Historically, super sale events such as Christmas, Black Friday and Internet Monday have sent retail activity across the globe to the top. However, the course of the pandemic has changed the course of shoppers’ behaviour, with many choosing to use more digital means over physical visits to the store.
Since this year’s numbers from the US represent a decline in sales expected around these periods, Marius costin، PayU He offers his insight into the changing expectations around e-commerce, and why merchants and developers should look farther if they want to move forward:
Across Latin America, the holiday season has remained one of the biggest retail periods for emerging e-commerce leaders.
The pandemic has already sparked a transformation of the Latin American retail space, with a marked shift in consumer behavior and a reset of business strategy for merchants, as they have had to respond and adapt to the rapidly changing environment. These developments have marked a change in the retail paradigm to the point where it is irreversible. For example, PayU data has found that Latin America is on track to become the new force of e-commerce globally.
However, figures show that e-commerce growth in the US is slowing, reaching just $8.9 billion during Black Friday this year, compared to $9 billion last year. Although there is little difference, it highlights the huge opportunity for emerging e-commerce leaders to expand and diversify their geographic reach by tapping into unsaturated markets such as Latin America. Here are some of my notes from the recent holiday season, which include background information for both traders and fintech companies looking to expand into the region.
Government support – a key to stimulating consumer spending
Amid lockdowns and social distancing measures, consumer behavior and buying habits have adapted globally, and Covid-19 has encouraged markets to accept and embrace e-commerce more quickly.
This holiday season and more specifically Black Friday, we have seen this trend continue, with the total value of online transactions made through the PayU platform reaching 3,9278,999. In addition, apart from the big shopping days like Cyber Monday, Black Friday, Singles Day, El Buen Fin and Cyberlunes, we are seeing other initiatives and programs aimed at supporting the growth of e-commerce in high-growth markets. For example, Colombia introduced three VAT-free days to encourage wider adoption of e-commerce within the country, and in total, PayU has processed more than $184 million in intra-country transactions.
Given the success of these dates, it won’t be long before we see more governments introducing similar initiatives throughout the year to maintain retail momentum after the holiday season. E-commerce leaders can partner with payment providers to stay aware of these initiatives and to ensure they are established in the right markets to take advantage of key events, market potential, and changing consumer behavior.
Retail innovation amid challenges
Over the course of this holiday season, the industry has seen many merchants challenged by global supply chain issues. To combat this, merchants have started making use of payments and e-commerce platforms that can be integrated into their in-house supply systems to avoid customer disappointment. Through this integration, employees are automatically updated based on real-time requests across e-commerce platforms, which has only been achieved through new and improved emerging technologies such as artificial intelligence and machine learning automation.
It has been proven that incorporating these technologies into business processes improves efficiencies for e-commerce organizations, particularly those that put the welfare of their employees first. New technology will be increasingly important to organizations as consumers dictate the gradual transition from in-store experiences to the Internet. Thus, technological innovation has been a key factor in helping merchants mitigate supply chain disruptions during the recent holiday season, and the apparent value of this new technology will undoubtedly drive further innovation this year.
mobile commerce boom
In the past year, more merchants have turned to mobile journeys to serve 18-24-year-olds who are increasingly using their smartphones to transact online, providing greater retail opportunities for global merchants. In fact, the number of Generation Z P2P mobile payment users globally will more than double from 20.5 million in 2021 to 41.1 million by 2025. It is also important to highlight that while this adoption can be seen at the generational level, it is It is also very prominent at the regional level. For example, Mexico is now second only to South Korea in the use of mobile devices for online purchases, with 15 percent of all e-commerce sales taking place on mobile phones.
As we continue to see sales holidays as key dates on retailers’ calendars, we’ll start to see more creative applications of mobile-friendly retail journeys this year and beyond.
Additionally, we expect that by 2025, there will be 424 million mobile internet users across the region, which will drive the digital commerce sector to grow even more, as mobile commerce becomes increasingly popular.
Translated Exit Experiences
While mobile payments are gaining momentum, we continue to see a growing adoption of alternative payment methods as well. In Colombia for example, during Black Friday, approximately 1 in 2 transactions were made through our platform via PSE, a popular and local alternative payment method.
With a greater variety of payment methods available, merchants must use payments data to gain greater insights into the payment preferences of customers across markets. We’ve seen a steady increase in merchants turning to payment partners to help them not only with these processes, but also with guidance and expert insights into local and regional regulations, industry trends and consumer preferences. I would make this recommendation to any US merchants expanding into Latin America, looking to take advantage of growing markets, increase sales and attract new customers through popular global and local payment methods.
Unsurprisingly, the holiday season also showed us that customers prioritized purchases from merchants who can offer simplified checkout trips. The speed, efficiency and diversity of alternative payment methods that are popular and recognizable in every local market is something that merchants and fintech companies must consider as they continue to expand into new markets in 2022.
Innovation in the payments landscape was a key factor in much of last year’s holiday season success, bringing e-commerce more accessible to previously overlooked markets. The holiday season always gives us a good indication of what push trends to watch out for in the coming year. Merchants do well to take note as they are planning their customer interactions and trips in 2022 and are considering expanding into unsaturated markets across Latin America.