Retail e-commerce begins to decelerate in Latin America

Illustration: Aanbetta/Shutterstock

After two years of growing at breakneck speed, Latin America’s e-commerce sector is experiencing a slowdown, especially in retail — that is, sales of physical and digital goods except for food delivery, subscription-based products, and travel-related services.

Persistent inflation — despite region-wide monetary tightening — and the return of consumers to brick-and-mortar stores are two of the main factors holding back the expansion of some of the region’s leading retailers. Online shopping, however, will never play a supporting role again, even more so in the age of mobile commerce.

In early August, while reporting a record-breaking net revenue of USD 2.6 billion for Q2 2022, Latin America’s e-commerce behemoth Mercado Libre warned investors about “local and worldwide signs of online retail slowdown due to the normalization of mobility triggering shifts and constraints in consumer spending.”

The company also said it has absorbed logistics costs pressured by inflation, particularly rising fuel prices. Verticalizing its logistics operations remains one of the company’s priorities, as cheap and efficient freight is crucial to continue growing.

Big Brazilian retailers, such as Americanas and Magazine Luiza, are following the same path.

“We are coming from two periods of such record,...

Fabiane Ziolla Menezes

Former editor-in-chief of LABS (Latin America Business Stories), Fabiane has more than 15 years of experience reporting on business, finance, innovation, and cities in Brazil. The latter recently took her back to the classroom and made her a Master in Urban Management from PUCPR. At TBR, she keeps an eye on economic policy, game-changing businesses, and people driving innovation in Latin America.