Ecommerce in Argentina: A Fast-Growing Market in the Sights of Large Investors

“Argentina is having an interesting momentum regarding ecommerce growth and we expect to keep seeing this increase over the next years” said Sebastian Fantini, Product Manager and expert in LATAM at EBANX

There are many aspects that confirm the fact that the Argentine market is projected as one of the fastest growing in the next four years. The increase in the use of mobile devices and the consumer features of this country, make that the companies planning to invest in Latin America find in Argentina a promising and effective scenario to compete in global ecommerce.

It’s not by chance that big companies and investors from all over the world are looking at Latin America and of course, Argentina as well. Recent investments in this market prove it. The fintech scenario in the region, for example, has developed quickly and is poised to grow at a fast-pace. After investing $180 million in Brazilian bank solution Nubank in last October, Tencent Holdings, Chinese tech powerhouse, has chosen an Argentinian player to aim this time: Ualá – an app which allows users to transfer money and make payments and purchases through a prepaid card.

Another great bet was made by Softbank, which has confirmed a $1 billion investment to scale Rappi operations in Argentina and other LATAM countries. The on-demand delivery startup is one of the unicorns in the region and was valued at more than $1 billion last year with a $200 million financing.

If you are thinking about expanding your business and investing in the region, we tell you why you should take a look at Argentina and its power around the strategies and trends in ecommerce.

Ecommerce Sales Growth Despite Crisis: Turning Challenges into Opportunities

Despite the 40% rate of inflation, ecommerce in Argentina grew almost 38% according to the last WebShoppers report – more than any other country in Latin America. In fact, growth in Argentina was higher than in Brazil (12%) and Mexico (15.3%), the first two economies of Latam.

Argentina’s ecommerce has been growing at a high rate over the last years. With a clear goal of being connected to the world, we have seen this increasing trend in the country year after year. Even with a high inflation rate, the increase reflects not only on the total processed value but also on the number of different orders

Sebastian Fantini, Product Manager and expert in LATAM at EBANX

For Sebastian Fantini, Product Manager and expert in LATAM at EBANX, the main drivers which make a shopper buy online are related to user experience, the possibility to buy at any time and receive the products at home, as well as having lower prices or discounts when compared to physical stores.

The Argentine Consumer and Online Shopping Forecast

The Argentine consumer is eager to buy from international ecommerces and is always looking for better solutions. How to explain this, if even in times of economic recession, ecommerce does not seem to get affected by unstable landscape?

“Argentina has a 45 million population and with a very active consumption behavior. The latest report from CACE (Cámara Argentina de Comercio Electrónico) showed that 90% of the adults connected to the Internet already bought online. The natural evolution of the ecommerce offer and the technology adoption makes that online commerce is not that affected by economic instability”, Fantini explained.

It is expected that by 2021 there will be 3.1 million more users shopping online, in addition to the 16.8 million ecommerce users today. Another interesting fact has to do with the generational groups that access online shopping. More than 80% of ecommerce consumers are under the age of 25, which sets a challenge for companies to offer competitive platforms that prioritize the user experience with agile and secure processes.

There are a lot of marketing opportunities for companies interested in investing in Argentina, and to develop them successfully, it’s also important to understand how media and social dynamics like mobile usage and Internet penetration, have an enormous influence on the consumer behavior in the southern country.

On this matter, Sebastian Fantini mentioned the recent Gartner report, in which Argentina ranks second in Latin America on technology adoption, in terms of Internet usage, mobile penetration, and development of cloud services. “Also, when we consider the mobile usage growth, mobile-based apps development and responsive UXs; all that plays in favor of the ecommerce consumption”, he said.

Many factors influence consumer preferences regarding cross-border and local ecommerce. Variety of items and competitive price play an important role. “If the shopper does not need to receive the product right away or pick it up in person, definitely the cross border retailers are an attractive option,” Fantini said.

The new and improved Puerta a Puerta solution, for example, shows how government regulations and the willingness of private sector can further facilitate and improve the results of, in this case, ecommerce strategies, optimizing mechanisms and offering access to new markets and international product portfolios.

“Also, in terms of payment, if the customer is able to pay on an international site with his local preferred options, such as local cards, installments or even with a cash payment method, that is a great incentive for him to use international ecommerce”. concludes Fantini.

Ecommerce Strategies: Where to Focus?

Beyond economic and political barriers and with the certainty that the challenges related to payment methods and logistics are gradually being overcome, there are many opportunities. What should companies interested in investing in Argentina focus their ecommerce strategies on?

  • Smartphones are increasingly becoming the consumers’ favorite device to buy online, so merchants should start to improve their apps development and mobile-friendly websites.
  • Another strategic approach that needs to be taken into account has to do with social purchasing or how to promote purchasing through the influence of social media.  According to data from EOS Intelligence, as of January 2018, about 76% of the total population were active social media users and e-retailers are now using this platforms to interact with shoppers in an effective way. Businesses are using social media to engage with consumers in platforms like Facebook and YouTube, not to mention the enormous potential for commercial influence that Instagram has and which is growing exponentially in segments such as retail, tourism, and food.

Be flexible to succeed in one of the countries with more potential in the region. Also, staying on top of the trends and initiatives being implemented is crucial to thriving in the country

Sebastian Fantini, Product Manager and expert in LATAM at EBANX

For Sebastian Fantini, the companies that manage to thrive in Argentina should understand the whole ecosystem including the rules, shopping behavior, and customer preferences.

Product Categories that Are Consolidated in the Argentine Ecommerce

According to the annual study of electronic commerce in Argentina, performed by Kantar TNS for the Argentine Chamber of Electronic Commerce, the product categories that grew the most in online commerce were household goods, whose sales soared 124%; cosmetics and perfumery, with 104% growth; and accessories for cars, motorcycles and other vehicles, with an increase of 98%. However, the best-selling category in ecommerce for Argentines were tourist reserves, which represent 28% of total income.

Government on Track to Foster Economic Openness

Several are the efforts of the Argentine government to control inflation and boost consumption in the country. Among the measures is an agreement with companies to maintain prices for 60 products for six months, including oil, rice, pasta, beverages, and other products that are part of Argentina’s food basket.

In addition, the government announced that cellphone operators accepted to keep the price of prepaid lines for five months, until September 15. According to the administration, the country has 35 million active prepaid lines.

Fantini emphasizes that Argentina has been investing in initiatives to promote financial inclusion and further develop the payments financial sector. But even with half of the population unbanked, that is not a limitation for the consumers in regards to ecommerce adoption. “Everyone wants to be part and have access to it. The country is having an interesting momentum regarding ecommerce growth and we expect to keep seeing this increase over the next years”, concludes the expert.