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Posted by Zia Daniell Wigder on May 21, 2014
I just got back from a couple of days at eTail Latin America in Miami — it was my third year at the event and I always come away having learned an enormous amount from the other attendees. This year, some of the takeaways included:
Everyone’s talking about mobile, but the real shift is coming. The online retailers I spoke with had all either rolled out or planned to roll out smartphone offerings, but mobile investments overall are still quite small. Tablet commerce initiatives are few and far between. Retailers’ mobile revenues, while growing, are not typically at the same levels seen by many leading eCommerce players in Asia. This dynamic will shift significantly as both smartphone and tablet penetration increase: Across the region, penetration of both types of devices will shoot up over the next few years.
Payback periods on new eCommerce offerings remain long. A theme we write about frequently is the fact that businesses often assume short payback periods on new global digital offerings. The unfortunate reality, however, is that eCommerce initiatives often take many years before becoming profitable. This challenge is front and center in Latin America. There are some profitable businesses — the founder of Brazil’s Beleza na Web talked about how he got his company into the black — but many large online retailers continue to suffer losses. Businesses jumping into any of the Latin American eCommerce markets must be patient.
There’s still debate over what will drive eCommerce in Mexico forward. eCommerce revenues frequently don’t correlate with economic size: For example, Brazil’s economy is roughly twice the size of Mexico’s, but its online retail market is almost seven times larger. I’ve had a number of conversations on what drove Brazil’s market to its current size and whether similar factors will propel Mexico’s market forward. One key reason is the fact that many of Brazil’s large traditional retailers embraced eCommerce early on and succeeded in getting consumers to trust the online channel. Mexican retailers are moving forward more aggressively with online offerings today — they have their work cut out getting consumers to overcome their concerns about eCommerce. This trust will be essential if online shopping is to become more of a mass market phenomenon in the country.