E-commerce growth in Latin America and Africa for 2023
According to the new Beyond Borders 2022/2023 study, rising economies, such as Latin America and Africa, are among the leading markets responsible for driving e-commerce hypergrowth globally. As a result of the pandemic and new consumption habits, digital commerce will continue to grow by 30% a year, until 2025, in countries such as Brazil and […]
Andressa MaltacaDecember 08, 2022
According to the new Beyond Borders 2022/2023 study, rising economies, such as Latin America and Africa, are among the leading markets responsible for driving e-commerce hypergrowth globally.
As a result of the pandemic and new consumption habits, digital commerce will continue to grow by 30% a year, until 2025, in countries such as Brazil and Mexico. Africa is poised to be the next player in global e-commerce, with the world’s highest concentration of mobile money accounts.
With the increasing number of online shoppers, payments are one of the leading factors for democratizing the digital ecosystem. Alternative payments, such as Pix in Brazil, boost access to products and services previously restricted to just a portion of the population.
Take the Latin American market as an example: nearly 75% of Latin Americans shopped online in 2021. The Latin American shopper is now a heavy-connected consumer, with more cell phones than bank accounts.
Continue reading this article and discover key opportunities to grow in Latin America and Africa.
Africa, the “next frontier of hypergrowth” for e-commerce and digital payments
Africa has laid a strong foundation for e-commerce with the massive use of mobile phones and the adoption of innovations that have boosted finance and spurred confidence in online payments. With double-digit growth in all areas, the continent of 1.3 billion people has 83% of mobile subscription penetration.
Among the 360 million Africans who are internet users (about 30% of the population), digital payments are already widespread — a favorable point for expanding e-commerce in the region. While e-commerce penetration is still low (12% of the population made an online purchase in 2021, according to Insider Intelligence), the African e-commerce sector has a large foundation to build on.
The adoption of digital payments is above the world’s average in Africa, reaching nearly half of the adult population. Regarding the current market development stage, there is a high growth trend in online sales.
According to McKinsey, 70% of all online transactions on the continent will be through alternative payment methods by 2025. In this scenario, cards represent only about 30% of the online volume.
Latin America, the apple of the eye of e-commerce in rising economies
Positively impacted by mobile commerce (which surpassed desktop purchases for the first time), retail digitalization, and access to alternative means of payment, Latin America has opportunities everywhere. Growing at 30% a year, an acceleration comparable only to Asian markets – with no decline in sight.
A blue ocean of opportunities for global companies seeking hyper growth in the online market with a strong acceptance of digital technologies. Due to rising inflation and the war in Ukraine, the economic slowdown in developed markets such as the United States and Europe is another impetus for multinational companies to invest in emerging markets.
“The rapid growth of digital commerce in rising economies such as Latin America and Africa is catalyzed by payment innovations that are breaking the mold. The future of payments in these regions is decidedly alternative and instantaneous,” said Paula Bellizia, President of Global Payments at EBANX, during the edition of the Latin America Summit, the company’s annual event.
The recipe for success is taking advantage of Latin America’s best market moment. With accelerating digitalization and alternative payment methods driving financial inclusion, the gaming, online retail, SaaS, and streaming segments have achieved double-digit growth in 2022.
How is digitization driving e-commerce hypergrowth in Latin America and Africa?
According to the Beyond Borders study, the e-commerce hypergrowth in rising economies is due to two main factors. The first relates to the massive adoption of online payment methods, such as digital wallets and instant payments.
Pix is an example that quickly became Brazilians’ preferred means of payment. Secondly, by the growth of purchases made by cell phones (known as “mobile commerce”).
Another factor that influences the acceleration of growth in these markets is a young population increasingly inclined to buy online. Improved internet access, with more affordable and faster plans. The thriving ecosystem of greater substantial financial inclusion and innovative payment solutions is transforming how Latin Americans and Africans consume, shop and pay.In Latin America, the e-commerce boom has driven the adoption of digital payments. In Africa, digital payments are driving the digitalization of the market. The future of e-commerce sales and digital payments is instantaneous and alternative.
How to prepare your company to ride the wave of rising economies?
There is a sea of opportunities to be explored in rising economies. But the main question remains: how do you prepare your business to ride these incredible growth trends?
We’ll make a brief analogy between surfing and business – which, at first glance, does not seem to connect. But the truth is that they are very similar in many ways: quickly adapting to changes, trying new moves, and taking risks.
That’s why we’ve separated four essential tips to surf this super wave of e-commerce growth in 2023. Check them out:
Tip 1: Give access!
Offer a greater payment range as your competitive differentiator. Scale operations and reach more customers through a comprehensive payments portfolio and deep regional knowledge.
- With a cross-border solution to easily access new markets and achieve broader operations in each country;
- Offering more than 100 payment methods and local connections in 15 countries in Latin America and 3 in Africa;
- Increasing your revenue by double-digit revenue through APM adoption and greater payment availability.
Get to know all the payment solutions to expand your business safely.
Tip 2: Consider expanding to countries of rising economies
Even companies historically recognized for their results have already realized that the world is changing – and fast. That is, emerging new “waves” can literally throw you off the beach – or rather, from potential markets…
Many companies face the dilemma of where they should land as the next sweet spot to thrive and generate more profit. As we mentioned, rising economies offer a golden opportunity for companies eager to grow their customer base and revenue in regions where digital commerce is booming.
Look at other angles and be where the opportunities are! The Latin American and African markets have shown great potential for the expansion of global brands.
Discover the quick integrations that best fit your business model.
Tip 3: Extend the payment offer
Brands familiar with the local payment landscape are likely to lead the race to acquire new customers looking to pay using their favorite payment methods. Among these are alternative payment methods (APMs), such as bank transfers and digital wallets, which are all the rage in rising economies. In Latin America, APMs can reach nearly 40% of the region’s e-commerce volume.
Payment preferences on the African continent differ across countries. In the top three economies, such as Kenya, cash is the preferred payment method for online purchases, with a 40% share. In South Africa, digital wallets account for 20%, followed by Nigeria at 7%.
Know the best payment methods to increase your potential customer base.
Tip 4: Localize the Digital Experience
And last but not least: localize your digital experience.
Accessing the correct local network for your customer base and connecting to multiple acquirers are critical to optimizing approval rates. After all, every consumer base is different. Therefore, having a local partner will help you adapt payment behavior to the nuances of each acquiring partner.
Whenever a company wants to sell abroad, it can choose to have an international or local acquirer on its side. However, merchants always seek to offer their customers the best experience and have the most cost-effective payment processing.
Discover the solutions to localize your marketing and sales strategies.
Eager for more information?
EBANX takes you on a deep dive into the payments landscape in rising economies: download the Beyond Borders 2022/2023 study.