The fastest-growing regional e-commerce market in the world is Latin America, where last year total retail e-commerce sales grew 36.7%, to $84.95 billion. In fact, the Latin American market represents a major opportunity for U.S. e-commerce. The region has a total population of more than 656 million; Brazil, where e-commerce sales jumped 57% in the first five months of 2020, is the world’s seventh most populous country, and ranks among its top 10 economies in terms of GDP.
Much of the reputation for difficulty in the Latin American market stems from merchants’ attempts to access it via the U.S. Postal Service, and encountering delivery times of over three weeks and sometimes longer. The USPS international service works well to places like Western Europe or Japan, but badly for Latin America. It’s not USPS’s fault; the post office is only as good as its partner in the destination country, and Latin America is dealing with bankrupt and dysfunctional postal authorities that provide highly unreliable service.
Encountering this situation has led many merchants to believe that their only alternative is to ship via the large, well-established (and expensive) international carriers. In most cases, this isn’t a reasonable business proposition, as the shipping cost can easily outweigh the value of the parcel.
To fill the gap between unacceptable postal service and unaffordable international shipping rates, merchants should 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.
Looking to the future, e-commerce, and the logistical capabilities it requires, will play an increasingly large role in the Latin American retail economy. Before the pandemic, there was a trust barrier, with many Latin Americans afraid to put their credit card information online. That included American citizens reluctant to do business with Latin America for fear of credit card fraud. Then came COVID-19, stores shut down, and shoppers had no choice. The last year has created a level of confidence that will sustain the region’s growth in e-commerce even after the pandemic has lifted.
To retain that level of confidence, merchants should use specialists in Latin American logistics to handle their shipping. The most important aspect of logistics is data: the better it is, the better the results, and vice versa. Bad addresses, missing tax IDs or missing harmonized tariff codes result in bad deliveries and unhappy consumers.
AJ Hernández is CEO of SkyPostal Inc.
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