E-commerce retail industry in Chile

15.03.2011 By: TRANSFER based on Ecommerce-Journal and Bloomberg

Today, Chile is one of the most stable and prosperous countries in South America, and seems to be the leading country of Latin America when it comes to electronic commerce transactions. Everis Information Society Indicator (ISI), prepared by the IESE Business School, confirms that Chile triples the regional average of 31,22 euro per capita, with sales equal to 107,85 euro a year per person. Brazil is a good second, with 36,89 euro per capita. The figures reported by Chilean business newspaper Diario Financiero indicate, that the annual per capita expenditure for Chileans in (ICT) is 366,13 euro -above the 268,21 euro average for Latin America. This shows a growth of 7,9% over the year before. The institution explains this dynamism to strong internet penetration and better economic conditions in the country.

Chile has an advanced telecom infrastructure and regulatory system. Internet penetration and PC rates are also the highest in Latin America. The broadband market is considered to be one of the fastest growing businesses, with 45% growth of cable modems a year. ADSL access increases nearly 108% (according to www.internetworldstats.com).

The nationwide broadband penetration rate is 8,8%, with Tarapacá Region (14,2%), Antofagasta Region (12,9%) and the Santiago Metropolitan Region (12,0%) anticipating. There are several companies on Chile’s broadband market, offering different services (VTR, Telefónica Chile and Gtd Manquehue). Internetworldstats.com confirms that since the millennium change the internet use has grown, up to 320,2%. Chile had an initial amount of 1.757.400 (or 26,2 %) users in 2001, that reached to a level of 7.387.000 (44,9 %) users in 2008. In 2009 a national survey, published by Subtel in January, showed that 40,6% of Chileans used the Internet, while 59,1% did not.

As for the e-commerce development, today Chile seems to be the most developed Latin America country. This does not only concern IT, but for online business industry as well since Chile has the highest penetration of credit cards, personal computers and Internet access. The World Economic Forum’s Global Competitiveness Report for 2010/11 ranked Chile 39th out of 139 economies estimated in terms of technological readiness, still well ahead of its nearest regional competitor, Brazil, which occupied the 46th position.

Chilean retailer Falabella confirms this. It sees data quality, IT security and logistics among the main pillars for its continued e-commerce growth in Latin America. According to BCI forecasts, the company generated about 74% of its total sales in Chile in 2009, while e-commerce in this country has been growing 100% year-over-year and will only expand. Falabella Chile is far ahead compared to expansions of e-commerce retail sales in its other Latin American countries (Peru 6,7%, Argentina 5,5% and Colombia 4,3%). Also Walmart started online e-commerce operations in Chile last November, expecting to sell electronics, home furnishings, books, music and fashion accessories.

Falabella is seeing a shift in regional consumer habits. Customers are trending more toward multiple shopping channels. The company is taking steps to assure that product information available online - as well as in other channels such as product catalogues, call centres and kiosks - is 100% accurate.

Foreign suppliers of technology could profit from this development, especially companies that design and develop web applications and consider security as a primary design goal. Also companies active in the field of exchange of data to facilitate the financing and payment aspects of the business transactions are expected to draw their attention towards the Chilean market.