The cross-border e-commerce market for minor languages has long attracted much attention. Driven by the Belt and Road Initiative, the cross-border e-commerce market for minor languages has emerged as a huge growth point in the cross-border e-commerce market. Many data research institutions have repeatedly mentioned the Latin American region, where Spanish and Portuguese are popular, in their predictions of emerging markets for cross-border e-commerce in the next five years. What is the charm of the Latin American market favored by many cross-border e-commerce giants and big sellers?
At present, there are only two major local e-commerce forces in Latin America: one is MercadoLibre, which has been listed on the Nasdaq and is the Latin American version of “Taobao”. It has a large transaction volume but lacks control over counterfeit goods; the other is Linio, which is the Latin American version of “Tmall”. It has e-commerce websites and local customer service teams in 8 Latin American countries. Although its transaction volume is not as good as MercadoLibre, it has a sound regulatory and regulatory system and provides high-quality and authentic sources of goods.
In the long run, the Latin American e-commerce market has certain development potential.
1. Latin American online shoppers are sensitive to prices
Unlike the high-end and high-priced sales route of European and American products in Latin America, Chinese products have a higher cost-effectiveness. Latin America is a market that is highly sensitive to prices. As far as electronic products are concerned, whether they are famous brands is not that important. Consumers will compare. If two mobile phones have the same functions and the same configuration, then the cheaper one will be very attractive to them. At present, compared with many similar products in the world, Chinese products have a very obvious price advantage. If they enter the Latin American market, they will also be in a favorable position in the competition with local sellers.
2. Foreign brands are hot-selling online
The overall economy of Latin America is dominated by the primary industry. It is rich in various resources such as oil, gold, silver and copper, and many cash crops such as soybeans and corn are planted, but the manufacturing industry is relatively backward.
It is impossible for local retailers in Latin America to purchase a full range of products from famous brand manufacturers in large quantities without market sales support. It is also difficult for local retailers to get the latest products, which makes the local product replacement speed relatively slow (for international sources). Among international sellers, some are close to the source of goods, and some can manufacture and produce by themselves. Through cross-border e-commerce platforms, the latest products can also be circulated into the Latin American market, and Latin American consumers just happen to have this demand.
3. Tempting demographic dividend
According to the latest estimates of the United Nations, the current population of Latin America has exceeded 600 million. More importantly, the average age of the population in Latin America is around 27 years old, making it one of the youngest regions in the world. Their consumption concept is not like that of China. They do not save money to buy a house, but are more willing to spend money to buy what they like.
4. The number of Internet users has surged
Latin America is currently the fastest growing region in the world in terms of the number of Internet users. As of 2018, Latin America is the fourth largest regional online market, second only to Asia, Europe and Africa. In 2018, the number of Internet users in Latin America was about 378 million, and the Internet penetration rate reached 60%, an increase of nearly 100 million households from 2013.
5. Popularity of smartphone devices
The increasing popularity of smartphones is generally considered to be one of the main driving forces for the growth of the Latin American e-commerce market. Latin American smartphone users are mainly concentrated in six countries: Brazil, Mexico, Colombia, Argentina, Chile and Peru. As of the end of 2018, the smartphone penetration rate in Latin America was 63%, and this figure is expected to rise to 79% in 2023.
6. Steady growth in e-commerce retail sales
In the past 10 years, the income of the middle class in Latin America has doubled, and the purchasing power of the entire region is growing rapidly. According to monitoring data from the “Net Economy Society E-Commerce Research Center”, in 2018, the online transaction volume in Latin America reached US$71.2 billion, a year-on-year increase of 15%. Cooper Smith, senior research analyst at BI Intelligence, has analyzed the e-commerce market in Latin America and predicts that by 2021, the scale of e-commerce in Latin America will reach US$118 billion.