Latin America is a recent addition to the major contenders for global online dominance, but according to new research from comScore, had the fastest-growing online population globally during the last year, driving a significant increase in ecommerce and digital advertising throughout the region. The number of internet users in Latin America increased 12% to more than 147 million unique visitors in March 2013. Of course, an increase in the online population usually means a corresponding increase in levels of online shopping. Indeed, the amount of Latin American internet users conducting ecommerce grew even faster than the amount of people getting online, with the total number of online shoppers rising 16%. The retail giant Walmart, in particular, showed the greatest gains among the most-visited retail websites, as the number of visitors leapt 163% to 11.7m. With internet use and ecommerce both expanding so rapidly, it is prime time for growth of online advertising, which almost doubled over a 12 month period in Brazil (LatinLink 2012).
In terms of individual countries, a survey by research firm Tendencias Digitales studied online shopping levels in 13 Latin American countries. Brazil was not included in the research, as it is by far the largest ecommerce market. Out of the other countries surveyed, Argentina and Chile have the most online shoppers (71% of internet users shop online), followed closely by Uruguay (70%), Venezuela (68%), and Mexico (61%) (LatinLink 2012).
Clearly, the online world is expanding in Latin America at a rapid rate and ecommerce is following suit. But as marketers, it is more interesting to look at exactly how Latin American consumers are shopping online.
Firstly, it is important to note that online shoppers in Latin America tend to spend a lot of money on their internet purchases. According to comScore, 75% of consumers in Argentina were most likely to spend between 100 and 1,000 U.S. dollars on internet purchases over a space of three months, with the majority of people (31%) spending between $100 and $250. In Brazil, 66% of online shoppers reported that they spent between 100 and 1,000 U.S. dollars, with 14% spending more than $1,000. 17% of Venezuelans reported that they spent more than US$1,000 through ecommerce in the past 3 months, with 73% reporting that they spent between US$100 and US$1,000 in the same period. Other countries in the region report similar levels of online spending, including Chile (76%), Colombia (69%), Mexico (78%) and Peru (78%). The majority of people in Chile, Argentina, Colombia, Mexico and Peru, reported spending between US$100 and US$250 online in the past 3 months (LatinLink 2012).
Most Latin American consumers prefer to do their research online before investing in products and services. According to comScore, 8 of 10 Latin American consumers search for products online before buying. Other regional studies have reported similar results, clearly demonstrating the importance of online research for the Latin American consumer. For instance, a study from Google, IAB Europe and TNS Infratest indicated that between January and May 2012, 57% of internet shoppers in Mexico and 63% of those in Brazil researched products online before buying. According to the Argentine Chamber of Ecommerce, 75% of Argentines research products online before buying. A wide-ranging regional study by Google in 2011 showed that 6 out of 10 shoppers in Peru, the Dominican Republic, Puerto Rico, Costa Rica, Panama, Ecuador, Colombia and Chile first became interested in a product after finding it online. Furthermore, the same amount of shoppers also reported they ended up buying a product after finding it during an online search (LatinLink 2012).
In contrast to other areas of the world where ecommerce is still developing, it seems Latin Americans prefer to carry out more of their online shopping using international rather than local websites. For example, even though 55% of Latin Americans buy on Mercado Libre (eBay’s Latin American partner site), just 23% buy on Garbarino, an ecommerce site in the Argentine market. Indeed, Garbarino seems to have a higher rate of purchase than other local Argentine ecommerce sites, such as Fravega (17%), Falabella (17%), Sodimac (3%) and Netshoes (4%). In Brazil, consumers buy the most from Americanas (27%), while in Chile the top local ecommerce site is Falabella (41%), with the highest purchase rate. In Colombia, the site with the highest reported purchase rate is Éxito (31%). Falabella is the local site of choice for 41% of Peruvians (comScore 2013).
According to the comScore study, there are four major factors that influence the online purchase process for Latin American consumers and make them more likely to make a purchase. The first is going directly to an ecommerce site, then followed by entering a keyword into a search engine. After this comes the influence of online advertising, followed by the influence of recommendations from family and friends (comScore 2013).
As far as online buying methods go, Latin American shoppers tend to use credit cards despite the relatively low credit card penetration in the region overall. In fact, the study by comScore shows that 74% of the Latin American internet users surveyed use credit cards to buy online. Other payment methods reported were electronic funds transfer (41%), debit card (41%) and cash on delivery (26%) (LatinLink 2012).