E-Commerce’s Great Leap Forward In Latin America

Retail e-commercejumped 36.7% in 2020, to $84.9 billion in sales throughout the region in 2020 driven by the pandemic and lockdowns.

If e-commerce was already a prospering segment in Latin America, where unicorns found fertile ground to multiply, the Covid-19 pandemic has created a new environment in which many local businesses can survive only with a strong online presence. Even relatively small companies are investing in technology, payment services, logistics and new means to reach and satisfy customers.

Retail e-commerce, as a result, jumped 36.7% in 2020, to $84.9 billion in sales throughout the region in 2020, according to SkyPostal, Latin America’s largest private mail and parcel deliverer. And there is little sign the shift will reverse itself.

Local and global platforms were already surfing an impressive wave when isolation measures kicked in. Since then, demand has grown more rapidly. Argentina’s Mercado Libre, the leader in Latin America, doubled its operations in 2020.

In Brazil, digital sales grew 68% to $41 billion last year, according to the National Confederation of Commerce, Goods, Services and Tourism (CNC). International data consulting firm Kantar found that total e-commerce sales in Argentina jumped 124% to $10 billion. In Panama, e-commerce jumped to 8% of retail sales, more than the 7.8% in Brazil, according to Magento Commerce, Adobe’s e-commerce platform.

The numbers reveal a deep and accelerating transformation in how goods are sold and delivered in Latin America, embedding changes in technology, logistics and digital payments and opening a new market for consulting and service companies. Pandemic-related measures to ease credit availability are helping companies invest in these changes and shifting many informal and unemployed workers into gigs delivering food and small packages.

But Latin America still has a lot of work ahead if its economies are to benefit fully from the new efficiencies. World Bank consultants Edoardo Totolo and Hemant Baijal, in a recent blog post, warn that now is the time to simplify regulations on finance services, improve digital literacy, reduce the high cost of service access and raise levels of financial inclusion.