E-commerce

Short history

E-commerce in South America, as in the case of several other economical branches, was way behind North America and Europe. This part of America represented a market in his infancy for big companies especially from the USA.

The first, and biggest obstacle was the lack of a comprehensive telecommunications infrastructure. To have a closer image of the existing situation in 1999, only about 10% of the population was connected to a phone line, and regarding the economy the GDP was less than $4000. We have to add also that there were quite big disparities between the regions.

In these conditions the development of e-commerce faced difficulties. But the benefit in this situation was, that south americans could, and did avoid the mistakes in the nascent stages, learning from their ancestors.

In order to develop a broadband infrastructure, big companies from Wester Europe and USA pumped millions in this region. For example Microsoft made a $126 million investment to develop a leading Brazilian television and cable company.

But there was a second obstacle the credit card ownership was extremly limited, in Brazil, for example, about half of the hoseholds did not own a credit card. And even those who have credit cards have constrains using them for on line transactions. While the safety problems in North America and Europe were solved with technological solutions (implementation of improved encryption technologies) in the case of South America these problems were far more deeply rooted. [1]

Growth of e-commerce incomes and buyers

The good news is that South America made a big progress from 2001 until 2008, e-commerce incomes raised more than tenfold between this years.[2]



The number of buyers increased in Brazil, the leading economy of South America, as well with quick steps.[3]

E-commerce “boom”

According to a study made by AmericaEconomia Intelligence commissioned by Visa Inc., e-commerce in Latin America showed a 121% growth over 2006/2007.
The most amazing rise was experienced in Venezuela, where e-commerce increased 224%, on the second place is Chile with 183 %, followed by Mexico 143%, and forth is Brazil with 116%.[4]
Altough Brazil is South America’s largest economy [5], it helds the forth place on the list of electronical commerce growth, Venezuela being prior to it not only in this case but in the case of retail e-commerce also.
The table below shows how retail e-commerce sales grow in the leading South American markets . [6]

At the end of the list, we could find Argentina and Columbia with less than 20%.

What south americans buy on line ?

The same study contains responses from customers regarding the categories of products they buy online. On the top of the list are books, music and movies representing almost a quarter from the total on line shopping. The following highest rate is held by tourism and travel 16.9 %.
It is not surprising that Electronics and software are close to each other with 13.9 and 12.3 percent. The costumers buy other products in less than 10%.[7]

Online payments are made in 70% with credit cards, represeting the most common way of paying. [8]

What about taxes?

What kind of tax system do south americans apply to their transactions?
There are no specific legislations regarding this issue. In Peru, for example, it is a general sales tax applicable for the goods sold over the internet. Tax principles are defined in the Tax Code, which is the main legislative body of law. The tax system is administered by the central government and local governments. he National Superintendence of Tax Administration (“SUNAT”) is in charge for national taxes, and local taxes are administrated by the local governments.[9]

Do customers trust in electronic commerce?

Although, at the beginning south americans were concerned about the safety issues, in 2008 the convenience of shopping on line beat security doubts.[10]

As we can observe the evolution of e –commerce is quick. According to forecasts e-commerce will surpass $16 billion in 2008 and reach nearly $30 billion by 2010 .[11]