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5 Things to Know About Expanding into Latin America

A region made up of over 30 different countries, LATAM requires a special touch when it comes to selling, distributing, and transporting products.

June 9, 2021
5 Things to Know About Expanding into Latin America
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This post is also available in: Spanish Portuguese (Brazil)

A region made up of over 30 countries, each of which has its own unique culture, customs, dialects, federal regulations, currency, tariffs, and customer preferences, Latin America or “LATAM” presents new opportunities for shippers to expand their cross-border operations and serve a broader audience of global buyers.

An enticing proposition for companies that have experienced success in their own markets, and that want to leverage existing web and distribution infrastructures, cross-border trade in LATAM puts companies in touch with completely new customer bases located in Latin America.

When expanding into the region, companies also need to understand the difficulty and complexity of entering into each individual country (versus using a broad brush across LATAM and hoping for the best possible results). Here are five things to keep in mind when developing your LATAM-focused sales, distribution, and logistics approach:

  • E-commerce is hot. With more consumers shopping from home, e-commerce companies are particularly well positioned for success in LATAM. “COVID spiked e-commerce demand during the lockdown periods and initiated millions of Latin Americans into digital commerce,” Americas Market Intelligence (AMI) points out. Even product categories with relatively low e-commerce sales—including fresh foods, groceries, and alcoholic drinks—will continue moving toward online sales in the post-COVID reality, AMI states. “The shift towards online sales in these categories will lead to a rise in micro-fulfillment centers, curb-side pickup, and automated delivery services as supermarkets look for ways to cut costs associated with selling more online,” it says. “This means growing revenues for logistics players that offer value-added logistics solutions tailored to e-commerce customers in need of outside support as they struggle to keep up with demand.”
  • The mobile-first approach works well in LATAM. According to Biz Latin Hub’s Craig Dempsey, mobile purchases are a primary driver of digital growth in LATAM, whose smartphone market is one of the fastest growing in the world. “Companies keen to reach new audiences across borders,” he adds, “should make sure their websites, advertisements, and payment systems are set up for mobile access and processing.” Skip this step and you may wind up missing out on opportunities to engage with and sell to customers who would rather shop from their cell phones than any other device (or, in person).
  • Know the nuances across different markets. In LATAM, many locales share languages and cultural similarities. Once these aspects are identified, Dempsey says they can be applied in various markets. “Additionally,” he adds, “highlighting novel differences between cultures while appealing to shared interests and tastes can help uniquely position a company’s offering in a new market.”
  • Find reliable local partners. “Despite having cultural overlap, laws and regulations in each Latin American country are distinct and particular to the local context,” Dempsey points out. Understanding these differences is essential for success, but it also requires significant investment to research and ensure compliance. “By connecting with local partners who are already knowledgeable about legal requirements and market advantages,” he adds, “companies can save time and money while gaining ground in local markets more quickly and thoroughly.”
  • Don’t leave out the logistics. With all of these new customers and the continuing digitization of payments in Latin America, AMI says demand for logistics services in LATAM will increase in 2021. With AMI forecasting 35% growth in LATAM e-commerce for the year ahead, it says the companies driving this growth will increasing rely on logistics providers to manage their inventory and shipping needs. For best success, companies should partner with an experienced, reputable logistics provider that can manage warehousing, distribution, value-added services, logistics, and transportation.

Calling Latin America a region of “opportunity, diversity, and richness,” Dempsey says LATAM boasts several emerging economies that demonstrate great economic potential. As with any international expansion, these markets also present challenges and obstacles that must be addressed prior to jumping in. By working with local operators and a reputable logistics partner, enterprising companies may leverage this opportunity in one or more of the 30 diverse, unique countries that converge to form the LATAM region.

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