Latin America May Be Holiday Gift Cross-Border Merchants Are Seeking

Winter gifting holidays are as important in Latin America as anywhere, and online retailers want to tap that potential not just to bolster 2022 receipts but to develop future markets now.

Speaking with PYMNTS, Mike Goodenough, global head of e-retail at Worldline, said the doom and gloom of a looming recession aren’t stopping eCommerce operators based in other countries from looking for ways to access Latin America demand by mastering cross-border payments.

“If we look at what happened during COVID to physical retail, there’s always winners or losers,” he said, “but I think that during this period, people are still going to leverage the opportunities that they see during the sale periods, and everybody’s still going to have Christmas.”

Noting that Black Friday and Cyber Monday sales will be important to Latin American markets as they are in other markets, Goodenough said merchants need to redouble their focus on seamless digital payments and in-stock positions to make the most of the coming months.

Within that, he sees “more focus on affordability” in LatAm selling, as is the case everywhere in the current economic climate, adding that Worldline clients began planning for cross-border holiday selling in the summer.

“Our retailers are already focusing on [winter holidays] in July. For instance, in July this year, e-retail sales were still growing. They see [the holidays as] an important period. They’re already pivoting to making sure that they have everything in place for this to be very successful for them. It’s not last minute that they will be connecting to Latin America.”

See alsoLatAm Travel Gets Booking Boost from Cross-Border Platforms

Localization is the Key

Connecting to Latin America as an eCommerce seller from Europe, the U.S. or anywhere is an increasing priority as these markets are emerging with gusto, with real-time payments, installments, and other methods by using the platform power of companies like Worldline.

Noting that Worldline began focusing on high-growth emerging markets before COVID, Goodenough concedes that the pandemic sped up the process considerably.

“What we’ve seen with our existing clients as they’ve expanded into these regions is that, despite the doom [of] a global recession, these countries, certainly with eComm, were already experiencing massive growth during COVID, particularly retail, but also post COVID this boom is still going on.”

He chalks that up to continuing investments in Latin American countries, increasing internet access, and the region’s high mobile phone penetration. “These have helped to keep the growth going in these markets. For many of our clients, this has been a success story, and LatAm is one of those.”

Larger eCommerce players are using their resources to pull ahead, but it’s anyone’s game in the region right now. Despite profit warnings from major global eCommerce operators, he said “they’re repurposing … funds into these markets. Even with some of the contraction, from consumers in these Latin American countries, particularly Brazil as an example, we’ve seen a 50% increase in consumers willing to buy online in the last five years.”

Where Worldline comes in is both providing and leveraging payments infrastructure to make sure that every basket converts by smoothing processes — especially payments.

“Local payment methods, understanding the market, supporting local nuances in installments [are] really important,” he said. “Otherwise, you’re just touching on those markets and missing out on a lot of the growth. Cross-border is one way of tapping in, but if you do cross-border without localization, particularly in Latin America, you’re going to have a problem.”

See alsoValue of Local Expertise Underestimated in Expanding Cross-Border Commerce

Real-Time and Other Realities

Emerging region though it may be, several Latin American countries have pulled ahead of more established economies with innovations like real-time payments that go a long way to create the kinds of payments experiences consumers in every region now expect and even demand.

“There’s a danger that outside of the region, you look at it like Europe and you say one size fits all, the countries are all very similar, consumer behavior’s very similar, but it isn’t,” he said.

Goodenough noted that Worldline’s four key LatAm markets now are Argentina, Brazil, Colombia and Mexico, all of which have established real-time payment schemes. For that reason, among others, he said, “We see the larger merchants targeting those because, in the next year or two, that’s where they can be guaranteed a lot more success.”

Brazil and its PIX real-time payments scheme is an exemplar of this regional expansion of real-time in Latin America, which is attracting massive public interest and uptake. That’s even more impressive given the high number of unbanked in LatAm and the continuing clout of cash.

Goodenough backed that up with figures, noting that since the end of 2020, “in the eight months following the launch, there was something like 800 million PIX payments, and a third of the Brazilian population, which is about 213 million people, are registered PIX users.”

Major local operators like eCommerce platform MercadoLibre and digital payments provider Mercado Pago offer stiff local competition to outside entrants, but the tools exist to help merchants from other geographies do well in their Latin America expansions.

One method is by partnering with MercadoLibre, Goodenough said, which may be easier for smaller eCommerce sellers. Larger merchants “can penetrate those markets where MercadoLibre is already strong by going cross-border and making sure that they support these local payment methods so that they are allowing consumers that local experience.”