Using regional challenges to your advantage to win in LATAM

eCommerce in Latin America (LATAM) is on the cusp of significant growth. While the region has not yet reached the same volume of online sales as markets like Europe and the U.S., the landscape in Latin America is rapidly evolving and this is creating new opportunities for brands and retailers.

Alongside the rapid growth and evolution of the Latin American market, there have been several challenges that have slowed online growth such as eCommerce talent availability, unauthorized 3P sellers, and credit card fraud. But with challenges come immense opportunity - and addressing these challenges proactively can unlock vast potential.

What are the challenges in the LATAM region?

A pain point is the availability of eCommerce talent. Ecommerce professionals are in high demand due to the market’s growth, leaving CPG brands and retailers struggling against each other to acquire this talent due to its limited supply.

Once that hurdle is cleared, the newly hired eCommerce professionals enter organizations where eCommerce is not thought of as part of a larger commercial strategy. This highlights a larger issue at play and results in missed opportunities for these organizations and the development of the needed talent. With the right support, though, eCommerce teams can focus on the fundamentals that make a significant impact on both the online and offline customer experience – we’ll touch on this in the next section.

Unauthorized 3P sellers are another issue, particularly in the consumables categories. Some categories see up to 60% of sales controlled by 3P sellers, leaving brands with less control over their presence. With this, we are seeing more eCommerce leaders recognizing the importance of implementing effective monitoring strategies to protect their brand equity.

Lastly, credit card fraud remains a concern for online shoppers with many preferring cash transactions as a result. While the use of cash fundamentally challenges the process of online shopping, brands and retailers can work together to implement more secure payment methods and offer cash-based options, which some retailers have piloted.

Despite these challenges, there is a clear appetite for eCommerce in Latin America. Countries like Peru, Guatemala, and El Salvador are seeing up to 70% of their eCommerce sales coming from cross-border purchases*, demonstrating that consumers are eager to shop online internationally, when local options fall short. In fact, cross-border eCommerce is so popular in Latin America that it is growing faster than the rate of domestic eCommerce, with projections estimating a growth rate of 34% from 2020 to 2025, compared to 25% to domestic ecommerce**.

*Statista 2024: Latin America: Cross-border vs. domestic e-commerce by country 2023 | Statista

**eMarketer 2023: Cross-Border e-commerce: Key Insights for 2024 - nocnoc (nocnocstore.com)

The reality is that to win in eCommerce Latin America brands don’t need to do much, they just need to do a few things really well.

How to win in the LATAM market

Prioritize investment

Brands in Latin America should carefully select which retailers and eCommerce platforms to prioritize. Because Latin American retail is still heavily driven by in-store sales, brands tend to align their ecommerce efforts to the large physical retailers that they know. But this strategy can leave opportunities at the door, especially when it comes to the more advanced pureplays. To evaluate where to invest, this is what brands should consider:

• Ability to increase category share on the retailer’s digital shelf

• Potential to expand the product assortment

• Ease of selling across borders

• Complexity of the retail media platform and how this ties to the total addressable market

• Compatibility between the target audience of shoppers of the retailer vs. your brand/product

• Level of expertise/number of resources needed to operate the platform

Latin America eCommerce teams are small, so focusing on the right opportunities for digital development is essential for scalable growth. By concentrating efforts on strategic retailers, brands can maximize impact without spreading themselves too thin.

Leverage data and insights

Successful eCommerce strategies are driven by data. Analyzing performance, profitability, and campaign effectiveness is crucial for making informed decisions that drive business success. Retailers in Latin America such as Mercado Libre, Lojas Americanas and Walmart Mexico are focusing on developing and improving tools that assist brands in managing their businesses based on analytics. These retailers are clearly going after their own version of Amazon Vendor/Seller Central with many of their dashboards having sophisticated components for performance analysis.

While advertising capabilities and measurement are not nearly as robust as in other markets, brands should be seeking out retailers who are trying to innovate here as advertising is a critical element of continuous digital growth. As a next step, it will be important for brands to partner with technology providers and experts (like Flywheel!) who can consolidate reporting across retailers into one platform .

Drive management of digital shelf with purpose

Managing digital shelf presence with intention is key, especially in Latin American markets with high levels of unauthorized sellers. Many brands in Latin America don't believe unauthorized 3P sellers are an issue but mostly because information around how these sellers interfere with the brand’s business is not widely known among eCommerce teams and information on how to address them has not been made available to them. While the eCommerce teams catch up to addressing unauthorized sellers, one thing that is essential to action on immediately is in investing in a few standout SKUs and ensuring these products shine online. This will help brands capture shopper attention and increase conversion while other things are being worked on in the background.

Invest in eCommerce education

Organizations should expand eCommerce knowledge across their entire workforce, ensuring that talent in this space can continue to develop and the Latin American market can continue to grow. Relying on just a few individuals leaves companies vulnerable, but widespread eCommerce training future-proofs organizations in the age of commerce. Cross functional education also fosters collaboration and promotes a unified approach to commercial strategy – a key element that will be needed to stay competitive in the region’s evolution.

The highlighted elements of winning the LATAM market are much easier said than done, and we recommend pursuing a partnership with global and regional expertise. Our consulting team specializes in delivering world-class Ccommerce training for global CPG brands, with specific experience upskilling teams across Latin America to ensure our clients are equipped to thrive in today’s eCommerce landscape. Now is the time to seize the eCommerce opportunity in Latin America and position your brand for future success.

‍