but also for payment aggregators due to the role of local payment methods in Latin American countries.

Challenges to address in 2020

As encouraging as the projections are, merchants will have to overcome some challenges common to the markets in this region:

  • Improving online payment security
  • Offering local payment solutions and alternative payments, due low banking penetration rates
  • Adapting to the internet infrastructure
  • Handling with local finances  polices and bureaucracy
  • Dealing with cultural preferences and local traditions

Although the e-commerce market growth is a foreseen reality for the Latin American countries, it remains the fact that this is a fragmented region – different cultures and traditions, specific characteristics and challenges. A local expert such as BoaCompra is a key partner that will help companies unveil each market’s 2020 forecast report.

Get in touch with us to learn how BoaCompra can help your company expand to this promising market: