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Examining the Latin American and Caribbean E-Commerce Market

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Examining the Latin American and Caribbean E-Commerce Market DIGITAL SECURITY WHITE PAPER Examining the Latin American and Caribbean E-commerce Market DECEMBER 2019 Introduction to the Latin American and Caribbean E-commerce Market Across the globe, the use of e-commerce is rapidly expanding and becoming the new standard method for shopping. Key to this growth is the proliferation of smartphones, allowing the instantaneous purchase of products and services, all at the touch of a screen. Further driving this market trend are Millennials – those whose youngest members were born in the year 2000 – who are used to purchasing anything they want, whenever they want, often sharing the experience with friends through social media. 2 MASTERCARD Paper sources To ensure the acceleration and success of the which ensures the safety of consumers’ Quantitative • 900 consumers evolutionary process of e-commerce in Latin payment credentials and acts as their invisible methodology • 25 minutes length America and reach the highest levels of security hero. The industry is in a continuous innovation and convenience for consumers, Mastercard process to leverage the latest technologies Consumer • Men and women has developed the Digital Security Roadmap. and develop fraud protection solutions, • Who have shopped online Mastercard’s Digital Security Roadmap authentication technologies that allow key in past 12 months provides a set of initiatives, guidelines and tools players including, merchants and banks to • 18 to 50 years for banks and retailers in LAC to accelerate ensure online shoppers are who they say they the adoption of cutting-edge technologies are, by leveraging solutions including biometric Fieldwork dates • September 24th to needed to not just keep the e-commerce space data for identification authentication. October 8th, 2019 safe for everyone involved, but also in line This paper is drawn from a variety with the latest standards of the industry for of sources, including our recent research Countries • Argentina, Brazil, Chile authentication of online transactions. interviewing 900 consumers, 100 each from Colombia, Costa Rica, This paper outlines the needs and nine important markets/countries in Latin Dominican Republic, expectations from shoppers in LAC, as told to America and the Caribbean to draw the current Mexico, Peru and us by themselves, in order for them to start conclusions. This work was conducted from Puerto Rico. embracing e-commerce shopping, the same September 24th to October 8th, 2019. The data way they do in the physical world. Importantly, is qualitative and quantitative, and is drawn this paper discusses new solutions and from 25-minute interviews with mass and developments like the “token” technology affluent men and women whose ages ranged concept (adopted by financial institutions), from 18 to 50 and who have shopped online in the past 12 months. The countries and markets examined in this paper are Argentina, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Mexico, Peru and Puerto Rico. While the last market is technically a part of the United States and not an independent country, it exhibits very different patterns of consumer behavior from the 50 states and is geographically within the Caribbean region. In fact, we will see how different it is from both the United States and other Latin American regions in its e-commerce consumer patterns. INTRODUCTION 3 Context and Study Relevance to Today’s E-commerce Marketplace We know how much untapped market growth • 24% of purchase volume is digital and online exists in Latin American and Caribbean transactions are growing 2.8 times more e-commerce market, largely based on its recent than in-store payments exponential growth in other areas of the world. This • In the next three years, online transactions upward trajectory of purchases, both in greater will surpass in-store transactions in terms of numbers by more consumers and representing a relevance trending increase in economic value, has occurred Several factors are behind this growth, and amid a rise of new technologies, and despite many the two most important are the large numbers perception obstacles. of Millennials coming of age and making Specifically, some of the important purchases, along with the massive proliferation statistics related to the phenomenal growth of smartphones. of e-commerce in Latin America and the The Millennial Generation, digital natives Caribbean from recent market research include whose youngest members turned 18 at the end the following: of 2018, is changing consumption patterns in • According to E-Marketer, E-sales in LAC are the region by prioritizing online transactions expected to grow 21.3% this year to $71.34 over physical ones. They are used to purchasing billion. what they want when they want, having their of purchase volumen is digital and online transactions 24% are growing 2.8 times more than in-store payments. 4 MASTERCARD The Millenial Generation Turning 38 this year, the oldest Digital natives whose Millennials are also youngest members turned well into adulthood 18 at the end of 2018. and in the early stages of their careers. Their methods of purchase will dominate the retail industry, both online and for in-person They are changing transactions. consumption patterns in the region by prioritizing They are the main drivers of online transactions over these current e-commerce physical ones. growth patterns. of the population 30% within Latin America and the Caribbean are Millennials, the largest group out of all generations. every whim satisfied almost instantaneously. Combined with the ubiquity of smartphones, at the final point of purchase. In fact, more Turning 38 this year, the oldest Millennials also this generational trend has significantly than one-third of all LAC online purchases are are well into adulthood and in more advanced impacted the growth of e-commerce. At the abandoned. More than half of planned LAC stages of their careers. As they continue to touch of a screen, consumers can access myriad online purchases make it to the final click, mature into middle age and grow their earning products and services, making instantaneous showing that billions of dollars in purchases are potential, as well as start their own families, purchases. What is intriguing about the Latin not occurring. their methods of purchase will dominate the American market is that many consumers The goal of the research is to better retail industry, both online and for in-person began to buy online first through smartphones, understand why this is the case, and help transactions. They are one of the main drivers eliminating any time once spent on computers. e-commerce retailers and banks better of these current e-commerce growth patterns. Understanding this involves a significant understand what is on the consumer’s mind. For perspective, within Latin America and paradigm change from how e-commerce began With this information, Mastercard and its the Caribbean, Millennials currently comprise in the United States and Europe. partners can work efficiently to make the 30% of the population, the largest group out Our research shows that online consumer online shopping experience better for everyone of all generations. On a global basis, Millennials purchase growth is extraordinary, but it can involved, consumers and retailers alike. are expected to represent 75% of the world’s be even better. What we do know is that many workforce by 2025, according to research by Latin Americans and Caribbean people want Deloitte. to shop online, but something holds them back CONTEXT AND STUDY RELEVANCE 5 Overview of E-commerce in Latin America and the Caribbean The window to e-commerce Across LAC, smartphones are the most shopping apps on smartphones is in Brazil at used electronic devices that consumers own. 83%, followed by Dominican Republic at 81%. Penetration rates are high, ranging from the These numbers do not indicate an overall lowest, 89%, in Puerto Rico to the highest, 97%, tendency not to use a smartphone in the region. in Argentina. In fact, across LAC, communication and social Interestingly, Colombian and Argentine media apps are the most used in the region, consumers report using their desktop and laptop approaching nearly universal usage levels across computers as often as their smartphones. all markets. Conversely, in Puerto Rico, the ownership and LAC’s residents love their smartphones, usage of desktops and laptops is significantly but they don’t always use them for shopping. lower than in other LAC countries. Pg. 14 Smartphone usage in the region remains strong graph. 1 in other aspects of digital life. For example, While smartphone ownership penetration is social media app usage is high, approaching high throughout LAC, there is strong variation nearly universal levels. Pg. 14 graph. 2 among the countries in the use of these devices Online purchases are conducted across to make online purchases through shopping various devices and platforms. These include apps. For example, the lowest rate is in Chile, at smartphones, tablets and desktops or laptops. 44% of those with smartphones, with Peru at Despite the high usage of smartphones across second to last with 50%. The highest usage of the region, consumers use both their desktops/ Smartphones highest lowest are the most used electronic 97% 89% devices that Argentina Puerto Rico consumers own: 6 MASTERCARD How often they O RDEM E P RO G R E S S make purchases O Brazil is the country where they make purchases most often. laptops and smartphones to the same extent Chile and Peru to make online purchases, except in Colombia make a monthly and Argentina, where the use of desktops/ purchase. Mexico and laptops is higher. Puerto Rico is the only region in Colombia our survey where tablets are used the most for make more online purchases. Pg. 15 graph 3 than one Brazil is the country where consumers make purchase every online purchases most often, followed by Mexico fifteen days. and Colombia, with more than one purchase every fifteen days.
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