The development of information technologies has provided a plethora of opportunities for businesses worldwide. Developed countries benefit most from technological advances but developing regions also start utilizing technology extensively (Bianchi and Mathews 426). E-business is one of the areas that is witnessing unprecedented growth as people are becoming more accustomed to using the Internet for many purposes. Although the USA, European countries and such nations as Japan are leading in this sphere, developing countries have become successful actors as well.
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Latin America is the second fastest-growing region for e-business with forecasted $85 billion in sales at the end of 2019 (Smith). Different regions of the continent develop at their own pace. For instance, Brazil is the leading country in Latin America with more than $47 billion in e-business sales, which makes up 42% of the e-commerce sales in the area (Smith). It is noteworthy that the expected growth of e-business sales is approximately 12.5% irrespective of the unfavorable economic situation in the world market. Mexico follows Brazil with its 12.3% of Latin American e-business (Smith). By 2019, Mexican e-commerce market is anticipated to reach over 15% of the regional e-business operations. Argentina deserves specific attention as it is now the third-largest market for e-business sales and makes up almost 9% of the regional market (Smith). At the same time, this country is the fastest-growing market and is expected to reach almost 15% of the Latin American e-commerce market.
This growth of e-business in Latin America is due to certain political and social changes that have taken place recently. Presidential elections that took place in many countries of the region contributed to the establishment of certain stability, which in its turn, resulted in people’s confidence and improved purchasing capacity (Spillan et al. 42). Governmental support of startups and e-business companies also has a positive impact on the development of the market. People’s trust in technology increases, which leads to the increasing use of Internet platforms for purchasing goods and services.
Nevertheless, the growth of Latin American e-business market is challenged by two serious obstacles. One of the barriers to rapid growth is inadequate logistics. The lack of proper roads and infrastructure makes the prices rather high as the delivery accounts for almost 15% of the sum consumers have to pay (Spillan et al. 170). Clearly, this area requires close attention of countries’ governments that have to improve the existing infrastructure. At the same time, various startups contribute to the development of the market (Spillan et al. 170). New delivery strategies come into existence as people start using different types of transport including private vehicles.
The other challenge is associated with the lack of payment opportunities as the primary method is the use of cash. However, e-commerce companies come up with various options that encourage people to use their services. For instance, Mercado Libre the leading company operating marketplaces for e-business operation has introduced their prepaid card that enables unbanked customers to buy online (Spillan et al. 165). People simply put certain sums that can be used for purchases. Again, local governments can facilitate the development of e-banking and the use of cash cards. It is necessary to relax some regulations and introduce new policies that would ensure the safe use of cards by the population. It is also essential to launch a wide-scale educational campaign to raise people awareness of the opportunities and benefits of banking and cash or credit cards.
One of the most effective marketing strategies that have proved to boost the development of e-commerce companies is the use of social networks. A bright example is a Venezuelan company, Open English, that had three employees in 2008 and grew into an enterprise employing 1,000 people (Spillan et al. 2). The company is now worth $43 million and is expanding rapidly across the continent. The success of the business is rooted in the use of a model that implies interaction. Open English provided the platform for the interaction between people who spoke English and Spanish. This interaction was facilitated by the use of social networks. Modern e-business companies should be active users of social networks that attract millions of people. This source of marketing data and a tool for information dissemination cannot be neglected.
On balance, it is possible to note that e-commerce in Latin America is likely to develop rapidly as technological advances make selling and buying easier and more comfortable. The most serious barriers to this growth are logistics and the lack of payment options. Nevertheless, these challenges can be addressed effectively if local governments introduce the corresponding policies and provide the necessary funds. It is also noteworthy that the use of social networks and the focus on people’s interactions are the most effective e-commerce marketing strategies.
Bianchi, Constanza, and Shane Mathews. “Internet Marketing and Export Market Growth in Chile.” Journal of Business Research, vol. 69, no. 2, 2016, pp. 426-434.
Smith, Cooper. “The Latin America E-Commerce Report: The Region’s Top Markets, Biggest Growth Opportunities, and Foreign Retailers Making Inroads – CLONE.” Business Insider, 2016, Web.
Spillan, John E., et al. Doing Business in Latin America: Challenges and Opportunities. Routledge, 2014.