The Billion-Dollar Misunderstanding: Ecommerce Merchants and Latin America
Retail ecommerce sales in Latin America will reach $86.6 billion in 2020, up almost 20% from 2019. Latin American ecommerce sales for 2023 are projected to reach $116.2 billion, representing 7.1% of total retail sales for the region.(1) For all its promise, however, many U.S. ecommerce merchants continue to be reluctant to enter the Latin American market. “There’s an assumption,” says A.J. Hernandez, president and CEO of international business-to-consumer shipping firm SkyPostal, Inc., “that Latin America is a prohibitively difficult place to do business. That’s simply not true. It’s complex, but the tools exist to make it manageable.”
In fact, says Hernandez, the Latin American market represents a major opportunity for U.S. ecommerce. The region has a total population of more than 656 million(2); Brazil, where ecommerce sales jumped 57% in the first five months of 2020(3), is the world’s seventh most populous country(4) and ranks among its top 10 economies in terms of GDP.(5)
Much of the reputation for difficulty in this market, says Hernandez, stems from merchants’ attempting to access it via the United States Postal Service, and encountering delivery times of three weeks and sometimes longer. He notes that USPS international service works very to places like western Europe or Japan, but badly for Latin America. “It’s not USPS’s fault,” says Hernandez. “The post office is only as good as its partner in the destination country, and in Latin America they’re dealing with bankrupt and dysfunctional postal authorities that provide, frankly, horrible service.(7)”
Encountering this situation, says Hernandez, has led many merchants to believe that their only alternative is to ship via the large, well-established—and very expensive—international carriers. In most cases, this is not a reasonable business proposition, as the shipping cost can easily outweigh the value of the parcel.
And yet, Hernandez notes, Latin America has flourishing economies and a major ecommerce boom. How do they do it? To fill the gap between unacceptable postal service and unaffordable international shipping rates, says Hernandez, merchants turn to private delivery networks that understand Latin America’s complex taxation and custom issues and offer timely, trackable, reliable delivery service throughout the region, at rates far below those of the major international carriers.
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Hernandez offers his own company, SkyPostal, Inc., the largest and best established of the private Latin American networks and part of Amazon’s Seller Provider Network, as a case in point. “We handle all customs clearances, include payment of taxes and duties. Then we handle the last-mile delivery. Throughout, our clients and their customers can track delivery of the shipment online, in real time.”