Describes how widely e-Commerce is used, the primary sectors that sell through e-commerce, and how much product/service in each sector is sold through e-commerce versus brick-and-mortar retail. Includes what a company needs to know to take advantage of e-commerce in the local market and, reputable, prominent B2B websites.
The government established several programs that have helped foster a growing eCommerce business environment, specifically, the Agency for Development of Electronic Government (AGESIC) in 2005. AGESIC is responsible for developing the government’s electronic commerce strategy.
ECommerce penetration in the retail industry was traditionally low (excluding food, beverages, and items of mass consumption), but is now growing at about 25 percent per year. 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.
These market conditions characterize Uruguay’s eCommerce ecosystem:
- Nearly 90 percent of the population has internet connectivity.
- 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.
- Mobile phones are the primary drivers of user growth and by far the principal method to access the internet.
- Among the younger population, Instagram is asserting itself as the second most used network, and 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.
Current Market Trends
In 2012, the government enacted a decree, allowing consumers to import a maximum of five $200 online shipments per year to be exempt from duties. 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 MercadoEnvios, a service aimed at simplifying and improving the on-line consumer purchasing experience. Uruguayan consumers, especially those in the interior, are beginning to understand and trust that home delivery is more convenient than using pick-up services. A large retailer noted that customers choosing delivery over pick-up grew 30 percent in 2019.
Domestic eCommerce: Business-to-Customer (B2C) In 2019, online retailers MercadoLibre, Woow, and PedidosYa serviced 50 percent of the eCommerce market and four out of ten internet users purchased products or services (+800,000 people over age 18) from one of these three enterprises. In terms of usage, eBay-like MercadoLibre, transportation apps, foreign goods and services, food delivery and discount coupons are the most popular types of eCommerce sites.
Uruguayans purchase over 90 percent of online products and services from China and the United States. Even when including shipping costs, these imported products tend to cost approximately half of similar products available in Uruguay. The government prohibits the importation of some articles: makeup, enamel, creams, shampoos, razors, toiletries, toys, alcoholic drinks, sun and reading glasses, cosmetics, 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 eCommerce, but given the relatively small industrial base in Uruguay, it is seldom used. Uruguay’s government publishes tenders online at: www.comprasestatales.gub.uy.
Uruguay is a regional leader in software development. It has the necessary human capital and tools to support eCommerce 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 (and app) developed by Uruguayan company EDCOM to request online food deliveries from restaurants called PedidosYa. 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.
Popular ECommerce Sites
Among the most popular B2C sites in Uruguay are:
• MercadoLibre, a Latin American equivalent of eBay, which commands 36 percent of eCommerce transactions in Uruguay.
• PedidosYa, an online restaurant food delivery service.
• Woow, a local discount company similar to Groupon.
Once a weakness in Uruguay’s eCommerce ecosystem, customer confidence using personal credit cards has been steadily increasing. Local entrepreneurs have developed popular e-payment apps. Consumers can pay utility bills (and over 1,000 services such as schools, cable TV, homeowners association fees, Health Maintenance Organizations, insurance, etc.) by scanning the barcodes which debits the amounts owed immediately from their bank accounts. The development of a local PayPal™ equivalent, MercadoPago (an online wallet for payment processing), has facilitated eCommerce sales. This platform allows for payment using local credit cards in full or in installments. The Payment Card Industry Data Security Standard certifies that the platform accepts, stores, processes, and securely transmits cardholder data. Pagos Web and CobrosYa are locally-developed online payment solutions for retailers. Paganza is an online and smartphone payment solution for consumers.
Several digital marketing firms exist, however most foreign firms doing business in Uruguay advertise mostly through traditional media. Digital media readership increased by a factor of five in the last eight years. Digital versions of local newspapers (El Pais, 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 yearly three-day eCommerce buying sprees (CyberMonday). The 2019 event registered an increase of 33 percent in buyers, and some stores reported increases of almost 500 percent in sales over the 2018 event. Almost sixty percent of CyberMonday buyers were from Montevideo. Preliminary figures for the 2020 CyberMonday event which took place in May 2020 (amidst the COVID-19 Pandemic) revealed that: 8 percent of the buyers purchased clothing and shoes; 5 percent home appliances; 4 percent furniture and home decoration; 4 percent cellular phones; and 3 percent tools. Seventy four percent of the buyers searched and paid online; 12 percent searched online and paid on the premises; 9 percent searched and paid on the premise; and 4 percent searched on the premise and later paid online (online only promotions).
Facebook remains a popular social media site. However, its influence, especially among youth, is declining while that of Instagram is increasing. The use of Twitter, Snapchat, Pinterest, and LinkedIn have all been decreasing.