As access to broadband, disposable incomes, and buyer sophistication increase in Latin America, e-commerce channels are becoming increasingly attractive to multinationals looking increase their sales and reach new customers. Additionally, companies see e-channels as delivering additional benefits, which include the ability to leverage user metadata to enhance sales, marketing, and account retention efforts, all while reducing cost-to-serve.
However, as brightly as e-commerce beckons, there are challenges to consider as well. Across most of the region, technological, financial, and physical infrastructure lags behind developed markets. Latin American customers also tend to place a heavy premium on personal interaction throughout the sales process, and may be predisposed to assume that options for online payment/financing and delivery are limited, unduly impeding the transition toward e-platforms and digital procurement processes.
FSG recently released a report on B2C and B2B e-commerce in Latin America designed to help senior executives (1) understand the factors driving growth of B2C and B2B e-commerce in the region, (2) prioritize among key Latin American markets, and (3) address customer, market, and management challenges they are likely to face when launching or expanding an e-channel.
Key takeaways from this report include:
- E-commerce has tremendous upside potential in LATAM, and companies that fail to invest in digital channels risk losing market share as customer preferences and market enablers evolve
- Companies striving to build digital sales channels in LATAM should anticipate and address customer expectations regarding the sales experience
- Traditional channel partners often feel threatened by the shift to a digital or hybrid model—adjusting incentives can help ease the transition and financing terms
Though scale remains difficult to achieve in many of Latin America’s smaller markets, time is of the essence, as e-channels shift from a “nice-to-have” source of competitive advantage within the region to a “need-to-have” feature, the lack of which may lead to reduced market share that will be difficult to regain down the road as consumer preferences and the technological landscape evolve. For FSG clients interested in learning more, the full report is available here, or you may download the podcast for more detail.