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Social Commerce in Latin America: The New Ecommerce Opportunity

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A smartphone displaying social media apps

As Latin America embraces social media, more consumers are turning to social shopping as well.

Social commerce is shopping done via social media apps such as Instagram, WhatsApp or Facebook without leaving the platform. Products may appear as organic posts, ads, show up as shoppable content, influencer recommendations, or even sold via live-stream

Today, social commerce is beginning to gain ground relative to ecommerce in Latin America. Over half of the Latin American consumers surveyed across Brazil, Colombia and Mexico made a social commerce purchase. Social commerce in Latin America is making inroads compared to traditional ecommerce, such as official company ecommerce sites or marketplace ecommerce sites like Amazon, Rappi, or MercadoLibre. 

And it has significant growth potential. As of July 2020, there were an estimated 346 million Latin American users of Instagram and Facebook, with another 360 million WhatsApp users reported that same year as LATAM users widely embrace social media. (Statista)

Speed and convenience were cited as key drivers of their purchases. While over half of LATAM consumers surveyed across Brazil, Colombia and Mexico made a social commerce purchase, significantly fewer (38 percent) of surveyed Argentinians tried using this new commerce channel. 

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LATAM Guide Digital Payments Ecommerce Guide New

The Emerging Popularity of Social Commerce 

Brazil and Mexico are ecommerce leaders in Latin America, making up 31 percent and 28 percent respectively of the Latin American ecommerce market. And the economies of Argentina and Colombia are also quickly picking up momentum with solid year-over-year growth. (Fidelity; Morgan Stanley)

Shopping via social is an emerging trend that is taking a bite out of traditional ecommerce’s dominance. Over 55 percent of Latin American consumers prefer traditional ecommerce channels over social commerce, but this number will likely change with the dominance of social media in Latin America

Social commerce is here to stay, especially for retailers in fashion, beauty, and food and beverages.  Social purchases tend to be highly concentrated in these sectors.

Why Latin American Consumers Choose Social Commerce

Over 40 percent of consumers from Brazil, Colombia and Mexico mentioned the greater variety of payment methods as a key benefit of choosing social commerce. Meaning that if you’re looking to get started with social commerce, offering the right local payment methods is a must.

Across Argentina, Colombia, and Mexico, nearly one-third of social commerce purchases were made using cash vouchers purchased at convenience stores. This shows that even tech-savvy users of social media channels choose cash as a top payment method, in addition to relying on bank transfers, cards, and PayPal.

With ecommerce surging in popularity, partially due to the COVID-19 pandemic, the ability to use cash to pay for digital transactions is an important lifeline for many Latin American consumers. For example, In Mexico, over 70 percent of the population has internet access (The Federal Institute of Telecommunications of Mexico), but less than 40 percent have bank accounts. (Center for Global Development). 

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Sources

ECommerceDb. “E-COMMERCE MARKET ANALYSIS: The eCommerce market in Mexico.” https://ecommercedb.com/en/markets/mx/all.

The Federal Institute of Telecommunications of Mexico. “Percent- age of population using the internet in Mexico from 2000 to 2019.” Statista.com, 2021, https://www.statista.com/statistics/209112/ number-of-internet-users-per-100-inhabitants-in-mexi- co-since-2000/.

Fidelity; Morgan Stanley. “Retail e-commerce sales in Latin America from 2019 to 2025 (in billion U.S. dollars).” https://www.statista.com/ statistics/445860/retail-e-commerce-sales-latam/.

Navis, Kyle, et al. “The Puzzle of Financial Inclusion in Mexico: A Closeable Gap?” Center for Global Development, 14 Jan 2020, https:// www.cgdev.org/publication/puzzle-financial-inclusion-mexi- co-closeable-gap.

Statista. “Latin America & the Caribbean: e-commerce market share 2020-2021, by country.” https://www.statista.com/fore- casts/256166/regional-distribution-of-b2c-e-commerce-in-lat- in-america.

Statista. “Social media usage in Latin America – Statistics & Facts.” https://www.statista.com/topics/6394/social-me- dia-usage-in-latin-america/#:~:text=Ultimately%2C%20 Latin%20Americans%20mostly%20use,region%20as%20of%20 July%202020.

Photo by Tracy Le Blanc for Pexels

The World Bank. “Latin America: Most still keep their money under the mattress.” https://blogs.worldbank.org/latinamerica/ latin-america-most-still-keep-their-money-under-the-mattress. 

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