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In Latin America, many factors go into consumers digital spending. One is that youths are more concentrated in Latin America than anywhere else. Latin American digital consumers are more tightly concentrated in the 25-34 age bracket than other regions, with 57% falling within that age range as compared with 43% outside the region. Consumers are also increasingly utilising mobile for commerce activities. Latin American digital consumers specifically are conducting more commerce activities online and doing so more often on mobile devices rather than computers. Using banking services and reading reviews are among the most popular daily activities on both form factors.
Lastly, Latin America is in the early stages of its digital commerce story. In addition to these nations having a weak digital backbone, Latin Americans do not have the financial wherewithal of developed economies nor the future growth rates of emerging ones. Even with economic recovery, Latin America’s digital commerce uptake will continue to be restricted by a number of challenges that face the emerging region, including high cash usage and fraud.
Latin American digital consumers are more tightly concentrated in the 25-34 age bracket than other regions, with 57% falling within that age range as compared with 43% outside the region. The average age for a Latin American digital consumer is 32.9 years, which is lower than Asia Pacific and Eastern Europe.
Digital consumers in Latin America are better off than their digital counterparts in emerging regions such as Eastern Europe and the Middle East and Africa, but have less spending power than developed nations. The average income for a Latin American digital consumer is USD42,000, about USD14,000 more than their nondigital consumer counterpart – the greatest disparity found between the two groups in any region.
The always-on connectivity of the mobile device is affording commerce players with new opportunities to engage with consumers in the path to purchase. Mobile phones are particularly important in Latin America, given that this device was the gateway to the internet for many.
In fact, Latin American digital consumers are conducting more commerce activities online and doing so more often on mobile devices as compared with computers. Using a banking service and reading reviews are among the most popular daily activities on both form factors. Visiting a price comparison website, which was ranked first among computer-based activities, fell to third on the mobile device.
Latin America is in the early stages of its digital commerce story. All seven of the Latin American countries within the Digital Consumer Index fall in the bottom half. These countries score low on both the digital connectivity development and digital commerce potential that feed these index scores. In addition, Latin Americans do not have the current income levels of developed economies nor the future growth rates of emerging ones. As projections for GDP growth over the forecast period point to recovery for most Latin American countries, consumers’ purchasing habits could return to what they were prior to the recent slowdown. Even with economic recovery and consumer expenditure growth, Latin America’s digital commerce uptake will be restricted due to a number of challenges plaguing this emerging region.
Cash remains by far the preferred method of payment in the region. This is due in part to generally low levels of card ownership as well as the lack of POS terminals in physical outlets. Having an established card network infrastructure is often a key factor in driving digital commerce growth, given the ease of making card payments online as compared with non-electronic payment methods. Travel dominates today’s top digital categories in Latin America which shows that Latin Americans are willing to spend online. Although Latin American digital consumers have setbacks to spending digitally, but there are many opportunities for digital commerce.
Source: Euromonitor International