Describes what a company needs to know to take advantage of e-commerce in the local market and covers prominent B2B websites.
B2C eCommerce sales reached $6 billion in 2019. Estimates for 2020 were initially set to a 15-25 percent growth, however, since the start of the COVID-19 pandemic the market has undergone dramatic changes across sectors leading to higher than expected eCommerce sales of an estimated $9 billion. Historically, eCommerce has had a positive growth trend over the last decade due to Chile’s rapid and continuing technological infrastructure development.
Chile’s digital economy accounted for roughly 3 percent of GDP in 2019, however, this figure is expected to increase in 2020 due to the dramatic shift towards ecommerce. For example, in March 2020 online sales had increased almost by 300Mercado Libre doubled its market capitalization and recently inaugurated a Distribution Center which demonstrated the huge demand that eCommerce is experiencing in Chile. Online retailer
Assessment of Current Buyer Behavior in Market
Chile has a tremendous mobile penetration, with 95.7 daily access over 100 inhabitants. There are over 22 million internet subscribers that access the internet primarily through smartphones. According to a recent study by Fundación Pais Digital, Transbank, and the Santiago Chamber of Commerce, online shopping in Latin America had an annual growth rate of over 30 percent, generating new businesses, higher productivity, and opportunities. To ease access to medicines during the pandemic, the Chilean Ministry of Health permitted the online sale of medicine which has led to an explosive demand for prescriptions purchased online.
Food and purchase delivery services, such as Rappi, Uber Eats and PedidosYa have experience an unexpected increase in demand due to COVID-19 sanitary restrictions. The use of these platforms has increased up to 250 percentduring the pandemic. This eCommerce growthd has also changed the way restaurants and retailers operate, and now Dark Kitchens and Dark Stores are popping up with the purpose of serving online channels with no public facing personnel.
According to a study by Bridge Research, COVID-19 has also influenced the purchase decisions of consumers with price and delivery accounting for 48 percent when makiing purchase decisions.
Local eCommerce Sales Rules & Regulations
Digital Agenda 2020 is a Chilean Government program to foster the country’s digital transformation by taking advantage of advanced technologies in all aspects of the social and economic activities of the country. Some steps include public-private alliances, investments in quality and robust infrastructure in all regions of Chile, and widespread IT used as a means to reduce inequalities. Currently, there are free internet zones in fifteen regions of the country, providing accesibility and connectivity for local low income residents. Users can connect for thirty minutes with the option to re-connect.
Local eCommerce Business Service Provider Ecosystem
CyberDay is an annual three-day event in Chile to promote online shopping. The results in recent years have far exceeded business expectations, transforming the event into the premier online sales event in the country, with over 260 vendors of products and services. CyberDay 2019 generated $271 million in sales from over two million transactions, a 16 percent increase compared to 2018. CyberDay 2020, which occured on August 31, doubled the number of transaction in 2019 to 4 million with total sales of $368 million.
eCommerce is seen as an important tool for local exporters to enter international markets with attractive bi-lingual websites and strategic alliances with logistics companies. For international online purchases, local customers use Alibaba for cheaper prices, although delivery time may be long and the goods may not turn out to be what expected, particularly during the COVID-19 pandemic. Amazon continues to be an excellent option for local customers and now includes products sourced from Chilean companies; however, there are brands that do not ship internationally. Still, local consumers are willing to take advantage of international online purchases looking for wider variety of products and prices.
eCommerce Intellectual Property Rights
The U.S.-Chile FTA, in place since 2004, addresses eCommerce in Chapter 15, which highlights the importance of eCommerce between the United States and Chile and the need to work together to overcome obstacles. The chapter notes the importance of sharing information related to reguations on data privacy, cyber security, and intellectual property rights.
The National Enterprise for Electronic Certification was created in 2002 by the Santiago Chamber of Commerce with the support of CORFO, the Chilean Economic Development Agency (housed within the Ministry of Economy). EcertChile, incorporates on a regular basis products and services to provide highter levels of security and confidence to safeguard the intergrity of eCommerce transactions.
Chilean domain names (“.cl”) are assigned and registered by Nic-Chile. Registration fees vary depending on the length of registration. The fee for the shortest period, one year, is approximately $12 in 2020. Foreign companies can register a domain name in Chile, but must have a local presence to do so. The Internet Assigned Numbers Authority (IANA) regulates the recording of domain names. When a conflict arises over a domain name, arbitration is required. Registration at the trademark department, INAPI, is the main criteria for determining who has a claim to a given domain name.
Popular eCommerce Sites
Retail and supermarket stores like Falabella, Ripley, Paris, Jumbo, Lider, along with the market places such as Linio, Mercadolibre and Yapo. For food and purchases deliveries Cornershop, Rappi, Uber Eats and PedidosYa are the most used platforms.
Online payments on sites in Chile are made in the local currency (Chilean peso, CLP) via local bank transfers and credit cards from local banks. Popular chilean platforms for payments are MACH, Fpay, and Mercadopago. For online purchases made in Chile from sites outside Chile, credit cards can also be used but the transactions are generally processed in U.S. dollars.
Credit cards issued outside Chile are generally not accepted on Chilean eCommerce sites.
As of December 2019, there were 22.4 million internet mobile subscriptions in Chile with over 80 percent of these connections are done using smartphones. Mobile companies such as Entel, Claro Chile, Movistar, and WOM plan to continue their investments to improve network connectivity. The Chilean Government announced in August 2020 the start of the 5G auction process.
For more information, please contact the U.S. Commercial Service in Santiago, Commercial Specialist Juan Catril firstname.lastname@example.org