The Straight Dope on Selling in Latin America
Latin America should be an attractive destination for US e-commerce merchants, as many countries there are experiencing strong economic growth and there is a strong demand for US products.
Nearly 40% of Internet users in Latin America shop online and that figure is growing by 10% every year. Additionally, a lack of diversity in local markets has led to nearly 32% of online purchases still being made from US websites.
However buying from a US online retailer from Latin America is still quite frustrating due to high cost of shipping, customs and tax issues, and the fact that many retailers are hesitant to ship to Latin America.
Another complicating factor is that as in other developing regions, many people still don’t have credit cards, or prefer other methods of payment. Even those who do have credit cards are often not able to buy on US sites as their cards are only valid for purchases in their home country.
Latin America’s ecommerce sales in 2012 totaled nearly $40B. Compare to Europe $302B, US $225B, China $110B, Japan $127B.
While this may seem like a big gap, it’s important to remember that much of Latin America is still developing and lacks the Internet penetration of many developed nations.
But with a growing population that is approaching 600 million, nearly equal to Europe’s population of 600 million, there is still plenty of room for growth in its ecommerce market.
Options for 3rd Party Merchants
The way to go is to sell through a local ecommerce marketplace. Unless you own a really huge brand, it doesn’t make sense to invest in creating your own localized shopping site targeted at a specific country.
If you sell through a marketplace site like Amazon, you don’t have to worry about marketing or payments, and in some cases you don’t have to worry about some of the logistics either, all you need to do is make your inventory available through that marketplace in that specific country.
Amazon was rumored to be in the process of building a fulfillment center in Brazil and trying to acquire B2winc.com, one of the largest ecommerce companies in Japan. However at the time, they only offer e-books for sale in Brazil.
Mercado Libre is the best known and largest ecommerce site in Latin America, focused around auctions and fixed-price listings by 3rd-party merchants, much like Ebay. In fact, Ebay currently holds a 18.37% stake in Mercado Libre.
In 2012, Mercado Libre reported total sales of over $370 million, growing nearly 70% since 2010. Mercado Libre’s traffic in the region was over triple that of Amazon.
Growing Internet infrastructure, especially in Brazil, lead many to believe that Mercado Libre will continue to grow.
However, MercadoLibre doesn’t target directly US merchants and it is not clear how to get started as a merchant on MercadoLibre. The rules and requirements vary from country to country and we are still researching those. As a general rule, finding a local company that you can partner with in order to have a local bank account and local return address is a good place to start.
Traetelo.com offers the best opportunitiy for US sellers looking to get started by selling in Latin America . We met Federico Torres, the Traetelo CEO at IRCE in Chicago where he did a presentation on his approach to cross border trade to Latin America.
Traetelo offers US merchants the opportunity to sell products 8 Latin American countries. Their service simplifies several aspects of international sales, including currency conversion (all transactions take place in the buyer’s native currency), management of taxes and customs.
Share Your Experiences
Do you sell in Latin America, maybe through your Ebay store? Or if you have your own website, what have your experiences been selling to customers in Latin America?
If you haven’t sold in Latin America, what’s holding you back? Or do you not speak Spanish and are worried about offering great customer service?
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