Chile is an economic powerhouse at the tip of South America. Rapid technology infrastructure development paired with a business-friendly political climate and high levels of Internet penetration have helped Chile’s e-commerce market stand out among its larger counterparts.
With a population of ~18 million, Chile is a small market compared to behemoths like Brazil and Mexico. However, Chile’s e-commerce sector is stronger than its local counterparts; Chile has a disproportionate 9% share of Latin America’s e-commerce market, despite holding only 2% of the region’s population. The Chilean e-commerce market is already worth more than US$3.7B and targeted to grow at 35% in 2018, reaching US$5B by the end of the year.
In part, this enormous growth comes as a result of international platforms, such as Amazon and AliExpress, which have drastically reduced delivery times and made e-commerce more accessible. Last year, national shipment company Correos de Chile partnered with AliExpress to reduce delivery times from a maximum of 60 days down to a window of 16 to 38 days.
Much like in Brazil and Argentina, delivery logistics and mobile commerce development have been the largest hurdles that Chile’s e-commerce market needs to overcome. However, by comparison, Chile’s e-commerce logistics are already much more streamlined. Currently, Chile ranks 42nd in the world for delivery logistics, Argentina ranks 60th, and Brazil ranks 65th.,
Still, Chile’s population is intensely tuned in to the importance of e-commerce. 40% of Chileans are e-commerce users, while 80% have access to the Internet. Since 2014, Chile has held an annual “Cyber Day” in late May to encourage online shopping, similar to “Cyber Monday” in the United States. Chile’s Cyber Day 2017 saw record numbers: online sales increased by 24% compared with 2016, revenue exceeded US$145M, and sites with discounts received 45 million visits.
While brand names like ViajesFalabella, Paris, and Walmart dominated Chilean e-commerce during Cyber Day 2017, new startups have begun making a name for themselves thanks to private and public support. I recently wrote an article for TechCrunch that discussed how the Groupon Mafia in Latin America created the impetus for a number of startups, much like PayPal did in the United States. For example, CornerShop, a Chilean grocery delivery service that is breaking into m-commerce, was created by the founders of Chilean ClanDescuento, the predecessor to Groupon Latin America.
When ClanDescuento became Groupon Latin America, it created a productive environment where future founders could develop. As a result, former employees of Groupon Latin America have gone on to found Babytuto, an e-commerce platform for baby products, and Kosleeping, an e-commerce site for mother and baby products, both operating in Chile. Other employees have become venture capitalists and founded startups in Mexico, Chile, Colombia, and Argentina.
Chile’s government has a long history of supporting the private sector, especially in entrepreneurship. To foster e-commerce growth, the Santiago Chamber of Commerce holds an annual E-commerce Day, to which they recently added an e-commerce startup competition.
While it’s clear that big names continue to dominate the e-commerce scene, events like these are showing smaller businesses the importance of reaching their customers through the Internet. Currently, only 56% of small- to medium-sized companies in Chile have e-commerce capabilities, which makes it hard to compete for consumers’ attention.
However, Portuguese startup Jumpseller (a Startup Chile grad with a Chilean office), is making e-commerce simple for more than 50,000 businesses across the region using an intuitive platform, like Shopify. Brands like Karcher, Chilota, and Ttanti are using this service to reach a wider audience, across Latin America and beyond. While small businesses in Chile are still running to catch up with the e-commerce trend, Jumpseller is making the process a little easier.
Still, Chileans tend to buy internationally. Since its partnership with Correos de Chile, Aliexpress (owned by Alibaba) has taken off as the single largest distributor of Chinese and Asian products in Chile. Chile receives over half of its e-commerce purchases from Asia, so Aliexpress has now taken a firm grasp on the Chilean e-commerce market, directly competing with Amazon and MercadoLibre.
Chile’s e-commerce market has not yet reached its full potential, but its skyrocketing growth and strong international standing put Chile among Latin America’s top e-commerce ecosystems. While big names, including Amazon, Walmart, and Aliexpress, continue to dominate, smaller startups are popping up to compete. As more and more Chileans go online, mainly through their smartphones, the next challenge will be providing faster deliveries across the entire country and making m-commerce more accessible. But with such a strong history of economic growth, Chile’s e-commerce market will undoubtedly rise to the challenge.
To learn more about e-commerce in Chile and Latin America, please see my case study on the Latin American e-commerce market.