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E-commerce in Latin America will exceed $270 billion in 2021 and post a compound annual growth rate (CAGR) of 30 percent through 2024, Americas Market Intelligence forecasts. (Photo: AMI) 
Thursday, August 12, 2021

Latin America E-Commerce: The COVID Impact

The impact and outlook of COVID on e-commerce in Latin America.


The basic surge in Latin American e-commerce in 2020 isn’t a big surprise: as in the U.S. and elsewhere, lockdowns forced the region’s consumers to order products online in huge numbers.

But will that continue?

Or will people go back to face-to-face retail once the crisis passes?

What kind of opportunities are now available in Latin American e-commerce that didn’t really exist pre-pandemic?


We’ve been reviewing lots of e-commerce transactional data as part of our work in AMI’s payments practice. A lot of these figures will be reflected in our LatAm Ecommerce Datapack 2020-2024, which we recently made available to the public. And these numbers make it clear: in a large way, Latin America’s strong use of e-commerce during COVID lockdowns is permanent and will continue to ramp up over the next few years.

This graph indicates how much e-commerce in Latin America represents of total retail, which is a good general proxy used globally to understand the maturity and penetration of e-commerce in the overall economy. In 2019, we can see that e-commerce represented only 6 percent of total retail in Latin America, quite low with a lot of runway for growth. This share increased substantially in 2020, more than doubling in some markets like Chile, as well as in Peru. We can see that it will continue to increase its penetration into 2024, accelerating most notably in Brazil.

This is interesting because Brazil is already the most mature e-commerce market. Brazilian retailers are the most sophisticated and most able right now to push into fringe areas of e-commerce and physical products by leveraging new channels, for example, selling over WhatsApp, selling over social media, and leveraging their websites to function as marketplaces inviting third-party sellers to sell on their platform. Companies that operate as retailers and as marketplaces — like Magazine Luiza— will continue to spur growth going forward as these major retailers open up their platforms to encourage new e-commerce sellers, a recent trend we have observed. Beyond retail, of course, digital goods purchases skyrocketed in 2020 and we can expect to see that continue.

Payments Factors Driving the Growth of E-Commerce in Latin America

Beyond the obvious pressure from lockdowns and e-tailers opening up their platforms to Latin American merchants looking to e-commerce to make up for a huge drop in their businesses, a shift in payment methods is another major factor in propelling e-commerce’s ever-greater share of online retail in Latin America. Until recently, the biggest barrier to e-commerce in the LatAm payments arena was access, i.e., not having a payment method. Consumers just did not have a credit or debit card to transact online. We can now safely say that in most LatAm markets, for the majority of adults in the region, this barrier has effectively been removed. Today, with the rise of fintechs, digital wallets and neobanks offering either a virtual or physical prepaid or debit card that is enabled for e-commerce and enabled for cross-border e-commerce that you can access without any real qualifications, LatAm consumers don’t have to go to a bank. They do not have to show a minimum balance. As such, the payments barrier has been removed for millions of consumers in the region.

However, one barrier to e-commerce growth in Latin America still persists: the risk of fraud. In fact e-commerce fraud in Latin America increased in 2020 — it was the worst year on record for fraud. This risk erodes trust in the overall e-commerce sector and also affects user experience. Some consumers can have their purchases rejected because a merchant’s risk configurations are too strict and thus decide never to purchase online again. This is still an area that needs a lot of work. The good news is that banks are working hard to improve this with machine learning, startups, and other types of big data technology to improve their risk models.

Latin America E-Commerce Projections for 2021 and beyond

According to AMI forecasts:

The volume of e-commerce in Latin America will exceed $270 billion in 2021 and post a compound annual growth rate (CAGR) of 30 percent through 2024. In 2024 the volume of e-commerce in Latin America will be $592 billion.

Between 2021 and 2024, the fastest-growing e-commerce segments in Latin America will be:

• Gaming

• Streaming

• Marketplaces

In our research, observed massive, triple-digit growth in online gaming in Latin America. As young people, teenagers, and young adults become increasingly banked and increasingly willing to transact online, the transactional portion of gaming is going to really come to the forefront, particularly in markets like Brazil and even in smaller markets like Peru.

Streaming, of course, was a staple for many of us while in quarantine. AMI payments market research has revealed that more international streaming companies are moving into the region and local offerings becoming more diversified, more available, and more payment methods being available to enable increased access.


The benefits of the COVID-driven LatAm e-commerce boom isn’t just reflected in the sales of online retailers selling digital or physical products. The boom is also echoing through other areas:


We might have expected venture capital to decline in the region in 2020 but in terms of the number of deals, 2020 was actually a record year. Looking into 2021, we’re seeing already record rounds of investment being raised by companies like Nubank and EBANX — local Latin American players that are attracting international investment dollars and continuing to do so at record levels.

We’re also seeing a bolstering of local fintech and digital commerce companies and fringe areas of the industry being bolstered. For example, online car sales, online real estate, lending, and even cryptocurrencies are going to be gaining speed and driving, being a real trend that we need to pay attention to in the next couple of years.

Lindsay Lehr is Associate Managing Director and Payments Practice Leader at Americas Market Intelligence, handling more than 75 client engagements across more than 20 Latin American markets.

This article is based on an analysis originally published by AMI Perspectiva.


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