Expanding Your Business to Latin America: What You Need to Know
Latin America is composed of several countries and territories1, but if you were to combine the region into one country, it would be the third largest nation worldwide in terms of population, with more than 600 million inhabitants2, only surpassed by China and India. Add to this the fact that most of the countries speak Spanish, the second most spoken language in the world. Expanding into LATAM represents a very large and scalable opportunity.
The region accounts for 11% of the 3.4 billion internet users worldwide3 and it is estimated that by 2020, the amount of mobile internet subscribers in the area will rise to 450 million, making Latin America the second fastest growing region after Africa4.
While Latin America is an attractive area to target, there are some market nuances worth taking into account when planning your business expansion to the region.
Five key considerations to take into account :
- Importance of Spanish for Spanish speaking Latin America: English proficiency remains low in the region -for non official English speaking countries- with only one country ranked among the highest levels, Argentina5. Guatemala, Venezuela and El Salvador occupy the lower levels. What does this mean in practice? Websites, customer service interactions, marketing campaigns and all communications are recommended to be offered in Latin American Spanish. Now just as there are differences between Latin American Spanish and Spanish from Spain, there are also variations within Latin American countries’ Spanish as well. To learn more on how to address this, check out the recording of the global panel (minute 23:00) where an international market specialist advises on this particular point.
- Payment methods: Credit cards are the most used payment method to buy online6. Still, the region faces the challenge of financial inclusion- only 51% of adults had an account at a financial institution in 20147. This has been addressed by several governments in the past years through the creation of programs like Prospera in México. While the unbanked population declines, being open to alternative payment methods like eWallets, PostPay and bank transfers will expose you to a bigger set of customers.
- Cross border eCommerce: Latin American buyers often choose to shop online on international sites mainly due to better prices, more product availability and a wider variety of brands to choose from, which in some cases may not be available in country. For example, it is estimated that more than 50% of Peruvians and Chileans buy online via cross-border and domestic8. Apparel, cosmetics and electronics are some of the products Latin Americans buy in high amounts through the first modality. Make the most out of this trend by creating campaigns in multiple markets with Dynamic Search Ads (DSA). Learn how to do it here.
- Seasonality: Unlike the United States that has clearly marked and fixed discount events like Black Friday and Cyber Monday, events in the region take many names, shapes and dates like Buen Fin, Hot Sale, Cyber Monday, Cyber Lunes, Black Weekend, among others. There is a growing trend of localizing the events and officially organizing them through the local chambers of commerce in each country. In 2016, Cyber Monday in Argentina and Chile generated 306M USD in purely online sales with Argentina representing 58% of those sales9. Find out more tips on how to prepare for seasonalities around the globe here.
- Video watching: Latin Americans are heavy video viewers. 58% of them watch every day, making the region index higher than the rest of the world average of 48%. And it doesn't stop here; the majority of users in Latin America tend to watch longer videos, between 5 to 10 minutes long. Complement your international marketing strategy with video and adapt your brand's communication to what mainly motivates Latin Americans to watch, the search for entertainment and inspiration10 .
If you are interested in learning more, check out additional articles, guides and videos on how to go global with Google here.
2World Economic Outlook Database, 2016
3eMarketer, Global Internet users by region, April 2017
4GSMA Report 2016
6Worldpay Report 2016
8eMarketer, October 2016
10Consumer Barometer with Google