Some Like It Hot: DHL eCommerce Moves Into Chile
When you think about e-commerce in Latin America, you probably assume the money’s in the big markets like Brazil, Argentina or Mexico. But in LatAm, it’s not only size that matters, it’s also maturity. This is why DHL eCommerce chose Chile’s ripe e-commerce market for its first domestic delivery service in LatAm.
Chile might be relatively small compared to the rest of the LatAm region, but it punches above its weight when it comes to e-commerce opportunities. This Latin American country boasts the highest internet penetration rates in all of LatAm at 72%; credit card usage is the highest in the region with an impressive 1.2 credit cards per person on average; and on top of that, the Chilean economy is considered amongst the ten freest in the world. With all these elements in place, Chile shows it’s ready to meet the world of e-commerce head-on.
What’s more, the overall indicators for e-commerce growth are better for Chile than most, if not all, LatAm countries. E-commerce is expected to grow by around 14% annually through 2020, according to BMI Research, and already makes up 2.5% of total retail sales.
With a positive outlook for growth and so many key requirements already in place, the only thing standing between Chile and e-commerce success is – you guessed it – logistics and delivery. Around 85% of deliveries are currently handled through third party providers, and 53% of customers say they’re unhappy with the services they currently receive. Since most logistics firms have concentrated on the B2B sector, B2C has been neglected.
So, when we first looked at the LatAm market, Chile was clearly a huge potential opportunity for us. But how could we ensure success where the competition had failed?
Our experience has taught us that delivery and logistics success is about giving the customer and the consumer what they want and listening carefully to their needs. Providers in Chile were simply not doing this. They weren’t able to offer reverse logistics, flexible delivery or a speedy response. And, if returns were offered at all, they weren’t nearly as advanced as consumers needed – or wanted – them to be.
Another problem for consumers was a severe lack of choice. Two players made up 80% of the market, and their focus is either C2C or B2B. Weight breaks started at 1500 grams (around 3 lbs) – clearly too high to benefit e-commerce customers who deal with much smaller parcel sizes. Services offered by these two companies also weren’t flexible for customers; with second delivery attempts made without any previous communication, and working hours restricted to 9am to 7pm, Monday to Friday.
E-tailers weren’t happy either. They’d been forced to build in workarounds to keep customers happy. Top e-retailing companies often used a mixed strategy involving two to four logistics players due to their lack of delivery reliability.
All in all, these gaps in the market presented a fantastic opportunity for DHL eCommerce.
And we didn’t have to start from scratch: DHL already has a presence in Chile with our sister divisions DHL Express, DHL Global Forwarding and DHL Supply Chain. We built on that in high density areas like Santiago, Valparaiso, Antofagasta, and Concepcion, and established outsourcing options for more remote areas. On top of this, we built a customized network with more flexible hours and a doorstep network for high demand areas, ground breaking compared to what was currently available in Chile.
Currently, our DHL branded vehicles operate nationwide in Santiago. Our domestic delivery service, DHL Parcel Chile, focuses on B2C with weight breaks starting at 500g (around 1lb), which is much more competitive for e-commerce light weight shippers. We also have a direct return service, DHL Parcel Return Chile, plus a host of unique extras that place us head and shoulders above the competition. From our customer Web Portal, with advanced reporting and dashboards, to our delivery Application, we offer optimized dispatch routes for drivers and give consumers real-time tracking and traceability for a complete consumer experience.
The result is a service that puts the consumer first. We deliver convenience, quality, service and speed, as well as innovative and attractive add-on services which makes consumers and customers delighted.
But the effect goes far beyond Chile. Our DHL eCommerce B2C domestic delivery service in Chile may be our first in the Mercosur sub-region, but it certainly won’t be the last. We now have a foothold in the region that will open up possibilities for additional growth opportunities in international shipping and fulfillment services.
Opening in Chile gives us the chance to test the waters. And now that we know what’s possible, we’re ready to dive-in head first. DHL eCommerce is ready to take on LatAm! Watch this space!
For more information visit: www.dhl.cl/en/ecommerce/business_customers/domestic_shipping
Sources: WMM; CIA The World Factbook; doingbusiness.org; Transparency International (2014); World Bank; heritage.org (2014), Euromonitor 2015.07.07
Source: DHL eCommerce Integration, Project Team