Describes what a company needs to know to take advantage of e-commerce in the local market and covers prominent B2B websites.
The government established several programs that have helped foster a growing e-commerce business environment, specifically, the Agency for Development of Electronic Government (AGESIC) in 2005. AGESIC is responsible for developing the government’s electronic commerce strategy, and promotes inclusion and technology adoption, knowledge management and communication. AGESIC develops five-year plans to guide the country’s digital transformation strategy. These plans include five priority areas and twelve main objectives, and each one is assigned to a government agency that is responsible for implementing them.
Uruguay is considered one of the most digitized countries in the world and increased use of technology in the market drives innovation. Traditionally, e-commerce penetration in the retail industry has been low (excluding food and beverages) but is now growing nearly 25 percent per year. The internet is altering Uruguayans’ consumption patterns, from the way people access information about product features to the way consumers interact with banks.
Legal & Regulatory
Uruguay is a signatory to the Declaration for the Future of the Internet. While no legal obstacles exist to foreign firms conducting e-commerce in Uruguay, the country’s express shipments law limits the amount of goods that can be purchased online tax free. Uruguayans are limited to three tax-exempt purchases of $200 or less per year. Purchases above this amount are subject to all applicable taxes and tariffs.
Electronic banking usage is segmented by age, level of education, income, location of resident, and to a lesser extent, gender. Local advertisers say the internet, and especially social networks are effective channels to disseminate information about companies, brands, and institutions to promote products and services, but not necessarily to close business transactions. Two fundamental aspects of the evolution of e-commerce in Uruguay are logistics and security because without adequate control of these two aspects it would not be able to perform correctly.
The pandemic transformed e-commerce into a necessity and has accelerated its growth in Uruguay.
Uruguay’s e-commerce ecosystem includes the following characteristics:
- Nearly 90 percent of the population has internet connectivity. The Government of Uruguay has plans to expand internet connectivity in rural areas by installing optical fiber in small towns, and ensuring the entire country has 4G cellular coverage.
- The mobile phone application WhatsApp and, to a lesser extent, social media networks (i.e., Facebook and Instagram) are the primary gateways for new users.
- Smartphones are the primary drivers of user growth and are the principal method to access the internet, followed by tablets and laptops.
- Among the younger population, Instagram has become the second most used social network while the use of Facebook is decreasing.
- Uruguay’s Plan Ceibal is the country’s One Laptop Per Child plan. All public-school children receive a wireless-enabled laptop increasing the population’s technological literacy.
- Plan Ibirapitá is designed for elderly adults to provide them inclusion into the digital economy by providing them with tablets and training to access the internet.
Current Market Trends
In 2012, the government enacted a decree allowing consumers to import a maximum of five, $200 duty exempt online shipments per year. Intense, ongoing pressure from domestic “brick and mortar” retailers prompted the government to restrict the number of purchases from five to three per year. Despite these restrictions, the total number of shipments to Uruguay is constantly increasing. In April 2018, Uruguay’s largest online retailer introduced Mercado Envios, a service aimed to simplify and improve the online consumer purchasing experience. Uruguayan consumers, especially in the interior, are beginning to understand and trust that home delivery is more convenient than using pick-up services.
The most used e-commerce applications are: food delivery; on-demand transportation; payment services; audiovisual services (generally by subscription); tickets purchases; restaurants reservations; flight reservations; and hotels bookings. Online retailers MercadoLibre, Woow, and PedidosYa service 50 percent of Uruguay’s e-commerce market, and four out of ten internet users purchased products or services (+800,000 people over age 18) from one of these three enterprises.
Uruguayans purchase over 90 percent of online products and services from China and the United States. Even when shipping costs are included, these imported products tend to cost approximately half of similar products in Uruguay. The government prohibits the importation of some articles: enamel, creams, shampoos, razors, toiletries, toys, alcoholic beverages, fragrances, tobacco, cigarettes, lubricants and greases, cell phones, and seeds, as well as goods requiring licensing. Amazon, Ali Express, and eBay are the three major platforms used by Uruguayan consumers when purchasing from abroad.
There are no restrictions for business-to-business e-commerce, but given the relatively small industrial base in Uruguay, it is seldom used. Uruguay’s government publishes tenders online.
Uruguay is a regional leader in software development. It has the necessary human capital and tools to support e-commerce activities in various industry sectors. A leading example of a software application that originated in Uruguay and quickly spread throughout Latin America is a platform called PedidosYa which was developed by Uruguayan company EDCOM to request online food deliveries from restaurants. The government provides over 1,300 government-related e-services to citizens (e.g., requesting appointments for the renewal of a driver’s license, copies of birth certificates, appointments for passports) via a centralized government portal.
Among the most popular B2C sites in Uruguay are:
•MercadoLibre, a Latin American equivalent of eBay, which commands 36 percent of e-commerce transactions in Uruguay.
• PedidosYa, an online restaurant food delivery service.
• Woow, a local discount company similar to Groupon.
While many Uruguayans are accustomed to shopping online, some still prefer to purchase in person, while others simply lack interest or digital skills. Currently, confidence in using personal credit cards for e-commerce has been steadily increasing and is no longer a weakness in Uruguay’s e-commerce ecosystem. In May 2020 there were more online payments than on-site, marking a historical event in Uruguay as it was previously estimated this would not occur until 2023.
Local entrepreneurs have developed popular e-payment apps where consumers can pay utility bills and other services such as schools, cable TV, homeowners association fees, insurance and others by scanning barcodes which debits the amount owed immediately from the consumer’s bank accounts. The development of a local online wallet and payment processing application, MercadoPago, is facilitating e-commerce sales. This platform allows local credit card payments in installments or for the full payment. Other locally developed payment applications are Pagos Web, CobrosYa and Paganza.
Digital media readership increased by a factor of five in the last eight years. Digital versions of local newspapers (El País, and El Observador) and Channel 10 are the most viewed.
A recent survey revealed that 45 percent of companies in Uruguay had no internet presence and that there are more companies with social media presence than websites.
Major Buying Holidays
Major shopping centers organize three or four “buying holidays” throughout the year in which customers are refunded the 22 percent value-added tax (VAT) for in-store purchases only. Christmas, Mother’s Day (second Sunday of May) and Epiphany (January 6, Día de Reyes) are significant buying occasions. Uruguay’s Digital Economy Chamber (CEDU) organizes an annual three-day e-commerce buying event called Cyber Monday.
Facebook remains a popular social media site, however, its influence is declining among youth. With the younger generation, use of Instagram and other social media such as TikTok have been increasing while use of Twitter, Snapchat, Pinterest, and LinkedIn have all been declining. Many of the rest of Uruguay’s population continue to use these platforms.