Describes what a company needs to know to take advantage of e-commerce in the local market and covers prominent B2B websites.
E-commerce is growing rapidly in the Guatemalan market. Guatemala has begun to use e-commerce among its chambers and associations, large banks, supermarkets, and the Exporters Guild among others. Some Government agencies, for example SAT (equivalent to IRS), the Government procurement office, and the Trade Mark Registry have recently launched new web pages offering interactive services.
Culturally, Guatemalans prefer face to face engagements, but new generations are embracing technology and moving away from the traditional retail model. Business people, associations, and the Government acknowledge that e-commerce is a very important electronic tool in doing business.
Guatemala is currently in the early stages of e-commerce development, and most purchases are conducted internationally. Many significant Guatemalan businesses have postal boxes in Miami. According to the Guatemalan Association of E-Commerce, in 2019 Guatemalan internet purchases reached $900 million from foriegn and local suppliers. Arrangements for the shipping of merchandise to Guatemala are made by ordering companies, which lower transportation fees.
However, e-commerce in Guatemala has grown in spite of considerable challenges such as the large amount of unbanked citizens, relatively low percentage of credit card holders, and difficulties with both cross-border transactions and delivery of products.
There were 11.54 million internet users in Guatemala as of January 2020. The number of internet users increased by 217,000 (+1.9%) between 2019 and 2020. Internet penetration in Guatemala stood at 65% in January 2020.
Social media users
There were 7.9 million social media users in Guatemala in January 2020. The number of social media users in Guatemala increased by 534,000 (+7.2%) between April 2019 and January 2020. Social media penetration in Guatemala stood at 45% in January 2020.
There were 21.12 million mobile connections in Guatemala in January 2020. The number of mobile connections in Guatemala increased by 369 thousand (+1.8%) between January 2019 and January 2020. The number of mobile connections in Guatemala in January 2020 was equivalent to 119% of the total population. Meaning there are more phone lines than people.
Facebook is the most used social media tool for promotion and sales. Large companies have become pioneers within the industry, and it will take some time for smaller firms to adapt. The total number of Facebook users for Guatemala in January 2020 is 7.9 million. 92% of these users are accessing the platform via a mobile device. Other popular social platforms used are: FB Messenger, WhatsApp, YouTube, Instagram, Twitter, Skype, Pinterest, and LinkedIn.
Guatemala offers new payment methods that facilitate the development of e-commerce, not only in Guatemala but throughout the Central American Region. The most common forms of payment are personal debit and credit cards (VISA, MasterCard and American Express), PayPal Latin America, Apple Pay and wire transfers. E-commerce has allowed many smalland medium-sized entrepreneurs to trade their products locally, and internationally.
The Covid-19 Effect
Due to the confinement in home mandates that begun in March 2020 due to the Covid-19 pandemic crisis consumers disappeared from physical stores and have migrated to a digital platform to buy products.
The Guatemalan Chamber of Commerce reports that e-commerce activity grew 27% since March 2020. Current sectors favored in online shopping are cleaning and personal hygiene products, followed by cosmetics and perfumes, car and motorcycle accessories, food and beverages, and construction materials and tools.
According to the Guatemalan Electronic Commerce Union (Grecom), before the Covid-19 pandemic, Guatemala reported an annual average growth of 20%. During the mandated confinement Grecom estimates that between 1,500 and 2,000 companies joined e-commerce platforms.
Many experts state that in this new post-Covid commercial reality the interaction between consumers and brands is changing. The move to online shopping could be perpetuated in the medium and long term, as new digital habits are expected to be maintained, even after the crisis is over.
Guatemala has also begun participating in the “eTrade for All” initiative led by UNCTAD. UNCTAD focuses on the development of e-commerce in developing countries by:
1. Strengthening of the regulatory framework
2. Protecting the consumer
3. Protecting data
4. Strengthening capacities to innovate
For more information:
Domestic e-commerce (B2C)
There is a trend of purchasing products from the United States, considering the ease of conducting business, and the well-established delivery companies found in Guatemala. Guatemalan consumers also buy from the European and Mexican eMarkets.
Some of the most popular products Guatemala purchase overseas are electronics, clothing, car spare parts, household items, gifts, decorations, books, online courses.
According to experts in e-commerce, the greatest challenges of buying from the U.S are:
1. Some U.S. vendors only accept credit cards with a U.S. billing address
2. Guatemalan Customs Authorities will open and verify all packages from the U.S. This practice is subject to the Customs agent’s discretionary rulings, and therefore some products may end up paying more import duties than they should.
Despite the attractiveness and growth of e-commerce, Guatemalan consumers and small business, can still be reluctant to purchase goods and services online due to lack of trust in the system.
Another factor that concerns Guatemalans is the lack of information and certainty of privacy protections, personal identification information, and insecurity of online transactions.
As a result, some courier and delivery companies offer to pay customer’s purchases with their company’s credit card for a small fee (1-3% of the total purchase).
Larger companies have IT offices within their organizations to manage commercial services on their webpages. Others subcontract from local firms that specialize in developing and managing e-commerce sites. These companies will provide software to the hiring firm such as site-building tools and templates, database features and methodologies for best practices, plus transaction software.
Product supply and procurement exchanges represent another aspect of online commerce. These sites serve a range of industries and often focus on a niche market. A company purchasing agent can purchase supplies from vendors, request proposals and even make bids for purchases at specific prices. These B2B websites enable the exchange of product supplies and procurement.
Intellectual Property Rights
Guatemala is a signee of the WTO agreement on Intellectual Property Rights (IPR), and is under Guatemalan legislation as a result of the ratification of the Marrakesh Agreement. However, Guatemala tends to ignore IPR when it comes to e-commerce.
Guatemala has recently taken legal and administrative steps to facilitate the protection of the rights of intellectual property, enacting new laws related to copyright and industrial property. The Guatemalan Minister of Economy is in talks with WTO to further address these issues.