THE COVID PANDEMIC AND E-COMMERCE IN LATIN AMERICA:
Echo’s 2020 Survey Predicted the Strong Growth in E-commerce Witnessed in the Region. What will the 2021 Survey Uncover?
2021 survey of The New COVID Consumer in Latin America, from Echo-MR and Americas Market Intelligence, is in the field now!
The extent of the pandemic tragedy in Latin America is overwhelming. Despite strict lockdowns of schools, airports, businesses, and personal livelihoods starting in May of 2020, according to the AS/COA by the end of the year over five-hundred thousand were dead – with over 12 million cases and 235,000 deaths in Brazil alone. The social and economic costs of the lockdowns are high: over 30 million people are out of work, workforce participation rates are declining (an astounding 23 million have stopped looking for work), and the region’s economic output has contracted by 7.4%.
A COVID Silver Lining?
As predicted in our June 2020 survey of over 2,000 online adults in Latin America, the pandemic effectively pushed people online towards e-commerce like never before. With that online surge came spectacular growth in financial inclusion across the region as consumers sought out and acquired the digital and financial tools required to participate in the online economy.
For example, according to the Central Bank of Brazil, from March to September of 2020, 9.8 million Brazilians entered a relationship with a financial institution for the first time; almost triple the number of people during the same period in 2019.
Several countries made emergency aid disbursements available to households via online savings accounts, reducing the unbanked population in Brazil, for example, by some 70%.
In short, COVID compressed 10 years of growth in banking, digital banking, and e-commerce into 1 year. According to the International Banker, COVID-19 was a “large-scale stress-test for individuals, banks, and companies across Latin America.” In most cases, the fragile digital ecosystem rose to the challenge and is poised to play a key role in the recovery of the region.
Our 2020 survey showed the wave of new e-commerce coming ashore. The quarantines obligated many people to shop online for the first time. These “Newbies” represented a high of 21% of online adults in Colombia, 17% in Mexico, and a low of just 3% in Brazil (the most mature e-commerce market in LatAm).
MercadoLibre, the regional e-commerce giant, reported more than 17 million new buyers in 2020. According to eMarketer, retail e-commerce in the region grew by 36.8% in 2020 – making it the fastest-growing e-commerce market in the world.
Powered by these Newbies, many predict retail e-commerce sales to increase 35% or more in 2021. Looking toward the future, Americas Market Intelligence forecasts strong e-commerce growth rates across the region to 2022.
Hope for 2021?
Based on stronger than expected economic growth in Q4 2020, an expanding vaccination roll-out, a positive outlook in the US, and skyrocketing commodities prices most economists predict a return to growth in 2021. Growth in the region will be fragile and beset by numerous risks, including new outbreaks and the ability to sustain aid and stimulus plans.
This month, however, Chile emerged as a global vaccination leader, surpassing Israel as the country with the most COVID 19 vaccinations carried out per 100 inhabitants.
Through May, PAHO expects 28.7 million doses to arrive in the region, where 36 countries are participating in COVAX, the global equitable vaccine access platform. According to the WHO, the region requires approximately 700 million people vaccinated to control the pandemic.
Consumer confidence recovered in Q4 from historic lows in 2020. Success with vaccination programs to contain the pandemic could create the conditions for a faster recovery. There is some light at the end of the tunnel.
Are you Ready? Get a Latin American Market Snapshot
Contact us to explore how we can help you with your own agile consumer snapshot of your target market in most countries of the region that will allow you to adjust to your customers’ changing attitudes and behaviors.
Finally, if you’d like a more detailed look at our 2020 COVID consumer study results, please click here to view the video of the webinar in which we shared them and contact us for a copy of the presentation.