Online Battle Heats Up in Latin America

Challenging Macro Market Environment

There is some optimism now that a trade deal between the European Union and South American trade bloc Mercosur (members countries are Brazil, Argentina, Uruguay and Paraguay) is underway. However, Latin America's macro-economic landscape is still volatile and prone to political instability.

Argentina's appetite for consumption has waned since the 2018 recession and uncertainty looms with a newly elected Peronist president, Alberto Fernández. Brazil has yet to reap the rewards of President Jair Bolsonaro's recent market-friendly reforms and there is fear that some of Mexico's recent policies will determine foreign investment. Meanwhile, civil unrest has taken center stage in Colombia, Bolivia, Ecuador and Chile as part of the so-called Primavera Latinoamericana protest movement.

But some experts suggest that e-commerce could be more insulated from social unrest than other sectors. “One would think that political instability would negatively affect e-commerce,” says Matteo Ceurvels, Latin America research analyst for eMarketer, of the current situation in Chile, “but in [some] markets with similar issues - such as Argentina or Venezuela - this has prompted e-commerce to grow at faster rates, rather than slow it down. ”

Indeed, he notes, consumers are more mindful of their money in troubled times. "As a result, they go online to look for deals instead of going to a physical store ... They're in the comfort of home and avoid exposing themselves to possible protests and street violence."

"Players understand what the opportunities for expansion are in the region," Ceurvels concludes. “While it's true the political crisis has impacted economic growth in the short term… [Latin America's] solid consumer base will allow e-commerce players to see continued success in the long term.”

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