Historically, super sale events like Christmas, Black Friday and Cyber Monday have sent worldwide retail activity through the roof. However, the course of the pandemic has altered the trajectory of how shoppers are behaving, with many opting to utilise more digital means over physical visits to a store.
As this year’s figures from the US represented a slump in forecast sales around these periods, Marius Costin, Head of EMEA High-Velocity Merchants and US Sales at PayU offers his insight into the changing expectations around ecommerce, and why merchants and developers should be looking further afield if they want to get ahead:
Across Latin America, the holiday season has remained one of the biggest retail periods for emerging ecommerce leaders.
The pandemic already sparked a transformation in the Latin American retail space, with a noticeable shift in consumer behaviour and a business strategy reset for merchants, as they had to respond and adapt to the rapidly changing environment. Such developments have determined a change in the retail model to such an extent that there is no going back. For example, PayU data found that Latin America is on track to become the new powerhouse for ecommerce globally.
However, figures show that ecommerce growth in the US is slowing, reaching only $8.9billion during this year’s Black Friday, as compared to $9billion last year. While only a small difference, it does highlight the immense opportunity for emerging ecommerce leaders to expand and diversify their geographical reach by tapping into unsaturated markets like Latin America. Here are some of my observations from the recent holiday season, which has key learnings for both merchants and fintechs looking to expand into the region.
Government support – key to incentivising consumer spending
Amid lockdowns and social distancing measures, consumer behaviour and buying habits have adapted globally, and Covid-19 has encouraged markets to accept and embrace ecommerce more rapidly.
This holiday season and more specifically Black Friday, we saw this trend maintained, with the total value of online transactions made through the PayU platform reaching 39,278,999. Additionally, apart from big shopping days like Cyber Monday, Black Friday, Singles Day, El Buen Fin and Cyberlunes, we are seeing other initiatives and programmes aiming to support ecommerce growth in high-growth markets. For example, Colombia has introduced three VAT-free days encouraging wider adoption of ecommerce within the country, and in total, PayU processed over $184million worth of transactions within the country.
Given the success of these dates, it won’t be long until we see more governments introducing similar initiatives throughout the year to maintain retail momentum beyond the holiday season. Ecommerce leaders can partner with payments providers to stay aware of these initiatives and to ensure they are set up in the right markets to capitalise on key events, market potential and shifting consumer behaviours.
Innovation in the retail space amid challenges
Over the course of this holiday season, the industry saw many merchants face challenges due to global supply chain issues. To combat this, merchants began to leverage payments and ecommerce platforms that could be integrated into their internal supply systems to avoid disappointing customers. Through this integration, staff were automatically updated on orders in real-time via ecommerce platforms, which has only been made possible through new and improved emerging technologies such as Artificial Intelligence and Machine Learning automation.
Integrating these technologies into business processes has been proven to improve efficiencies for ecommerce organisations, especially those with the wellbeing of their staff front of mind. New technology will be increasingly important for organisations as consumers dictate the gradual move away from in-store experiences to online. Technological innovation has thus been key to helping merchants mitigate against supply chain disruption during the most recent holiday season, and the demonstrable value of this new technology will undoubtedly foster further innovation this year.
Mobile commerce boom
Last year, more merchants turned to mobile journeys to serve the 18 to 24-year-olds who are increasingly using their smartphones to transact online, creating even greater retail opportunities for global merchants. In fact, the number of Gen Z P2P mobile payment users globally will more than double from 20.5 million in 2021 to 41.1 million by 2025. It’s also important to highlight that while this adoption can be seen generationally, it’s also very prominent regionally. For example, Mexico is now second only to South Korea for using mobile devices to buy online, with 15 per cent of all ecommerce sales taking place on mobiles.
As we continue to see sales holidays feature as key dates in retailers’ calendars, we will start to see more creative applications of mobile-friendly retail journeys this year and beyond.
Additionally, we anticipate that by 2025, there will be 424 million mobile internet users across the region, which will grow the digital commerce sector even further, as m-commerce takes off in popularity.
Localised checkout experiences
While mobile payments are gaining momentum, we’re continuing to see growing adoption of alternative payment methods too. In Columbia for example, during Black Friday nearly 1 in 2 transactions through our platform was carried out via PSE, a local, popular alternative payment method.
With greater diversity of payment methods available, merchants must utilise payments data to gain greater insights into payments preferences for customers across markets. We’ve been witnessing a continuous increase in merchants turning to payment partners to help them not only with these processes, but also with guidance and expert insights into local and regional regulations, industry trends and consumer preferences. I’d extend this recommendation to any US merchants that are expanding into Latin America, looking to capitalise on the growing markets, skyrocket sales and attract new customers through popular global and local payment methods.
Unsurprisingly, the holiday season also showed us that customers prioritised purchases from merchants that could offer streamlined checkout journeys. The speed, efficiency and diversity of alternative payment methods that are popular and recognisable in each local market is something that merchants and fintechs must take note of as they continue to expand into new markets in 2022.
Innovation within the payments landscape has been key to much of the success of the holiday season last year, making ecommerce more accessible to previously overlooked markets. The holiday season always gives us a good indication of the payment trends to pay attention to in the year to come. Merchants would do well to take note of this as they make plans for their customer interactions and journeys in 2022 and consider expanding into unsaturated markets across Latin America.