Empowering E-Commerce Success

Tapping into Latin America’s E-commerce Potential

E-commerce is booming all around the globe, but while market growth has slowed down in mature economies, it remains rapid in emerging ones. In Latin America (LATAM), e-commerce is expected to grow 29% annually until 20201, making it a very promising market for both local merchants and international e-tailers in which to expand their business.

Where to go? How to start?

For some companies looking to expand to the LATAM region, especially the ones not originally from this region, it can be quite a challenge determining where and how to enter the e-commerce market. Next to internal decision factors, such as the company’s strategy and existing ties to specific markets, there are certain aspects that are relevant to all organizations and should, therefore, always be considered when trying to pursue a new market. Despite e-commerce trending globally, not all markets are equally attractive. The following two main areas should always be considered when evaluating whether you are ready to expand your business:

1. Market attractiveness2:

The attractiveness of a market can be determined by looking at the current market size, the growth potential — such as % of e-commerce of overall retail — and growth rates. When making a decision whether and when to enter a market, these factors should always be analyzed. With the exception of Brazil, e-commerce markets in LATAM are still a lot smaller than in industrialized countries, but the region exhibits projected growth for the coming years, which is exceptionally high3. The table below highlights e-commerce market size breakdown for the LATAM region.

2. Ease of Entry4:

Market Complexity: Market complexity is another essential aspect for companies to consider when assessing possible locations in which to expand their business. The ease of market entry defined through regulatory requirements (or lack thereof), such as the general business environment, corruption levels, infrastructure etc., should be a major deciding factor whether investing in or staying away from a specific country because these factors can make doing business prohibitively difficult and unprofitable. Brazil might be the biggest market in Latin America; however, it might not be the first new market a retailer may want to enter, given its regulatory and fiscal complexity.

Maturity: Credit card, Internet and smartphone penetration are important factors to consider when evaluating a market. While Latin American countries score high in smartphone penetration (typically far above the global average), the other two categories depend on the specific country. While most LATAM countries are below the global average for credit card, Internet and smartphone penetration, Chile is leading the region and ahead of the global mean5. The difficult access to credit cards in many LATAM countries has inhibited faster e-commerce development in the past years; yet, this is starting to change as several significant investments have been developed in secure online payment services such as PayPal’s expansion and the partnership between leading providers allpago and Zuora6.

Geographic Proximity: The geographic proximity to a company’s home market, as well as existing business with different products or services, is a major influencer when evaluating a new market entry. Proximity usually goes hand-in-hand with similar business culture and similar time zones, which facilitate collaboration from a company’s headquarters, in addition to short travel times for business trips. That is why a lot of American companies target Mexico for the first penetration into the LATAM market.

In addition, companies that have existing relationships with firms in different countries present good opportunities for first expansions as it allows them test new products in an environment in which they have gained experience and with which they are at least somewhat familiar. Furthermore, organizations usually have easier access to a potential customer base, either through the existing clients directly or through other channels that have been explored. In the Latin American logistics industry, many international providers have been working with B2B services and customers and are now expanding their business to B2C services in order to benefit from the boom in online shopping.

With these factors in mind, a good way to test the entry to a new country or region is by launching a pilot in an “easy environment”; in other words, one that does not require a lot of capital expenditure and allows a company to gain experience under favorable market conditions. One such market to consider is Chile. With the e-commerce market growing at a 16.3% CAGR through 20107 and being a lead region in credit card (122%) and Internet penetration (67%), Chile is currently a very attractive market in which to expand8 for e-commerce companies to expand. This is why we recently launched our B2C domestic delivery service, DHL Parcel Chile, in that country. Launching our services in this new market gave DHL eCommerce the opportunity to test the waters in the LATAM region and it opened the doors for additional expansion opportunities. In addition to the positive market growth and high credit card and Internet penetration, Chile is also known for having a historically stable political and economic landscape9, making it a very attractive market in which to launch our services.


Latin America’s e-commerce markets are growing but are still nowhere near their full potential. Now is a good time to branch out and widen the focus beyond the mature markets. As buying power, Internet penetration and the availability of secure payment methods continue to increase, new e-commerce opportunities will arise in the LATAM region.

Deciding on where to go and how to enter the Latin American e-commerce market ultimately depends on various factors, both internal and external. Thorough due diligence is essential to identifying the right location and operational set-up. However, finding a reliable logistics partner that can help you navigate through the process is key. Markets in Latin America differ greatly, and each poses unique challenges. Having an experienced partner with knowledge of national and regional characteristics can make a big difference regarding a successful market entry and your participation in the Latin America e-commerce boom.

1. Euromonitor February 2017
2. Many definitions of “market attractiveness” available, e.g., Porter’s five forces
3: Euromonitor May 2017
4. Many definitions of “ease of market entry” available, e.g., World Bank
5: DHL project team internal study. Integration: E-commerce Penetration is the % of the population that has been engaging in e-commerce
6: http://amiperspectiva.americasmi.com/competition-intensifies-in-e-commerce-enablement-in-latin-america/ ; https://www.merchantriskcouncil.org/news-and-press/member-news/2017/allpago-and-zuora-partnership-expands-merchant-access-to-latin-america
7: Euromonitor September 2017
8: DHL project team internal study. Integration: E-commerce Penetration is the % of the population that has been engaging in e-commerce
9: DHL project team internal study. Integration: E-commerce Penetration is the % of the population that has been engaging in e-commerce

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