Argentina an emerging e-commerce power

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Latin America is an emerging market for e-commerce, but one nation in particular should become the leader of the pack.

BI Intelligence,  Business Insider’s premium research service, forecasts that online retail sales in Argentina will grow at a compound annual growth rate (CAGR) of 28% through 2019 to reach US $12.4 billion. This would make Argentina the fastest growing e-commerce market in Latin America for that period, just ahead of Mexico at 25%.

Business-Insider-ArgentinaMore than US $6.8 billion worth of goods will be purchased online in 2016, according to BI Intelligence estimates. This would mark a 40% increase. But Argentina does have some obstacles in its path as it grows its e-commerce market, primarily the slow delivery within the nation. The average delivery time for online orders in Argentina is one week, hardly a convenient length of time for online shoppers.

E-commerce in Argentina is also quite segmented, which is not surprising considering that it’s still a relatively young market. The top categories there are electronics, food and beverage, and appliances, which represent 13%, 7%, and 5% of online sales, respectively.

BI Intelligence expects food and beverage sales to be the primary driver of this growth because Latin America is friendlier to online grocery deliveries than North America and Europe.

Currently, only 13% of Latin American Internet users say they use a grocery delivery service, but 65% say they would be open
doing so, according to a 2015 Nielsen survey.

Argentina currently ranks third in terms of online retail sales volume in Latin America at 8.9%, but BI Intelligence expects that number to swell to 14.6% by 2019.

As we track Argentina’s growth in the next several years, the broader Latin American market is one that retailers must watch. It’s one of the top regions in the world for e-commerce growth, and those retailers that build out their e-commerce operations now will be in the best position to grab market share when the economy rebounds.

Cooper Smith, senior research analyst for BI Intelligence,has compiled a detailed report on Latin American e-commerce that sizes

up the region’s biggest e-commerce markets—Brazil, Mexico, and Argentina—and projects how online retail sales will rise in these countries. The report looks at the growth drivers in each market and identifies opportunities and challenges for foreign retailers operating there.

Here are some of the key takeaways of the BI Intelligence report:

Latin America is one of the fastest-growing regions for e-commerce, behind Asia-Pacific.

BI Intelligence expects online retail sales to grow at a compound annual growth rate (CAGR) of 17% between 2014 and 2019 to reach $85 billion in sales at the end of the forecast period.

Brazil is the largest online retail market in Latin America, accounting for 42% of the region’s US $47.4 billion in e-commerce sales.

But e-commerce growth is decelerating due to an economic downturn. Between 2014 and 2019, BI Intelligence expects e-commerce sales to rise at a CAGR of 12.5%.

Mexico is the second-largest market for e-commerce in Latin America.

Mexico currently accounts for 12.3% of the region’s e-commerce, but BI Intelligence expects Mexico’s share to increase to 15.6% by 2019. By 2018, Mexico is forecast to reach US $11 billion in e-commerce sales—or just under 2.5% of total retail sales in the country.

Argentina ranks third in terms of online retail sales in Latin America, but it will be the fastest-growing e-commerce market
the three countries.

The country currently accounts for 8.9% of sales in the region, but by 2019, BI Intelligence expects its market share to increase to 14.6%.

US retailers are investing heavily in building out their e-commerce businesses in the region, despite the slowing economy.

Walmart recently redesigned its country-specific site in Brazil and is finalizing construction of three new e-commerce fulfillment centers in the country—doubling its current fulfillment network. Amazon has been investing heavily in Mexico, launching a Spanish-speaking version of its shopping site under the Mexican domain

(This article was written by Andrew Meola of BI Intelligence and was published in Business Insider on March 10, 2016)
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