Electronic commerce in Colombia has seen a substantial increase in recent years, reaching 45% growth in 2022, according to data from Americas Market Intelligence (AMI). Other studies show that e-commerce penetration in Colombian households is up to 27%,[1] and that at least 6 out of 10 Colombians make purchases online monthly (not including food and supermarket shopping).[2] With such fascinating figures, e-commerce should be an exemplary sector in the country, yet logistics in Colombia continues to be the stumbling block.

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Attempts have been made from the public sector to improve logistics in Colombia, with initiatives like the National Logistics Policy 2020–2024 (Document CONPES 3982), which seeks to strengthen intermodal transport. There have also been initiatives from the Ministry of Information Technologies and Communications (MinTIC) to improve postal traffic, and even from the Colombian Chamber of Electronic Commerce (CCCE). In any event, these initiatives have shown little effect, so challenges in the country’s logistics persist, especially in technology adoption, infrastructure investment, and outsourcing services.

As part of our series of articles on logistics in the online customer journey (with the respective analyses for Brazil and Mexico), at AMI we have decided to look at Colombia, a country whose logistics is a real challenge.

Online customer journey in Colombia

Step 1: the online buyer becomes motivated

Colombia stands out in the region as having fairly strong domestic e-commerce (85% of all online sales are not cross-border), according to AMI, which includes verticals such as retail, travel, digital goods, and services. In November 2022, the value-added tax exemption in online purchases under US$200 was kept in place, a fact that did not sit well among local merchant associations. In addition, stores like Shopee had to close down their domestic business in Colombia, followed by companies like Just Eat and Dr. Martens, because of the slowdown in the global economy.

In Colombia, Mercado Libre is still the most popular website. In February 2023, it received 34 million visits: a 12% increase in traffic over February 2022.[3] Almacenes Éxito received 7 million, recording 5% growth. Colombians may visit up to five different websites before settling on a purchase option.[4] In addition, the online purchase conversion rate in Colombia lies at 1.05%,[5] among the highest in the region.

Currently, logistics plays a fundamental role in consumer preference for domestic websites. One in two Colombians say they shop online to “save all the effort of transporting what I buy”[6] and their choice of payment method and shipping is quite particular, as we will discuss in the next step of the buying journey.

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Step 2: the online buyer makes the purchase

Despite the popularity of e-commerce in Colombia, data from Gravity show there are still fears that products will not arrive (1 in every 2 respondents), will be different to what they expected (1 in 3), or that their credit card will be cloned (1 in 5).

That said, Colombia is among the Latin American countries where the method of shipping and payment on delivery persists. It is estimated that the pay-on-delivery option in e-commerce is essential to increase sales in Colombia by between 10 and 15 percent.[8] Including pay-on-delivery among the cash payments option makes it the third most important payment method in Colombia, after cards and bank transfers. Although, to be fair, Colombia is following the regional trend of cash payments decreasing in favor of digital ones.

Pero hasta que el efectivo −y los pagos contraentrega− desaparezcan por completo, empresas como AveOnline, Rocketfy o Mi Paquete seguirán ofreciendo este sistema y promocionándolo como una de sus propuestas únicas de valor.

These companies, instead of providing a logistics service, integrate with traditional parcel services like Envía, Servientrega, and others. Meanwhile, some traditional providers such as TCC also offer the pay-on-delivery service; however, they have too many requirements, making them a difficult option to navigate for SMBs.

Informal economy, social commerce, and pay-on-delivery in Colombia

Social commerce is gaining ground in Colombia, where pay-on-delivery shipping and payments with digital wallets such as Nequi, Daviplata, or RappiPay are the norm. Yet the impact is hard to measure, as the main players belong to the informal economy. According to CCCE—with data on 800,000 shipments made through Mi Paquete in 2022—“a large number of social sellers are not set up as formal businesses, although they are economic agents that generate a great amount to the economy and the e-commerce sector. Most of these sales are paid for on delivery, so they do not go through the system of payment processing networks, and end up being difficult to measure.”

According to CCCE analysis with data from MiPaquete,[9] 52% of transactions in social commerce are items of fashion, clothing, and textiles, and 24% are beauty and personal-care products. Most of these transactions (more than 98% in some categories) are small items, under 5 kg, meaning they can be sent by courier service. It is worth noting that Bogota is where 44% of social commerce shipments originate from, followed by Antioquia (21%) and Valle del Cauca (11%). On the other hand, 17% of shipping destinations are in Bogotá, 14% in Antioquia, 10% in Valle del Cauca, 7% in Cundinamarca, and 5% in Atlántico.

Step 3: the online buyer receives their product

For the online buyer in Colombia, shipping tracking is among the tools or features that would improve their buying experience, in addition to factors like the possibility of store pickup, low-price policies, or access to other buyers’ reviews.[10]

However, in terms of delivery times, there is a very interesting dynamic in Colombia: there does not seem to be a high level of expectation about the last mile. According to Gravity,[11] 7 out of 10 Colombian online buyers believe 2 to 7 days is an ideal shipping time, and just 6% of buyers would expect to receive their product in under 24 hours. Here we are obviously excluding meal, pharmacy, and supermarket deliveries, and are referring to traditional products like fashion, footwear, and sporting goods.

It is worth noting that delivery times are influenced by the type of product. According to the same Gravity study, the higher the purchase ticket, the more that Colombians are willing to tolerate delays. Fashion products and accessories, for example, have an optimal delivery margin of 2 to 3 days, and just 7% of buyers would expect to receive this type of product in less than 24 hours. Household electrical appliances, on the other hand, could take between 4 and 7 days to arrive, and only 7% of buyers would prefer to receive them in less than 24 hours.

In spite of this situation, the last mile constitutes one of the most significant efforts made in the country’s current logistics. Solutions such as Envíame (which began operations in Colombia in 2023) seek to optimize delivery times by using a “multicourier” strategy. This means integrating multiple logistics operators, accessible through a marketplace-style platform, to expand coverage and offer same-day or next-day deliveries, and even reverse logistics and pay-on-delivery services.

Another trend in Colombia is technological logistics or logtech. In Latin America, logtech ranked fifth in terms of the highest capital investments in 2022, driven primarily by the Colombian and Mexican markets. Representatives of this trend in Colombia include Mensajeros Urbanos and Melonn. More recently, ClicOH, an Argentine logistics startup with a presence in Chile, Uruguay, and Mexico, acquired Logysto to expand its logtech business in Colombia. According to Forbes, in 2022 Colombia contributed 30% to ClicOH’s total billing.

Step 4: the online in buyer could return their product

Data from Drivin, shared by Semana,[12] show that at least 15% of products purchased online in Colombia are returned. Returns often happen because of cancellation, or because of damaged goods, or products under warranty. However, “according to AMI studies, the rate is much higher—nearer to 30%. Reverse logistics has greater significance in Colombia and constitutes a fertile area to optimize costs and move stagnant inventories into resale markets,” says AMI’s Diego Rodríguez.

The White Paper on Electronic Commerce Colombia (MinTIC) recommends the following actions to reduce order returns:

• Design a correct set of product specifications
• Show reviews from other customers
• Update the FAQ page
• Maintain an ongoing relationship with customers
• Meet delivery deadlines
• Inform customers about the status of their purchase
• Analyze and measure all operations to and from the customer

In Colombia there is also a right of cancelation for any kind of sale made with “non-traditional or remote” methods (Article 47 of Act 1480 of 2011). Protected by this right, the consumer can request a return within five business days of the product’s delivery and receive a full reimbursement of the money. However, the law does have exceptions for certain goods and services that merchants should keep in mind. For example, perishable foods and items for personal or intimate use are excluded.

AMI, a leading logistics intelligence firm for Latin America

Americas Market Intelligence is the leading consulting firm in e-commerce and logistics chains in Latin America, advising multinationals and decision makers to reach full clarity about the growth potential of a customer segment or countries of interest. Our market studies provide first-hand data and a strategic approach tailored to your growth or investment needs.

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Sources

[1] Semana, 2022. “El 27 % de los hogares colombianos compró a través de internet durante el último año”

[2] We are social & Meltwater, 2023.

[3] Semrush. “Top Retail Industry websites in Colombia.” Data from February 2023

[4] Gravity, 2022. El consumidor online en Colombia en la era post pandemia 2022

[5] CCCE, 2023. El Comercio electrónico en 2022 y perspectivas 2023

[6] Gravity, 2022. El consumidor online en Colombia en la era post pandemia 2022

[7] ITC, 2022. Promoting SME Competitiveness in Colombia

[8] La República. “Opción de pago contraentrega aumentaría ventas del e-commerce entre 10% y 15%”. Viewed on March 20, 2023

[9] CCCE, 2023. El Comercio Electrónico en 2022 y Perspectivas 2023

[10] Gravity, 2022. El consumidor online en Colombia en la era post pandemia 2022

[11] Gravity, 2022. El consumidor online en Colombia en la era post pandemia 2022

[12] Semana, 2022. “Más del 15% de las compras online son devueltas”. Viewed on March 20, 2023

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