How have changes in customer habits impacted Latin America’s e-commerce sector during the pandemic?
The arrival of new buyers on e-commerce platforms since the start of the COVID-19 pandemic has led to major changes in purchasing trends, logistics, marketing and payment methods around the world. In Latin America in particular, e-commerce has been the salvation of many small and medium size businesses, which are the engines of the regional economy.
Amidst lockdown measures, economic disruption, and some of the world’s most severe COVID-19 outbreaks, e-commerce has been a source of significant resilience for businesses across the region’s economy, particularly in the retail sector.
Across our payment platform in Colombia for example, more than 20,000 SMEs have shown exponential growth in online sales due to the new developments in e-commerce during the pandemic. At a sector level, our data shows that verticals such as Furniture, Clothing, Food & Drink, and Hairdressers/Beauty Salons grew between 200 and 300% from January to July 2020 compared to the same period in 2019.
Spurred on by this encouraging news, last fall PayU’s Colombia-based team took a broad-based look at the pandemic’s impact on e-commerce across six markets where we are active in LatAm (Argentina, Brazil, Chile, Colombia, Mexico, and Peru). This summary collects the lessons that have been learned and the challenges that still lie ahead for the sector.
The e-commerce sector in Latin America has reached all-time highs since the beginning of last year’s quarantines. According to a Kantar study at the regional level, in just the first week of lockdowns last Spring, e-commerce penetration increased by 100%, while by the fourth week it reached 387%, which quickly positioned Latin America as the second fastest-growing e-commerce market in the world, surpassed only by Southeast Asia.
At PayU we have seen clear evidence of this on our payments platform across the region. As summarized in our report, merchants on our platform went from having 5.1 million monthly shoppers on average (February to March 2020 – before the pandemic) to a total of 8.9 million by July of last year.
The acceleration of e-commerce sales has also led to new developments in user behavior and trends based on the experiences of the rapidly growing e-commerce user base. The following are trends we are observing from merchants and customers across PayU’s Latin American markets:
As can be seen in the figure above, different sectors in Latin America have responded differently to the pandemic. Unsurprisingly, market verticals like Department Stores, Fashion, and Delivery have seen massive increases in online sales since March 2020. But as PayU’s platform data across Latin America shows, nearly every market sector has seen at least some increase in online sales.
For global merchants interested in Latin America, the e-commerce landscape across multiple verticals is clearly one of opportunity. Adding context to the sector level data, here are a few of the bigger picture insights our team has taken away in the last year regarding the development of e-commerce in Latin America:
The data for PayU’s COVID-19 report in LatAm was compiled during the first wave of the pandemic – since then, the LatAm e-commerce sector has continued to grow rapidly, fueled in part by a strong 2020 Black Friday as well as national-level efforts to boost the economy.
Meanwhile, a year after the first lockdowns, disruptions to public life still persist, leaving an uncertain outlook for when the COVID-19 pandemic will truly be able to be considered “over”.
Whenever that time comes, the world we will encounter will be very different from the world of 2019 and early 2020. The rapid advancement of e-commerce across LatAm and other emerging markets is one change that is here to stay.