Don’t just focus on Southeast Asia, there is a more potential market – it

Explore other potential markets beyond Southeast Asia

When it comes to the topic of going global, many new or small sellers tend to exclude developed regions and focus directly on emerging markets, because emerging markets mean greater growth space, lower operating costs, and less internal friction.

Looking ahead, where are the opportunities?

The increase in online shopping consumers and the continuous expansion of the middle class will further promote the growth of Southeast Asian and Latin American e-commerce markets.

Due to Southeast Asia’s proximity to China and the success of Shoppe and Lazada, it has become a hotspot for going global.

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Although it is undeniable that the Southeast Asian e-commerce market will still have tremendous development in the next few years, considering the current heat and language diversity of Southeast Asia, there are certain challenges in managing sellers and inventory operations.

We encourage sellers to go to Latin America. Compared with Southeast Asia, it can be summarized in four simple points:

1. Larger scale and stronger purchasing power (per capita GDP is at a medium to high income level);

2. Relatively uniform language (official languages are Spanish and Portuguese);

3. Less intense competition (fewer Chinese sellers);

4. Large companies are investing (continuously investing in logistics infrastructure).

Similar to the situation in Southeast Asia, the average e-commerce penetration rate in the Latin American market is 12%. This means that, in terms of potential purchasing power, Latin America is even better than Southeast Asia with its high growth rate and low penetration rate. Therefore, it is more natural for sellers to migrate their localization strategies to the Latin American market.

Moreover, in terms of language system, Latin America only has two languages: Spanish and Portuguese. The scale of e-commerce in Latin America is comparable to that of Southeast Asia, but the penetration rate is lower than that of Southeast Asia. At the same time, the GDP of Latin America is higher than that of Southeast Asia and India, and even the per capita GDP of some countries is higher than that of China.

(Image source: Internet)

Many people are worried that the e-commerce market in Latin America is so backward and with so many frictions, can the e-commerce flywheel still turn? The answer is yes.

Firstly, e-commerce in Latin America has entered the fast lane of development, and major countries such as Mexico and Argentina have taken very crucial steps (such as the government launching local currency trade).

In addition, large enterprises such as Amazon/ AliExpress/ Shopee/ SHEIN all regard Latin America as the most important new growth point, and they are burning money on infrastructure. Therefore, it is only a matter of time before the e-commerce ecosystem in Latin America becomes complete.

Since the outbreak of the pandemic, while the global e-commerce has seen a growth trend, the performance in Latin America has been particularly outstanding, with the e-commerce revenue index far exceeding the global average.

Latin America has more than 300 million shopping users, and this number is expected to grow by more than 20% by 2027. Although the online shopping penetration rate in Latin America is still lower than that in other regions, it is estimated that the online retail sales in Latin America will reach nearly US$168 billion by 2022 and account for nearly 20% of the total retail sales by 2026.

At the regional level, Brazil and Mexico are competing for the leading position, each accounting for nearly 30% of the e-commerce market in Latin America. However, other economies such as Chile, Colombia, and Peru are receiving more and more attention due to their fast growth.

As a new development direction of cross-border e-commerce, the opportunities brought by the Latin American region in this field will provide more space and opportunities for China’s manufacturing and brand output.

****The embryonic form of the market is gradually forming****

While global e-commerce growth has slowed down relatively, the Latin American market still maintains strong development momentum. Latin America, with its large market and good foundation, has gradually been recognized as the “last new blue ocean market”.

By 2023, the Latin American market will gradually enter its golden age. On the one hand, there is a series of policy support that continues to increase. In the past year, a series of policies targeting tariffs, transportation, returns, and other links have been introduced to promote the more standardized and faster development of the cross-border e-commerce industry.

On the other hand, the Latin American e-commerce ecology is iterating. In addition to traditional centralized e-commerce such as MercadoLibre, Amazon, and AliExpress, decentralized social matrix models are gradually emerging. Among them, TikTok has grown rapidly, and social media has become an important part of the marketing process for small and medium-sized sellers and brand merchants.

At the policy level, a series of economic and trade news about the Latin American region has been reported recently.

According to reports, the Brazilian government recently stated that China and Brazil have reached an agreement to no longer use the US dollar as an intermediary currency, but to conduct trade in their own currencies. It is reported that this agreement will enable China and Brazil, the largest economies in Latin America, to conduct large-scale trade and financial transactions directly, exchanging the Brazilian real for the renminbi, and vice versa, rather than through the US dollar as an intermediary currency.

On April 26, the Argentinian government announced that it will use the renminbi to settle trade of imported goods from China. Argentinian Minister of Economy Martin Guzman stated in a press conference that the $1.04 billion worth of goods imported from China in April will be paid for in renminbi. In addition, it is expected that $790 million worth of goods to be imported in May will also be paid for in renminbi.

These news have caused a sensation in the international trade circle. Brazil and Argentina have announced the use of the yuan to settle Chinese imports, which is a decision of great significance. The use of the yuan can improve import efficiency, accelerate the speed of goods circulation, and reduce trade costs, which is beneficial to promoting China-Latin America cooperation. The favorable cooperation at the national level has also driven Chinese cross-border sellers to rush into this new blue ocean of cross-border e-commerce in Latin America.

(Image source: Internet)

In the e-commerce ecosystem, the penetration rate of Latin American e-commerce is much lower than that of mature markets. Currently, the e-commerce penetration rate is only 12%, which is lower than China’s 28.53% penetration rate, and the implicit condition of the e-commerce market on the eve of the boom is a certain purchasing power and low e-commerce penetration rate.

At the same time, Latin Americans’ love for social media has almost reached an obsessive level. This region’s usage time on social media exceeds that of any other country in the world. Of the top 10 countries with the highest global social media usage rates, these five countries, Mexico, Peru, Colombia, Brazil, and Argentina, are all Latin American countries. It can be seen that social media operations cannot be ignored.

In addition, the logistics infrastructure construction in Latin America is also increasingly perfect. Not only is Mercado Libre, a local e-commerce platform in Latin America, increasing its investment in logistics business, but also giants such as Amazon, AliExpress, Shein, Magazine Luiza, and Americanas are continuing to invest in infrastructure in the Latin American e-commerce market.

In summary, the Latin American region has a large population base, a low e-commerce penetration rate, a younger age structure, and higher profit margins than mature European and American regions. This is exactly the new growth point that major giants are competing for in the market. With the continuous improvement of policies and ecology, the size of the Latin American e-commerce market has exceeded 100 billion US dollars in 2022, and the Latin American e-commerce track has taken shape.

With the changing market environment in Europe and the United States, the Latin American market has provided new opportunities for domestic players. Therefore, don’t just focus on Southeast Asia, dare to explore Latin America.

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