The region consists of independent nations with diverse and complex geography

The region consists of independent nations with

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Latin America is not a single entity. The region consists of independent nations with diverse and complex geography, as well as a series of poorly interconnected cities lacking navigable waterways, ports, and efficient air transport hubs. In particular, nations within this region have non-homogenous markets that, regardless of sharing a common language (except Brazil), differ culturally, politically, economically, demographically, and technologically (Welch and Welch 2018). While it is simplistic to presume that the Latinos speak the same Spanish, dialects and dialects do not bridge the seventeen different nations that MercadoLibre operates in or the four nations where Amazon has business. In such a way, these corporations run the risks of business failure if they utilise a single language to bridge the Spanish-speaking nations where they have ventures. Besides, presenting a US-centric version of the Internet to Latin American users may be a business disaster (Welch and Welch 2018). What is more, Latin Americans prefer buying products from physical stores, where they can personally inspect them, meet with friends, or
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4 window shop. According to Goyal, Sergi, and Esposito (2019), the pleasure of sampling products and bargaining prices is a part of Latinos socioeconomic fabric. Moreover, the loyalty of most Latinos to purchase brand names is a major hindrance to e-commerce firms that only rely only on the Internet to sell their products and lack traditional “brick and mortar” market identities. As such, Amazon may encounter difficulties in promoting its business compared to MercadoLibre, which has been ingrained in the local cultures. Still on socioeconomic obstacles, the regional payment system is a major concern. In view of Alyoubi (2015), most consumers in Latin America make purchases in cash rather than credit cards, which are common in Europe and North America. Notably, less than 30 percent of households in the combined markets of Argentina, Mexico, and Brazil have a credit card. In Brazil for example, international payments are subject to a 6.38% tax, which discourages most consumers from buying on Amazon. In addition to the mentioned hindrances, Amazon and MercadoLibre face logistical difficulties in their business within Latin America. Shipping remains a major problem in Latin America and customers are sceptical about actual delivery and product quality. To counter this challenge, most users buying from e-retailers such as MercadoLibre and Amazon prefer to pay for their deliveries in cash (Suominen 2017). To offset possible quality complaints, a number of local e-commerce firms offer shipping services and have relaxed return policies as they endeavour to gain customers’ trust. Brazil, as the biggest market, suffers from high sales taxes and complicated land shipping logistics, which affects the growth of the e-commerce industry.
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  • Spring '20
  • Americas

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