Unlocking the Potential of E-Commerce in Peru

With a population of 30+ million people, Peru is Latin America’s fifth largest country. Much like Chile, Peru is extremely centralized, with 10 million people – or one-third of the population – living in the capital city of Lima. Less than a million people live in Peru’s second largest city, Arequipa, resulting in a highly rural population scattered across a diverse landscape that includes the Andes mountains, the Amazon rainforest, and the Andean Plateau.

Peru’s geography provides challenges to both Internet penetration and delivery logistics. These barriers help explain why Peru, despite its young and Internet-savvy population, lags behind the rest of the region in the development of e-commerce.

MercadoLibre statistics show that only 5% of Peruvians currently purchase goods online, citing reasons such as low financial inclusion, fear of fraud, and concerns about delivery logistics for the disparity. By comparison, up to 40% of Chileans and 70% of Mexicans are purchasing online.

Peru’s e-commerce market was worth approximately US$2.8B in 2016. Americas Market Intelligence predicts e-commerce purchasing will grow by 30% on desktop and 55% on mobile over the next two years. However, only 54% of Peruvian online shoppers have a bank account, despite government efforts to improve financial inclusion.

Peru has enormous potential for e-commerce growth for those that can overcome delivery and payment challenges. Peru’s extremely young population, most of whom are under 30, are highly connected to the Internet. What’s more, 77% of people between 18-25 are active Internet users. Internet access in Peru is expanding by 10% yearly, though it remains highly divided between urban and rural areas. Up to 53% of people in Lima have access to Internet at home, while just 1.9% of rural Peruvians have Internet access at home.

Peru is one of the best countries for doing business in the region, ranking 58th on the World Bank Doing Business report. For comparison, Chile currently ranks 55th. Peru also outstrips larger countries like Brazil and Argentina in terms of getting permits, receiving credit, and trading across borders.

Peru’s government is working hard to promote the growth of e-commerce by improving Internet access, especially in the most rural areas of the country. Recently, several government agencies adopted Internet technologies, including the public registry, the tax collection agency, and the Central Bank. Furthermore, the government has installed a special task force to improve Internet penetration, called E-Gob Peru, that is creating Internet-based solutions like online voting, electronic procurement, and business assistance for SMEs.

Despite challenges, most of the regional e-commerce companies are active within Peru. Peruvian consumers can purchase online through MercadoLibre, OLX, Linio, Falabella, and Ripley. Local retailers such as Platanitos, Wong, and Rosatel also offer online purchasing and delivery options in Peru. Efforts like the annual Cyber Days are also helping attract more Peruvians to shop online using deep discounts. Events like Cyber Days and E-Commerce Day increase trust among Peruvians who are concerned about fraud or identity theft when shopping online.

Since the market is relatively new, Peruvian e-commerce is still an open playing field. A few startups have entered the space, but so far there isn’t a single company that holds a significant market share.

A few active e-commerce startups in Peru include:

Tannder: An online classroom platform that won the eCommerce Day award in 2017.

Chazki: An innovative delivery company that provides real-time tracking and location services to Peruvians in even the most remote areas.

Doktuz: A platform that connects citizens to doctors and offers at-home health services. Doktuz also won the eCommerce Startup of the Year award at the 2017 eCommerce Day in Peru.

Culqi: An online payments system that works like Stripe, making e-commerce and online payments possible.

Peru is a large, young market with a massive potential for growth. With a relatively stable economy, especially in the context of the region, and a mostly untapped digital marketplace, Peru is an ideal location for an e-commerce boom in the next two-to-five years and there is still room for an innovative company to grab a significant portion of this quickly space.