Latin American Quirks | Addicted to the Internet but Rarely Shop Online, Can Social E-commerce Take Off?

Title Latin Americans Addicted to Internet, But Rarely Shop Online; Can Social E-commerce Succeed?

In the constantly changing consumer environment, brands have always been the most intuitive perception of consumers for their products, services and other aspects, especially in the era of big data, the relationship between brands and consumers is more direct and transparent. As an emerging industry model, social e-commerce can not only make up for the shortcomings of traditional e-commerce in the sinking market, but also drive new trends in shopping experience.

Born for socializing in Latin America

Social media has become deeply rooted in people’s lives, and it is hard to imagine a world without it. According to Statista’s data, it is estimated that the global internet users will reach 5.18 billion by 2023, and social media users will reach 4.89 billion, with social media users accounting for more than 90%, which is an important reason for brands and merchants to increase investment in social media advertising.

(Screenshot from Statista)

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Among the top 10 countries with the highest social media usage rate in the world, 5 of them, including Mexico, Peru, Colombia, Brazil and Argentina, are in Latin America. According to Statista, by 2022, Latin America will have about 490 million social media users, accounting for over 75% of the total population of 648 million, making it the fifth largest market for social media platforms in the world.

According to the data research by Finances Online, global internet users spend 145 minutes (2 hours and 41 minutes) on various social media platforms every day, among which South America spends the longest time on social media, up to 204 minutes (3 hours and 24 minutes), far exceeding the global average level, which shows that Latin America’s love for social media has almost reached the degree of obsession.

(Image source: Finances Online)

It is estimated that despite Facebook reaching its slowest growth rate in history in 2022, Latin America will still be the region with the most social media usage in 2025. TikTok is expected to have the biggest growth rate in the region, approaching Instagram as the third largest social platform in the region, and is twice as big as Twitter and 3.5 times as big as Snapchat.

(Image source: Statista)

Overall, the data suggests that the development environment for social e-commerce is relatively friendly in Latin America. Currently, the social and entertainment market in Latin America is still in its early stages, and has a demographic dividend, relatively low customer acquisition costs, and relatively low competition.

Although internet and social media usage is high in Latin America, e-commerce penetration is relatively low, and there are factors such as weak local technological innovation. However, this also provides a golden development opportunity for cross-border companies and social media marketing.

Social e-commerce is accelerating its development

The Latin American market is dynamic and diverse, with unique cultures, traditions and consumer preferences. For sellers, establishing diverse sales channels is crucial, as it can increase sales resilience, enable products to cover a wider market, and capture a larger market share. To adapt to market changes and reduce risk, sellers need to showcase their products on different platforms to achieve greater sales success and market share.

How to accurately capture overseas traffic and facilitate efficient order conversion? In addition to platform placement, social media is a trend that has been successfully verified domestically and is gradually becoming the mainstream solution for European and American cross-border e-commerce breakthroughs, while the Latin American market is still in its infancy, “if you want to eat crabs, you must do so early”.

If you want to create a perfect environment for social e-commerce, it is difficult to build a better one than the existing environment in Latin America. Although the super companies in this field have already emerged in India and China, Latin America seems more suitable for the development of social e-commerce in many ways, due to the region’s population structure, consumer purchasing behavior, and overall competitive environment.

(Image source: internet)

We generally believe that China and India are the two most important single large markets after the United States. Although this conclusion is reasonable, it also makes us easily overlook the size of the Latin American market. The GDP of the entire Latin America region is almost twice that of India.

According to World Bank data, India has a population of 1.42 billion, a GDP of 2.66 trillion U.S. dollars, and a per capita GDP of 2150 U.S. dollars; China has a population of 1.42 billion, a GDP of 14.72 trillion U.S. dollars, and a per capita GDP of 11880 U.S. dollars. The Latin American region has a population of 652 million, a GDP of 473 billion U.S. dollars, and a per capita GDP of 7245 U.S. dollars. The per capita GDP of Latin America is closer to that of China.

What does this mean? In fact, Latin America has a huge population, 47% of India’s population, and a GDP that is 1.77 times that of India. A higher per capita GDP also means stronger consumer purchasing power. Compared with another popular emerging market, Latin America’s per capita GDP is almost twice that of Indonesia.

An economic area that tends to have a middle to high income level, but has a high usage rate of the internet and social media, and a low penetration rate of e-commerce. What can explain this gap?

A key factor may be the trust gap between consumers and e-commerce platforms. Unlike other regions, Latin American consumers currently do not have a high level of trust in online stores. In addition, the prevalence of offline purchasing channels is also one of the factors that slow down the development of traditional e-commerce. Consumers are accustomed to visiting local stores or trusted direct sellers for purchases, and the continued existence of direct sales may be a quirk in Latin America.

Given the population structure and cultural customs in Latin America, consumer behavior is almost perfectly suited to the model of social e-commerce. Consumers are more likely to buy products recommended by internet celebrities. According to the latest data from Statista, internet celebrities play an important role in encouraging consumers to buy products through social media platforms such as Facebook and Instagram in Latin America.

Brazil ranks first in this regard, with influencer marketing leading China, and more than 40% of consumers shopping through these platforms under the recommendation of internet celebrities. However, social e-commerce in Latin America is still in its early stages, and the establishment of market access standards and adaptation to localization are not yet perfect.

(Image source: Statista)

According to a survey by Research and Markets, the compound annual growth rate of social e-commerce in Latin America is 28.9% from 2022 to 2028, and GMV is expected to reach 27.3 billion US dollars by 2028.

In the past two years, the social media industry has rapidly developed throughout Latin America, especially in Brazil and Mexico. Since the outbreak of the pandemic, the e-commerce industry in Latin America has shown significant growth, and the way of purchasing products through social media platforms has also been welcomed by consumers.

For sellers, first, it is crucial to determine market positioning and brand positioning and match them with suppliers to provide consumers with the best quality products and achieve win-win results. In addition to actively placing on-site ads on various platforms, it is also necessary to strengthen social media promotion, use KOLs to conduct unboxing tests, and share real experiences from core users.

While emphasizing marketing, sellers should put products first and use marketing as an auxiliary tool. They should pragmatically create high-quality products and attract consumers’ attention through product reputation, forming brand influence. They should not only focus on advertising, but also ignore the competitiveness of the products themselves.

With the continuous evolution of the e-commerce ecosystem and the change of consumer shopping habits, it is necessary to adopt more flexible, richer, and more precise forms to attract consumers. Only by continuously adjusting according to consumers’ habits can we maintain long-term and stable development.

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