The measures to close commercial activity caused by the arrival of the COVID-19 pandemic have hit all sectors of the economy hard, as pointed out by the World Bank in its June 2020 report, where a 5.2% impact was predicted. This has forced companies to look for alternatives that allow them to survive in this “new reality,” which is here to stay. This has created the conditions for a continued increase in the use of eCommerce, especially in the retail sector. Aaron Rodriguez, an expert in the area of eCommerce in LATAM, provides details on how the arrival of COVID-19 in the region has changed and impacted their eCommerce in recent times.
This growth had been incremental, as indicated by Statista (German market research and opinion portal) and eMarkerter (market research and digital marketing company), where retail eCommerce sales range between 12.4% and 12.8%, in 2019 worldwide. As for Panama, according to ICEX in its report eCountry: eCommerce in Panama 2020 indicated that “the average annual growth of online commerce in the period 2014-2019 has been 12% and online sales are expected to reach $270 million in 2024, which would be an increase of 41.1% over sales recorded in 2019,” which is similar to the global trend.
After a couple of months of confinement due to the pandemic, eMarkerter presented its report on the eCommerce forecast for retailers 2020. In Latin America, Mercado Libre pointed out that it had increased its orders by 52% in Argentina, 130% in Mexico, 119% in Colombia and up to 125% in Chile, compared to what was perceived in the same period of 2019. Specifically, in Mexico, its CEO, David Geisen, indicated that in ten weeks of pandemic, the number of new buyers increased by one million, and searches on the platform increased by 37% back in that time.
Similarly, in a study conducted by Visa Consulting & Analytics (VCA), Visa’s strategic consulting area for clients, showed that in LatAm and the Caribbean the number of transactions made in May 2020 registered an increase of 6 percentage points compared to January and February of the same year, especially in General merchandise, medical expenses, and supermarkets. It also indicated an increase of 8 percentage points in the number of debit transactions made through eCommerce in the region.
“Likewise, the annual percentage changed in the number of transactions made online compared to transactions made in person was 5.8 times higher in May 2020 than the average for January and February 2020, showing an acceleration in the use of eCommerce by cardholders in the region during the analyzed period of the COVID-19 pandemic,” Rodriguez indicates.
Panama is in its first steps in terms of eCommerce, but its growth is very promising. Especially given the recent declarations by representatives of the Ministry of Health regarding the authorization of retail commerce over the Internet.
These measures represent great challenges for small and medium enterprises (SMEs) in certain countries such as Panama since most of these companies do not have the necessary tools. Rodriguez says that it is “necessary to take into account some minimum factors for the establishment of eCommerce, such as, establish a commercial portal or a digital channel for sales, establish an electronic payment mechanism and of course define the logistics system for delivery of products or goods to customers.”
It has always been crucial to understand how Panamanian companies, and especially SMEs, can participate in the growth of eCommerce. A crucial element is the means of payment; some of those available in Panama are, Pay it easy, 2checkOut, PayU Latam, Credicorp Bank. The latter also offers a platform to give full support to eCommerce. In addition, Bac Credomatic click purchase is available, and of course, virtual applications and wallets such as Yappy, Nequi, and Mony. “We do not know what the future holds, nor how long this pandemic could last, so we must find agile and innovative solutions that allow the economy to always keep moving,” Rodriguez says.