(I) E-commerce potential stocks in the early stages
Colombia is the fourth largest economy in Latin America, with a population of 49.65 million as of 2018. Its e-commerce market is still in its early stages of development, but with the improvement of infrastructure and the opening of trade policies, Colombia provides a lot of opportunities for the development of cross-border e-commerce.
The Colombian e-commerce market experienced explosive growth in 2015-2016, increasing by 64% in one year. As of 2017, Colombia had about 12 million online shoppers and more than 87 million online transactions. According to Statista, in 2017, the country’s e-commerce transaction volume was about US$4.8 billion, a growth rate of 22% compared with the previous year. According to statistics from the Colombian Electronic Commerce Association (CCCE), its e-commerce output value accounted for 5.61% of its GDP in 2017.
1. The increasing number of mobile devices
In 2019, the number of Internet users in Colombia has reached 34 million. 3G networks are now covered in major cities across Colombia. To meet the growing demand for mobile Internet services, the Colombian government is vigorously promoting the construction of 4G network facilities. According to the Colombian telecommunications department, by 2020, the number of mobile phones, tablets and other terminal devices using mobile Internet in the country will reach 400 million.
2. High broadband penetration rate
In terms of broadband subscriptions, Colombia is the third largest country in Latin America, second only to Brazil and Argentina. The country has nearly 4 million fixed broadband users and more than 2 million mobile users. Although Colombia has a relatively high broadband penetration rate, most of the country’s 32 provinces have weak infrastructure, and fiber-optic broadband is mainly concentrated in cities.
3. Online banking payment is very popular
In terms of payment, 57% of Colombian netizens prefer to use credit cards when shopping online.
(II) Colombian e-commerce urgently needs to break through
1. Difficulties in logistics and transportation
Due to the continuous mountains and rugged terrain in Colombia, express delivery is difficult. Once encountering extreme weather conditions, express delivery is indefinitely delayed.
2. Imperfect financial services
In Colombia, less than 40% of adults have formal bank accounts. Many investors have seen this huge opportunity and have entered the financial industry. I believe that in a few years, the number of people with bank accounts will increase significantly.
3. Low trust in online payments
Although Colombia’s online fraud rate is very low, only 0.45%, consumers are still very cautious about online shopping. As of 2019, most platforms still do not provide effective payment solutions for netizens without bank accounts.
4. E-commerce platform management solutions that need to be improved
Due to some negative impacts on Colombia in the international arena, many e-commerce investors who are not aware of the situation are worried about being involved in improper activities related to money. In order to solve these problems, the Colombian government requires all companies to use electronic invoices from January 2019. In addition, Colombia is the only country in Latin America with a dedicated “E-commerce Department”. The E-commerce Department and relevant technical departments have cooperated to establish a non-profit E-commerce Observatory to monitor and evaluate the growth of the e-commerce market.
Of course, with the accelerated construction of hardware and software facilities, the use of mobile phones and the popularization of the Internet, these challenges that hinder the development of e-commerce in Colombia will be transformed into rare business opportunities.