Did you know that the fastest-growing regional e-commerce market in the world is Latin America, where last year total retail ecommerce sales grew 36.7%, to $84.95 billion? (1)
In fact, the Latin American market represents a major opportunity for U.S. e-commerce. The region has a total population of more than 656 million(2); Brazil, where e-commerce sales jumped 57% in the first five months of 2020(3), is the world’s seventh most populous country(4) and ranks among its top 10 economies in terms of GDP.
Much of the reputation for difficulty in this market stems from merchants’ attempting to access it via the United States Postal Service and encountering delivery times of over three weeks and sometimes longer. The USPS international service works very well to places like western Europe or Japan, but badly for Latin America. It is not USPS’s fault, the post office is only as good as its partner in the destination country, and in Latin America they are dealing with bankrupt and dysfunctional postal authorities that provide very unreliable service.
Encountering this situation has led many merchants to believe that their only alternative is to ship via the large, well-established—and awfully expensive—international carriers. In most cases, this is not a reasonable business proposition, as the shipping cost can easily outweigh the value of the parcel.
To fill the gap between unacceptable postal service and unaffordable international shipping rates, merchants should turn to private delivery networks that understand Latin America’s complex taxation and custom issues and offer timely, trackable, reliable delivery service throughout the region, at rates far below those of the major international carriers.
Looking out to the future, e-commerce—and the logistical capabilities it requires—will play an increasingly large role in the overall Latin American retail economy. Before the pandemic, there was a trust barrier: many Latin Americans were afraid to put their credit card information online. That also included American citizens reticent to do business with Latin America for fear of credit card fraud. Then COVID came, the stores shut down, and they had no choice. The last year has created a level of confidence that will sustain the region’s growth in e-commerce even after the pandemic has lifted.
To retain that level of confidence merchants should use specialists in Latin American logistics to handle their shipping. And the most important aspect of logistics is data: the better the data, the better the results, and vice versa. If you have bad addresses, or missing tax IDs, or missing harmonized tariff codes—which is what the customs authorities of the world use to identify merchandise type—you get bad deliveries and unhappy consumers.
- Ceurvels, Matteo. “Latin America Will Be the Fastest-Growing Retail E-commerce Market This Year.” Insider Intelligence, 14 Dec. 2020, emarketer.com/content/latin-america-will-fastest-growing-retail-e-commerce-market-this-year.
- “Latin America and the Caribbean Population (LIVE).” Worldometer, worldometers.info/world-population/latin-america-and-the-caribbean-population/.
- Mello, Gabriela. “Brazil E-commerce Jumps 57% in First Five Months of 2020 Fueled by COVID-19.” Reuters, 23 June 2020, reuters.com/article/brazil-e-commerce/brazil-e-commerce-jumps-57-in-first-five-months-of-2020-fueled-by-covid-19-idUSL1N2E02QI.
- “U.S. Census Bureau Current Population.” Current Population, census.gov/popclock/print.php?component=counter.
A.J. Hernandez the CEO of SkyPostal, Inc. has been in the international logistics industry since 1987. In 1992 he developed SkyBox, a B2C cross-border shopping service for Latin American shoppers. After selling SkyBox to Lan Airlines in 2001, he founded SkyPostal. SkyPostal quickly became a leading private mail and parcel delivery network in Latin America. A.J. is regarded as an industry expert on international cross-border e-commerce package delivery, especially in the complex Latin American market.