Latin America experienced a seismic transition to digitally driven services and online commerce in the last few years.
This transition was created partially out of necessity during the COVID-19 epidemic. Throughout the region, businesses adapted to the new conditions and began the process of digitalization.
In less than two years, e-commerce in Latin America surged by 36.7% in comparison to pre-pandemic levels, and in 2020, 13 million consumers in the region completed their first online transaction, according to Statista.
Previously, online transactions and digital technologies had failed to take off due to the large population of unbanked and the prohibitive cost of many technologies. However, the Latin American economy is growing, and the percentage of the population with direct access to technology is greater than ever.
In addition, financial services have made a drive to improve services to the unbanked, allowing more people to make online payments.
As a result of this shift, many digital businesses in Latin America are growing at a rapid pace, especially thanks to digital marketing. Many agencies internationally have signed a number of new clients in the area, all of which are looking to build their brand and expand within the markets of Latin America.
DIGITAL GROWTH IN LATIN AMERICA HIGHER THAN GDP
While the overall GDP of Latin America has been growing quickly, it’s still been outstripped by the rapid adoption of digital technology. Both GDP and digitalisation can be interlinked, with digital businesses able to save costs and become more efficient while providing better jobs. This adoption was partly due to the pandemic but was already growing rapidly.
Internet usage in the region has been on the rise since 2001. According to World Bank figures, around 6% of Latin Americans used the internet in 2001. This number had increased eleven-fold by 2019, reaching 66%.
As of 2021, there were more than 160 million internet users in Brazil alone, a 6.1% growth from 2020. Additionally, 8 out of 10 Peruvians use the internet, which is similar to the average level of internet users in Europe.
Greater access to the internet has led to the growth of the region’s digital economy. According to recent reports, Latin American tech companies’ economic worth increased from 2.3% in 2020 to 3.4% in 2021.
Additionally, Latin America now has 105 “unicorns” (tech startups valued at $1 billion or more), up from 46 in 2020.
As the digital economy of Latin America has grown, regulations have managed to keep up with the pace for the most part.
Data protection laws such as Brazil’s Lei Geral de Proteção de Dados (LGPD) came into effect recently, helping to protect consumer data from misuse and ensuring that everyone can use the internet safely.
THE FUTURE OF LATIN AMERICA’S DIGITAL ECONOMY
As Latin America’s digital economy continues to grow, it’s possible that we’ll see it develop into something similar to that of Europe. However, there are many differences between the regions that will allow them to be clearly separate.
For example, Latin American companies are more likely to show loyalty to companies within their own country rather than going with offshore businesses. This is a key factor in helping the region to grow and means there are often stronger ties between Latin American businesses.
The future of Latin America’s digital economy looks bright, particularly if the growth can be sustained.
As more of the population gets online and a greater number of businesses implement digital practices, there’s huge potential for greater innovation and development.
This also bodes well for the region’s place on the world stage.
With the help of technological innovations, communities and data-driven marketing businesses of all sizes and in a variety of industries can compete and succeed in the global market.