In the wake of the Covid-19 pandemic, boosted by social distancing, 2020 was a record-setting year for ecommerce adoption across Latin America. Online retail sales soared by 63.3% in 2020 to USD 104.6 billion, according to recent estimates1 by eMarketer, a business intelligence research firm. This compares to an already stunning 25.7% growth rate registered globally during 2020.
Although the strong acceleration seen in 2020 is unlikely to continue, this year also looks very promising. Online retail ecommerce sales are expected to grow another 25.6%, back in line with pre-pandemic growth rates, according to eMarketer. The total number of Latin American digital buyers is expected to rise to 248.7 million, or nearly half the region’s population aged 14 and older.
Booming ecommerce in Latin America illustrates how the great acceleration in ecommerce adoption seen since the beginning of the pandemic is not just limited to the most developed economies, or a few large emerging markets such as China. Instead, it is a widespread phenomenon that is changing the way people consume across the world.
Moreover, growing online shopping adoption is only one of many aspects of a broader digitalization trend currently transforming Latin American economies. As millions of people access the internet for the first time every week, new businesses are emerging to serve these populations, providing an ever wider range of services including financial services, mobility services and entertainment.
Despite the rapid growth seen in recent years, huge potential still remains. According to the latest World Bank data2, around 66% of Latin Americans have access to the internet compared to nearly 90% in high-income countries. If we look beyond Latin America, less than half of the population in middle-income countries has access to the internet.
To benefit from the broad digitalization trend transforming our economies, investors must increasingly go off the beaten track. Latin America is one of the many regions experiencing a strong catch-up in internet connectivity. Southeast Asia and West Africa, for instance, are also witnessing impressive growth.
In these regions, many local and regional champions are emerging to serve this wave of new internet users. In doing so these companies are unleashing new pockets of economic value, often creating markets that didn’t exist before. They are also starting to create substantial value in the form of market capitalization.
The rise of ecommerce and in particular mobile ecommerce across emerging markets is one of the many trends we follow closely as part of our Robeco Next Digital Billion equity strategy. This strategy aims to uncover the long-term winners of the massive of internet adoption currently occurring in most emerging markets.
1 Source: eMarketer, July 2021, “Latin America Ecommerce Forecast 2021”, report.
2 Source: The World Bank, data for 2018 and 2017.