Local, on-the-ground knowledge is essential for making mobile commerce work for companies trying to leverage it in Latin America.
Mobile commerce in Latin America is still getting underway: less than 10% of Latam’s e-commerce sales come from mobile devices.
Yet the potential is quite attractive to many companies:
- Currently: 40% of Latin Americans have smartphones
- By 2019 smartphone penetration will reach more than 70% in Mexico, Chile and Colombia
- By 2020 there will be 51% smartphone penetration for Argentina, 45% for Brazil
And while the percentage of smartphone users in Brazil 4 years from now may look a bit low in comparison, keep in mind that the projection is that by 2020 there will be 90.5 million Brazilian smartphone users—a huge market.
Regional M-Commerce Hurdles in Latam
Lots of barriers to capitalizing on Latin America’s burgeoning mobile Internet use remain. Such as:
- More than 90% of mobile users in Latam are on a prepaid plan—buying their data in bundles for messaging and social media—and don’t want to use their data for m-commerce
- Only 5% of merchants in Brazil have an m-commerce site—and it’s the region’s most mature market
- Card-on-file features in Latin America are scarce, so mobile customers have to enter their whole 16-digit card number for each individual purchase
- 50% of mobile connections in Latam are still covered by 2G
Specific M-Commerce Market Hurdles
Besides these general challenges, specific Latin American markets present their own local conditions that hold back the development of mobile commerce.
Compatibility. While cash-based boletos bancarios are a mainstay of Brazilian e-commerce, on-the-go goods and services consumed in the mobile channel are typically not compatible with this payment method.
Security concerns. According to mobile advertising firm BuzzCity, the number one reason that Mexicans are hesitant to make mobile purchases is the fear that they aren’t secure. Similar concerns about mobile transaction security were expressed by nearly 500 Latin American mobile users surveyed by EasySolution in 2015.
Limited purchase categories. BuzzCity’s results on Mexico’s m-commerce shoppers showed that less than 10% of Mexican mobile users bought a physical good with their phones. And 56% of Mexican mobile users have never made a mobile commerce purchase. In Peru, m-commerce is less than 5% of e-commerce sales are from m-commerce. Moreover, Peruvian m-commerce purchases mostly consist of ride purchases through taxi apps like Uber and Cabify.
Preference for cash payments. With credit card penetration fairly low, it’s no surprise than only 5% of Mexican mobile users say that a credit card is their preferred payment option for m-commerce. Cash payments at authorized agents or cash on delivery are much more preferred by Mexico’s mobile shoppers. In Argentina, cash still accounts for 40% of online spend and a study from Colombia’s Chamber of E-commerce shows that more than 40% of Colombians purchase good online with methods other than credit cards.
Navigating Latam M-Commerce Hurdles
A strong understanding of the mobile commerce environment in each Latin American market is crucial for companies seeking to take advantage of the growth in this area.
Contact Americas Market Intelligence for a deeper understanding of the Brazilian and Latin American mobile commerce markets and for key competitive intelligence. You can also explore our whitepaper’s incisive guidance for merchants seeking to navigate e-commerce payments in Brazil.