Market Trends of Latin America E-commerce Logistics Industry
E-commerce Boom Spearheading Last-mile Delivery Demand
- With a population of 386 million, there is an abundance of potential opportunities for e-commerce success in the region. While many would not expect growth in e-commerce during economic unrest, this surge mostly came from the rise in internet and smartphone usage, which provided access to goods from abroad that were previously out of reach.
- E-commerce's rapid growth in Latin America faces a stubborn bottleneck offline with same-day deliveries. Reaching a customer's doorstep faster has drawn investors toward warehouses and fulfillment centers in dense city centers. However, moving goods in and out of mega metropolises like Mexico City or Sao Paulo could be more active at best.
- Van and small truck drivers drive on poor roads amid terrible traffic jams to make deliveries from large warehouses in the sprawling suburbs, often arriving late. While e-commerce companies have shaved delivery times from 7-10 days to 2-3 over the past few years, the target is to reach same-day deliveries.
- Mercado Libre has played a leading role in developing the sector in Latin America. Although the third-party sales giant maintains a growing influence, many competitors are rising to catch up with its e-commerce hegemony.
- The online marketplace created in Argentina remains at the top of the Latin America-born e-commerce companies list. Branching out to digital payments, Mercado Libre's Mercado Pago, its online payments service, processed a staggering USD 50 billion inside and outside the marketplace business model.
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Digitization and Inclination Toward Online Transactions
- To circumvent the logistical nightmare of a cash-based society, e-commerce providers targeting the region have found ways to manage this reality. About 40% of online consumers prefer utilizing PayPal, and 38% use cash-on-delivery.
- Moreover, the declining costs of internet services and data and the growing use of credit cards and digital payment systems have reduced the challenges to adopting online shopping. As a result, the sector has captured an 8-10% share of total retail sales in Latin America.
- Brazil and Mexico hold enormous potential for e-commerce in Latin America. There are currently 77.4 million e-commerce users in Brazil, with an additional 38.8 million estimated to be shopping online by the end of 2023. By comparison, there are 103.31 million internet users in Mexico, accounting for just under half of the population, leaving room for substantial growth.
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