Summary

The Latin American e-commerce logistics market is expected to register a CAGR of more than 13% during the forecast period (2021 - 2026).

COVID-19 encouraged growth in the digital world in 2020, with e-commerce being one of the biggest beneficiaries. The exponential growth of internet shopping throughout Latin America, with some countries reporting significant increases in online purchases, is one of the primary drivers of the market. As a result, the Latin American e-commerce market is the world leader in e-commerce growth and is expected to grow further by 19% over the next five years, surpassing the global average of 11% (as reported in 2020), providing immense scope for the growth of e-commerce logistics market.

Last-mile delivery solutions in the region have become more attractive from an investment perspective due to COVID-19. For example, as reported in April 2020, 99 Minutos, a Mexico City-based company that provides last-mile delivery services and backed by Engie’s corporate venture arm Engie Factory, was expected to raise USD 12 million to accelerate its regional expansion.

Key Market Trends

E-commerce boom Spearheading Logistics Demand

With a population of 386 million, there is an abundance of potential opportunities for e-commerce success in the region. While many would not expect growth in e-commerce during economic unrest, this surge mostly came from the rise in internet and smartphone usage, which provided access to goods from abroad that were previously out of reach.

E-commerce’s rapid growth in Latin America faces a stubborn bottleneck offline: same-day deliveries. Reaching a customer’s doorstep faster has drawn investors toward warehouses and fulfillment centers in dense city centers. However, moving goods in and out of mega metropolises like Mexico City or Sao Paulo is sluggish at best. Van and small truck drivers drive on poor roads and terrible traffic jams to make deliveries from large warehouses in the sprawling suburbs, often arriving late. While e-commerce companies have shaved delivery times from 7-10 days to 2-3 over the past few years, the target is to reach same-day deliveries.

Digitization and Inclination toward Online Transactions

Among the logistical nightmare of a cash-based society for e-commerce providers targeting the region, merchants have found ways to manage this reality. About 36% of online consumers prefer to utilize PayPal, and 35% use Cash on Delivery, as reported in 2019. Moreover, declining costs for internet services and data, along with the growing use of credit cards and digital payment systems, have eroded hurdles for adopting online shopping. As a result, the sector now captures a 4% to 5% share of total retail sales in Latin America, as reported in March 2020.

Brazil and Mexico hold enormous potential for e-commerce in Latin America. There are currently 66.4 million e-commerce users in Brazil, with an additional 28.2 million expected to be shopping online by the end of 2021. By comparison, there are 95.31 million internet users in Mexico, accounting for just under half of the population, leaving room for substantial growth.

Competitive Landscape

The Latin American e-commerce logistics market is fairly fragmented in nature, with the presence of a mixture of domestic and international companies in the market, including DHL, DB Schenker, and Kerry Logistics.

Growing e-commerce activities have led to a high frequency of large-scale deliveries across provinces, giving birth to logistics services specific for e-commerce activities in the region. Since the e-commerce business environment has become more dynamic and competitive, companies tend to demand better logistics services that are flexible and cost-effective.​​ Value-added services, such as door delivery, real-time tracking, and others, have given a competitive advantage to logistics players to build a long-lasting relationship with their customers​.

Additional Benefits:

The market estimate (ME) sheet in Excel format
3 months of analyst support

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