According to data from different experts, between 2019 and 2020, eCommerce in Central America grew at a rate of 40%. This means that sales generated through this type of commerce in the region reached more than $3.7 billion in the last two years alone. Jason Simon, an expert on Central American markets, takes a closer look at how eCommerce has been taking off in the region.
Although there is a wide range of products available for eShopping, fashion, and technology products are unanimously the most lucrative online shopping categories for Central American countries. Guatemala and Costa Rica have been among the top 15 Latin American countries in terms of eCommerce revenues for the past few years.
Panama, in turn, was the economy whose online segment accounted for the largest share of total retail sales. According to Simon’s estimates, fashion-related online shopping would have generated revenues of some $156 million in Panama in 2020, while in Costa Rica, it reached $344 million. In the latter, electronics was the second most purchased item online in 2019, an interest also shared by Guatemalan consumers, who, according to a survey conducted a few years ago, mainly searched for this type of product when shopping online.
“There is potential for eCommerce to continue to grow in Central America,” explains Simon. “With approximately 50 million inhabitants and more than 60% of that population connected to the Internet, Central America has the potential to reach a large number of consumers online. In fact, the numbers seem to indicate that buying products and services online is beginning to displace physical purchases.”
Still, the upswing in the use of eCommerce services requires much more support to increase digital transformation capabilities in the region. According to the expert, Central America and the Caribbean will undoubtedly have the potential to generate a large number of online consumers in the coming years.
The key to consolidating the growth of eCommerce and making it stable is to effectively and efficiently connect the front office with the back office of companies in the region, and strengthen cybersecurity strategies for people to make their purchases without worries. Simon indicates that purchases of mass consumer products through digital platforms in Central America such as shopping by apps, WhatsApp, phone, and internet pages, although slowing its growth by -7.2%, by 2021, continues to gain buyer households, reaching 2,216,000 buyers. This figure represents growth of 19% versus 2020, being an $85 million business in Central America.
Costa Rica is the country that reaches the highest penetration and where it gains the most households in the last year. Four out of ten Costa Ricans buy products from the basket through eCommerce. 44%t of purchases are made through WhatsApp and 33% through websites or applications of supermarket chains and hypermarkets (non-pure eCommerce).
“eCommerce purchase growth in mass consumption represents in Costa Rica 33% being one of the countries in the region with the highest growth,” indicates Simon. “Among the categories most purchased by Costa Ricans is the beauty sector, fragrances and among the food rice, cheese, milk, sausages, tuna, soft drinks, among others.”
Honduras is the second country in the region with the largest number of buyers, contributing 84% of the lost value of eCommerce for Central America, followed by Guatemala, which contributes to the contraction of 11%, decreasing -by 9.8% in value, but is the third country with more digital buyers. Contrary to Costa Rica, the highest percentage of purchases are made by phone. There, $8 out of every $10 of the purchase of products in the basket are left in this format, especially in the purchase of bottled water, flour or corn dough, toilet paper, and soft drinks, among others.
“On average, 53% of Central Americans who use these means feel satisfied with the shopping experience, especially with the follow-up of prevention measures against contagion, and are satisfied because the products arrive in good condition”, the specialist highlights. There is no doubt that Central America is becoming a highly digitalized region and this can be reflected in the movements that eCommerce has begun to have in recent years.
About Jason Simon
Jason Simon is a FinTech and digital payments expert who became involved in cryptocurrencies when they were first introduced. He enthusiastically follows what is happening in the evolving world of finance, excited about the prospects digital currencies offer global consumerism. When he’s not involved in helping advance the digital payments space, he enjoys spending time with his family and improving his community.