With a population of more than 600 million and two countries among the world’s 15 largest economies, Latin America presents a unique opportunity for businesses to expand their digital footprint.
Exploring Latin America’s 30 countries would be the right move for a company’s e-commerce growth strategy in 2018. Though the current figures show that the e-commerce market is rather small in comparison to others, hoteliers must consider that Latin America is currently the second-largest growing market after Asia-Pacific and that e-commerce sales in the region are projected to do nothing but grow (from $57 billion in 2016 to $85 billion by 2019).
The low single-digit online sales in Latin America indicate a huge potential for growth as the region overcomes challenges in the coming years, such as regulatory hurdles, infrastructure issues and economic unrest. In fact, according to a 2017 report by Research and Markets, the growth rate of B2C e-commerce is predicted to outpace the growth in the mature markets through the next five years due to increasing Internet penetration, growth of the urban population, as well as improvement in the payment infrastructure.
At the regional level, Brazil continues to lead the market with 42% adoption, followed by Mexico, Argentina and Colombia. Interesting is how diverse the region is. Looking at the top three e-commerce products purchased:
- Brazilians opt for books, appliances and fashion.
- Mexicans’ number one is fashion followed by digital downloads and event tickets.
- For Argentineans, plane tickets are their first choice, followed by hotel reservations and mobile phones.
- Colombians buy fashion, electronics and food.
These figures might indicate why Argentina-based Despegar.com, one of the leading online travel agencies serving 20 of the 30 countries in Latin America, became the region’s first unicorn (startup reaching $1 billion in valuation).
Travelers Moving Online
According to Euromonitor data cited in Skift, only $22 billion of travel is bought online in Latin America today, which investment analysts believe is merely 34% of the potential if consumers switch away from traditional travel agents (European and US online travel penetration is 51% and 48%, respectively). It is expected that the number of e-commerce shoppers in LatAm will have an exponential growth from 121 million in 2016 to 151 million in 2019.
But those numbers also mean that hoteliers in the region cannot oversee traditional channels as they continues to represent more than half of booking inventory. A strong offline presence is still very much needed.
Smartphone penetration is driving mobile shopping and engagement and is a key component of the online growth in the region. For example, Despegar.com reports that more than 50% of the company’s traffic comes from mobile devices and its mobile travel app is the most downloaded travel app in Latin America. However, mobile sales rely on the improvement of connectivity infrastructure and consumers’ trust on the secure nature of those transactions.
Mobile is also responsible for the impact of social media in travel as Latin Americans are some of the most active social media users globally. They are connected, buying and sharing their experiences with friends and family, encouraging even more spending. In Mexico only, surfing social media represents more than 80% of online activity, with almost half the country’s population on Facebook.
To have strong digital presence, hotels cannot ignore social media advertising and a strategic content marketing focus. Besides Facebook, hotels must consider TripAdvisor as a key online channel both for awareness and booking, along with Instagram for the more affluent community. When it comes to social and content marketing, the key is to personalize the traveler’s journey and inspire them to the point of booking.
Hotels employing Revenue Strategy can be on top of the game by being present at all phases of the booking journey: when the consumer is searching, shopping or just feeling inspired. Looking at online regrets and denials can help hoteliers measure and personalize the booking experience and determine best practices to complete conversion.