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After a peak in e-commerce growth in Latin America in 2022, equivalent to 39% year-on-year growth, the region will slow its growth. Retail e-commerce sales will have a compound annual growth rate (CAGR) of 21% between 2023 and 2026.
The pandemic accelerated the adoption of digital shopping, with impressive growth during 2021 and 2022 (peak) equivalent to 36% and 39% year-on-year, respectively.
By 2023, this growth rate will decline and then stabilize by 2026. “Unlike the last two years, in the coming years, e-commerce growth in Latin America will be driven by verticals other than retail,” says Lindsay Lehr, Managing Director of PCMI. “We expect growth in travel and tourism sales and the emergence of new verticals such as SaaS, tax payments, insurance, betting and casinos, healthcare, among other miscellaneous services. Those verticals have not yet widely penetrated the Latin American market,” she says.
Total e-commerce volume across 15 markets in Latin America and the Caribbean., from 2018 to 2026. PCMI data.
PAYMENTS AND COMMERCE MARKET INTELLIGENCE
It is impossible to talk about the success of e-commerce without framing it in the context of each country locally. Because of this, PCMI has put together a methodology for calculating per capita e-commerce consumption in each market. This new approach correlates with two important data points: penetration of digitization and online banking, and per capita GDP.
PCMI team has compared e-commerce spending in Latin America with other regions such as Asia, the United States, Europe and Africa, as shown in the graph below. According to PCMI, annual per capita retail e-commerce spending in Latin America has doubled since 2019, showing how much the industry has matured. However, Lehr explains, per capita spending in Asia provides insight into the potential growth that the LAC region still has.
Latin America is the fastest-growing e-commerce region, with higher y-o-y growth rates and CAGR 2023-2026 than Asia, the United States, Europe, and Africa.
Retail e-commerce sales will have a compound annual growth rate (CAGR) of 21% between 2023 and 2026.
Payments and Commerce Market Intelligence
PCMI evaluates the e-commerce market in different verticals to cover the broad regional context. “E-commerce is dynamic and constantly evolving. We recently decided to measure sales in delivery and ride-hailing apps compared to digital goods overall, after observing unique and substantial growth. We have also seen the emergence of new ways to digitize payment verticals, including SaaS, tax payments, fees and licenses, mobile top-ups, healthcare, insurance and gambling, that together will account for US$123 billion in e-commerce in 2023, a figure that is expected to triple by 2026, with an average annual growth of 30%,” Lehr says.
However, PCMI forecasts that retail sales will continue to account for nearly half of e-commerce sales in the region.
Market share of the main e-commerce verticals in Latin America, with annual growth projections 2023-2026. Retail, Travel & Tourism, Delivery Apps, Streaming, Video Games.
ecommerce and retail.
Digital penetration and access to financial accounts
Argentina, Brazil, Chile and Colombia are the markets with the highest digital penetration in Latin America 2026
Payments and Commerce Market Intelligence
The most mature markets in e-commerce, i.e. Argentina, Brazil, Chile and Colombia, are also the markets with the highest digital penetration among the adult population and the highest rates of users with financial accounts. In these markets, according to PCMI, the development of value-added services and multi-rail financial products is essential.
On the other hand, in markets such as Peru and Mexico, despite having representative per-capita e-commerce spending, digital penetration is really low and cash is still the king. In Mexico specifically, large retailers are competing strongly to attract the under-banked population by developing their own payment apps.
Digital penetration in Latin America 2023, percentage of online shoppers and percentage of financial account users over total adult population, by country. Argentina, Brazil, Chile, Colombia, Ecuador, Mexico and Peru.
Ecommerce-payment-methods are the most used payment methods for online purchases in Latin America.
Pix is consolidating as the most disruptive payment method in Latin America. In Brazil, it will handle 29% of e-commerce retail sales in 2026.
Payments and Commerce Market Intelligence
PCMI has observed the greatest ever disruption in e-commerce payment methods. Credit cards will continue to be the leading payment method in 2023 (with a 48% share in LatAm), but that share is already declining in favor of alternative payment methods.
That said, a high growth rate 2023-2026 is estimated for bank transfers (38 % CAGR), Buy Now Pay Later (35 %), debit card (30 %), Pix (26 %), and digital wallets (20 %).
Pix in Brazil, just a few years on from its launch, is “the most disruptive method of the last 10 years.” PCMI forecasts that Pix will cover 29% of 2023 e-commerce sales in Brazil.
In Colombia, the share of bank transfers will equal the share of credit cards in 2026, both competing for 40% of online sales. The PSE button is consolidating as Colombia’s most widely used payment gateway.
Initially, businesses only offered online payments through credit cards, so as the adoption of electronic commerce became more widespread in the region, the share of credit cards increased accordingly. But in 2022—and this is historic—the share of credit cards decreased. We expect this to continue over the coming years.
By Americas Market Intelligence
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