October 20, 2020

Pandemic pushes millions of shoppers online in Latin America

Latin America’s e-commerce industry is booming as millions of shoppers across the region venture online during the pandemic, many for the first time, forcing traditional businesses to adapt to survive.

The sector has been one of the big winners of the coronavirus outbreak as fears of infection and lockdown measures keep people at home.

“Covid-19 has been an accelerator of trends, and in electronic commerce it has been very powerful,” said Oscar Silva, an expert in global strategies with the consultancy firm KPMG in Mexico.

“More than 10 million Latin Americans who had never bought online now do so regularly,” he told AFP.

The dominant regional force is not Amazon or eBay but Mercado Libre, which has a similar business model and is present in 18 countries.

Despite the economic turmoil unleashed by the pandemic, the Argentinian company doubled its sales in the second quarter of this year thanks to a 45 percent rise in the number of customers to 51.1 million.

Its market capitalization reached $55 billion, challenging Brazilian mining giant Vale for the title of Latin America’s most valuable company.

The tectonic shift in consumer habits is likely to endure, said Silva.

“People were afraid of fraud or that the product wouldn’t be what they expected. It’s very likely that a large percentage of these customers will stay after realizing how easy and efficient online commerce is,” he said.

– Survival of the fittest –

David Geisen, head of Mercado Libre’s Mexican arm, said that “loyal users now buy in 12 days what they bought before in 17, frequent users in 24 days what they bought in 79, and sporadic users in 29 days what they bought in almost a year.”

At the start of the pandemic, top sellers included face masks, antibacterial gel, thermometers and oximeters, but demand gradually spread to other goods and services.

The boom even reached Cuba’s tightly controlled economy, with sales soaring on the government’s tuenvio.com platform, which struggled to meet the expectations of some customers.

“I’ve made around 40 purchases and I’ve had about 40 problems,” Jorge Noris, a 34-year-old IT worker, told AFP in Havana.

There have also been hiccups in Mexico.

One man who tried to buy a cellphone online complained he received a soft drink instead, although the store — part of Mexican magnate Carlos Slim’s empire — eventually sent him the right order.

Many businesses have gone bankrupt because they had a poor online offering or none at all, Silva said.

“The big platforms are the winners, but we also see neighborhood businesses that keep their customers or win new ones using something as simple as WhatsApp,” he said.

– Boost to jobs –  

According to the firm AppsFlyer, downloads of e-commerce mobile applications grew 93 percent in the second quarter of the year in Latin America, with Brazil and Mexico leading the way.

Brazil, the region’s biggest economy, saw online commerce grow nearly 57 percent between January and August, with 135,000 new stores, according to the Brazilian Association of Electronic Commerce. 

Governments in the region are eyeing the online boom as a source of tax income to fund increased public spending during the pandemic.

New jobs are also being created, replacing some of those lost during the economic downturn.

While unemployment stalks millions around the region, Sergio Garcia is optimistic about his future after a year as a parcel courier for a global e-commerce giant.

“Demand has grown a lot during the pandemic,” said the 60-year-old, who earns the equivalent of about $0.30 for each package he delivers on foot.

“It doesn’t sound like much, but it’s more than other jobs,” he said.

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