27th February 2020

5+ Tips for Successful E-Commerce in Latin America

The Latin American e-commerce market has been evolving at such fast pace, it’s GDP exceeded $15 trillion in 2019, according to statistics.

This being said, if you’re thinking of establishing an e-commerce business that reaches Latin America, here are 5+ tips on how to achieve this successfully.

What does this mean?

As a merchant, by expanding your business, you are obviously reaching out to a new, larger audience of potential buyers.

By providing your potential customers with a selection of local payment methods, you make it easier for them to make purchases.

Therefore, as you expand your business, your customers are simultaneously offered a payment method they are familiar with and trust.

Tip #1: E-Commerce in Latin America is Diverse

The way payment methods work in Latin America is quite different from Europe. For starters, they have so many local payment methods that are only popular on that side of the world. 

So, as a merchant in Europe, you need to specifically address the precise needs of the local consumer groups.

Additionally, in many South American countries, numerous citizens don’t own a bank account. Instead, they visit special collection points which also include online orders and pay for them in cash.

Cash management company Brink’s estimates that 85% of Brazil’s market relies on cash, while in Mexico, the figure is 90%.

There are hundreds of cash payment options in Latin America, but some of the popular cash payments in Brazil are Boleto and Loterias Caixa, in Argentina PagoFacil and Rapipago, in Colombia Efecty, Baloto, Davivienda and SER, and in Peru Interbank, Caja Tacna, and Western Union.

This is another reason why if you’re thinking about expanding your services/products in Latin America you will need to “adjust” to their online payment methods.

Tip #2: Finding Experts in your Target Market

Companies planning to establish a business with Latin America should definitely work with a trustworthy group of market experts.

This is advised because transaction fees vary from bank to bank or other acquirers, and in many cases, up to 20% of the sum is lost to banks when traders want to bring the money to Europe or the USA.

Companies such as our partner PayRetailers provides a new way of accepting payments in Latin America, enabling all relevant local payment methods on a single platform.

Additionally, they offer the best conversion rates and state-of-the-art technology to succeed in Latin America.

Tip #3: Localization is key

Some might find it an unimportant detail, but the language on your shop’s website should not be underestimated.

Although Spanish is the main language of Latin America, if you are targeting Brazilian customers, Spanish won’t take you far.

Also, it would be extremely important to have a checkout and payment process in a way consumers will be familiar with for each different country, including prices in the local currency, checkout flow and required customer information. This kind of optimization for a payment gateway allows the flexibility and customization of the checkout pages such as default settings of serving clients only with the payment methods that are available to them, including locally popular alternative solutions.

Tip #4: Trust and Security are a Must

Besides communication, you need to know your audience in order to build trust between your business and your Latin American customers.

Brazilian buyers, for example, love free shipping (much more than anyone else, if you can imagine that!). Therefore offering them this service raises your order possibilities and creates trust between your business and them.

Additionally, security is very important when it comes to payment methods due to the comparatively high fraud rates. So make sure the payment gateway you choose lives up to high-security standards.

Tip #5: Starting Small

“Going all in” could potentially harm the business.

Since Latin America has a large, competitive market, it is advised especially for smaller businesses, to start with fewer products.

This way, companies will get the chance to experiment with the market first, before putting all of their services/products on the market.

Also, don’t be disappointed if things don’t go off immediately with your business. The pace varies from country to country, and according to acrossresearch.com, you are advised to allow at least 25% more time to complete projects in Latin America compared to Europe.

Tip #6: Don’t forget the Grey Markets

Grey markets in Latin America offer illegally manufactured products that are either imported illegally or sold without VAT. This being said, you can imagine the huge variety of products available to customers there.

Many multinationals might not know this, but grey markets can be surprisingly sophisticated, offering and delivering money-back guarantees for a limited warranty period, even extending credit to well-known customers.

Therefore, it is extremely important to get to know the country’s pricing policies and more generally recognize the competitive pressures of the grey market.

Getting Down to Business

The Latin American market can be very promising. Growth in e-commerce is expected to be 19% over the next five years, which is more than the global average of 11%.

Before proceeding with the expansion of your business, it’s important to learn from the mistakes previous companies made by conducting market research, competitive intelligence and analyzing Latin American risk.

And of course last but not least, it is important to choose a payment gateway that offers a large variety of payment methods in order to target a much bigger customer base.

BigWallet Payments has recently announced its partnership with PayRetailers, enabling European businesses to accept all payment methods in Latin America, through its payment gateway.

You can learn more here, or contact us if you consider expanding to LatAm.