eCommerce in Colombia has improved substantially within the last year. There were 32.8 million internet connections registered in the last quarter of 2019. Factors that are driving growth in eCommerce in Colombia, particularly in the B2C segment, include greater accessibility to web services through smart phones, and an increase in online services, especially banking and online payment services. B2B eCommerce in Colombia is becoming more common but is constrained by poor infrastructure, especially highways that connect to seaports, which complicates supply chains.

Table 1: Colombia’s eCommerce as a Percentage of Annual GDP

Source: Colombian Chamber of Electronic Commerce (CCCE)

The United Nations Conference on Trade and Development (UNCTAD) B2C eCommerce Index 2019, which ranks levels of eCommerce based on internet use, secure servers, and credit card penetration, among other factors, ranks Colombia 66th out of 152 countries, behind countries like Chile. Colombia ranks high in Latin America for internet connectivity; however, its online retail profile remains less established. Business Monitor International (BMI) believes the country will sustain rapid growth in the e-commerce sector, outpacing regional rivals such as Chile or Peru.

Due to the COVID-19 pandemic, several companies are turning to the digital world to continue generating income through eCommerce and people are increasing online purchases. Colombians’ preferred method of payment remains to be Cash on Delivery (COD) followed by bank account debit and credit card, according to the CCCE, however, the use of digital payment systems such as PayU is also common. Social media is widely used to promote eCommerce websites in Colombia and is a powerful tool of communication that some companies use to reach out to customers and position brands. Facebook, Instagram, YouTube, and Twitter are the most popular. With 32 million users in Colombia, Facebook is the most popular social network. Instagram has been among the fastest growing social networks with 12 million users, LinkedIn has 7.8 million, Snapchat with 4.5 million, Twitter has 3.2 million in Colombia.

Digital marketing in Colombia has exploded and changed the traditional marketing mix. Social networks such as Facebook Ads and tools like Google AdWords are used in Colombia to launch simultaneous campaigns at affordable cost, reaching the people who meet the audience profile to be targeted. Companies in Colombia can use online retailing to sell products of third-party merchants on sites such as www.linio.com. This channel allows them to reach a wider audience and create a stronger presence. The most prominent Colombian online commerce platforms include www.mercadolibre.com.co, www.olx.com.co, and www.dafiti.com.co. Most Colombians are currently shopping directly from websites. However, this trend is changing because the younger generation is using social media like Instagram to buy online.

The most common challenges eCommerce companies face when entering the Colombian market are related to local regulations, local payment methods (credit card, bank account debit, cash on delivery, and digital payment systems such as PayU) and poor internal transport networks that are underdeveloped and inadequate to meet demand, causing significant costs and delays to supply chains. According to Allpago, tighter rules have been introduced to regulate the industry. Institutions such as Incocrédito are highly involved in managing and monitoring merchant information to minimize fraud. The same is true for the Finance Superintendence, which recently introduced a Financial Inclusion Bill. As an example, Decreto 587 from October 2016 lays out specific rules about chargebacks and the protection of the online customer.

The main statutory provisions in Colombia for eCommerce are found in three laws: Law No. 527 of 1999 (the “eCommerce Law”), Decree No. 333 of 2014, and Decree No. 2364 of 2012. The eCommerce Law regulates information that is generated, transmitted, received, or stored through electronic, optical, or other similar means, such as electronic data interchange (EDI), the Internet, and email. The law also regulates other issues in connection with eCommerce. In line with the precedent set by the original eCommerce Law, Articles 15 and 16 of Law No. 1676 from 2013 establish that documents or agreements that constitute guarantees upon which mobile assets can be contained in data messages without losing validity or enforceability to the extent that there is evidence of mutual consent for the establishment of the guarantee on the assets. Similarly, Decree No. 805 of 2013 allows for merchants to keep their business and corporate books in data messages. Decree No. 2364 of 2012 regulates all types of electronic signatures, whereas Decree No. 333 of 2014 specifically regulates digital signatures and certifying entities. The most significant contribution of these legal norms is to confirm the validity of digitally signed electronic documents, as long as they are verified by a certifying agency or a reliable and appropriate method to identify the signatory has been used.

On April 18th, 2016, the new electronic invoicing model adopted by Colombia officially went into effect. This new model is defined by Decree 2242 of 2015, which seeks to expand the use of electronic invoices in Colombia, bringing with it the benefits expected by DIAN (Colombia’s National Tax and Customs Directorate) both for those who invoice electronically and for those who acquire goods and receive electronic documents, facilitating the conditions of issuance and interoperability among all participants. Intellectual property right (IPR) laws in Colombia do not provide adequate protection at international standards and need to be updated. The IPR regulatory regime for eCommerce in Colombia falls under the Copyright Law 23 of 1982; Decision 351 of 1991; Cartagena Agreement, decree 162 of 1996; and Trademark Rules decision 486 of the Cartagena Agreement.