Over the past five years, Amazon has slowly expanded into Latin America, testing the waters in Brazil, Argentina, Chile, and Mexico.
Despite the Seattle-based giant’s explosive success in the United States, Amazon has not yet made inroads as quickly in most of Latin America.
Part of the challenge is that Latin America already has its own e-commerce giant: MercadoLibre.
Founded in 1999 by Hernan Kazah and Marcos Galperin in Buenos Aires, Argentina, MercadoLibre is now the e-commerce site of choice in Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Mexico, Ecuador, Guatemala, Honduras, Peru, Panama, Uruguay, and Venezuela.
In Latin America, 47% of online shoppers buy on MercadoLibre while only 17% use Amazon. In Mexico, where Amazon offers similar services to the US, 38% of online shoppers still use MercadoLibre while just 21% use Amazon.
Brazil is already a global player in the e-commerce industry. It is the only Latin American country to crack the top ten retail e-commerce markets in the world. Despite Brazil’s recent economic slowdown, e-commerce grew by 11.5% in 2017 and is predicted to chart 10% growth in 2018. While these statistics show a significant drop from the 28% growth Brazil’s e-commerce market experienced in 2013, it is safe to say that Latin America’s e-commerce powerhouse will continue to dominate the region for the foreseeable future.
Brazil’s size has been a double-edged sword for its e-commerce industry. On the one hand, with approximately 140 million Internet users in a country of 211 million people, Brazil presents an enormous market for e-commerce. On the other hand, much like Argentina, Brazil struggles with complex land shipping logistics and high sales taxes, which slows down the growth of this industry.
Nonetheless, the mood was optimistic at the 6th annual “E-Commerce Brazil” conference in 2017, with retailers viewing Brazil as an opportunity rather than a challenge. Up to 52% of Brazilian shoppers already research products online before purchasing, and that number is growing.(more…)
Despite years of sky-high taxes on imports and challenges with online transactions, Argentina is still an important force in Latin American e-commerce. The birthplace of MercadoLibre, Latin America’s most popular e-commerce site, Argentina is the fastest-growing e-commerce market in the region, registering up to 28% yearly growth. While Argentina still comes in behind Mexico and powerhouse Brazil, its predicted market share in e-commerce is expected to grow from 8.9% to 14.6% of the region’s total sales volume by 2019. So what is driving this meteoric growth?
It’s a combination of Argentina’s young, Internet-savvy consumer base which is now being aided by President Mauricio Macri’s increased openness to cross-border commerce. Argentina is not new to the e-commerce game. Latin American e-commerce giant MercadoLibre was founded in Buenos Aires in 1999 and now operates in 16 countries, with more than 174.2 million active users in Latin America.
Federico Malek, the founder of Argentina’s second largest e-commerce provider, Avenida.com, which raised a US$30M Series C Round in 2015, also founded Wallooz, which was acquired by Groupon in 2010. Soon after leaving Groupon, Malek received funding to start Avenida.com. However, Avenida almost went under in 2016, letting off 250 staff members, until they were acquired by online marketplace Good People, which restructured the company. (more…)
The labels “on demand economy” or “sharing economy” don’t accurately characterize these new business models and work arrangements. One of the new “jobs” rates airbnb accommodations based on cleanliness, if the photos are real etc. Their job is to make sure it doesn’t smell bad. They’re on demand airbnb smellers. While that’s a new job that maybe be needed, it’s not a job that will pay living wages and give people dignity.
We have similar problems in most other “sharing economy” companies. It’s like making people into code, shuttling them from place to place and only paying them when they can work. It’s many a business owners’ dream: pay workers only when they can work, don’t pay benefits and make workers compete against each other. Look at Amazon’s Mechanical Turk, where workers are paid pennies to complete mundane tasks and train the AI. Turkers are already protesting that they’re people, not algorithms. Contrast the sharing economy with Henry Ford’s dream of paying his workers so that they could afford his product. We’ve come a long way.
This competition structures incentives to create a massive race to the bottom. These companies make economic sense for the first people who use them, but don’t make sense for workers in the long term. Just look at Uber driver income in any new city. Uber pays big bonuses when they come into a new market where there are few drivers. Drivers earn $100k+ in places like Philly and LA. But as soon as more drivers get on the platform, wages go to as close to zero as possible as Uber lowers fares and ups its commission.
For on demand services like design, programming, creative writing etc, the developing world will always win these price wars. Just look at Upwork…there’s $2/hour video editors that do a great job. As Seth Godin put it, “we can’t out obedience the competition.” It’s a race to the bottom.
On demand economy websites will help some people go through the transition from stable jobs to our new AI enabled future, but competition that drives compensation, working conditions and best practices to the lowest common denominator will be the norm. Airbnb smellers are a new job, but not something that’s going to give satisfaction or a wage that supports a family in the near future.