Will The Economic Downturn Create New LATAM ‘Amazons’? Asks Report

A recent report from an investment house suggested that one of the consequences of economic downturns is that eCommerce operations are given a springboard. What’s more, that tough conditions might also ignite other ‘Amazons’ out there.

Latin America is experiencing a number of economic problems, but as the report suggests, the ‘Amazon’ effect could be spreading throughout the region. It’s been noted the leading ecommerce retailer Amazon achieved some of its greatest growth during the 2008/2009 financial crash. It was during this period that consumers literally bought into Amazon’s model of operation, led by pricing, selection and logistics.

The argument goes that it was only during the financial crash that consumers began to truly appreciate and adopt the eCommerce model. When times are tough financially, consumers hunt out value and convenience. And eCommerce operations, such as Amazon, or the home-grown Argentinian operation MercadoLibre, or smaller platforms, are the beneficiaries. It’s at this stage of the cycle that eCommerce companies can compete more advantageously than traditional operators.

And once eCommerce platforms gain vital traction and critical mass, a further incentive has been identified by the report. It’s reckoned that once an eCommerce operation has around 10% of the local population as its active user base, the company can truly begin to monetize them and begin to sell-in such services as restaurant take-outs, car rentals and cross-border trade.

So, in many ways, the economic hardship being felt throughout some parts of Latin America, might prove a silver lining for some online companies.

Reference: Morningstar

Photo: Jozef Krajčovič