After enduring decades of political unrest and over half a century of armed conflicts between the FARC rebel group and the government, Columbia is enjoying peace and prosperity. A stable economy and business friendly political settings are favorable to international merchants.
Colombia has a population of 49 million and is now the fourth largest economy in Latin America (behind Brazil and Mexico). The Internet penetration rate is 67%. The e-commerce market is emerging, boosted by a strong economic growth, a growing middle class and state reforms. The e-commerce industry is blossoming, with the Columbian national e-commerce association and its partners being the most active in the region. Events, such as e-commerce days or HotSales, are featuring strong incentives to buy online. In 2017, Columbian spent 99$ US per capita online and 1,397$ US per capita at point of sale. Columbia's e-commerce sales are expected to grow by 23% until 2022.
American brands find it especially attractive to expand on the Colombian online market.
Columbia's population is very young, with a median age of 29.6. In comparison, the median age in the USA is 37.9 and 32.6 in Europe. Smartphone penetration, currently at 58%, facilitate the democratization of access to Internet and the popularization of m-commerce. In Latin America, payment by monthly installments is very popular. The method is not only used for bigger purchases. Columbians may choose to pay in installments for purchases as small as $10.
50% of the online payments are made by credit or debit card. The most popular providers are MasterCard (51%) and Visa (44%) followed by American Express (2%) and Diners (1%). Although the credit card market is predominantly focused on the higher income population, there are a number of businesses that have introduced private cards to reach poorer population strata. Private cards include Cencosud, Coomeva, CMR Falabella and Exito. They account for 1% of the market share for credit cards.
The second most popular online payment method, after the credit card, is Botón Pagos Seguros en linea (PSE). PSE is a direct debit procedure. This payment method is used by over 4000 traders and 17 financial institutions. The popularity of bank transfers in the country, more than in any other Latin American market, is largely attributable to PSE.
Despite the popularity of online shopping, there is still great potential for new traders to enter the Colombian market. Nearly half of all Colombians are ready to buy on international websites, but more than half prefer purchasing on domestic websites. Popular import countries are the USA, China, Mexico and Brazil. Exports are mainly sent to the USA, China, Spain and the Netherlands.
For merchants wishing to enter the Columbian market, creating a local entity might be attractive, as it is easier and cheaper than in most countries of the region. However, considering the size of the country and the how easy and affordable cross-border e-commerce with Columbia is, this might be more viable than opening a local entity. Merchants should however prepare a local payment strategy, as only 26% of Colombians own a credit card.
Credit card 50%
Bank transfer 25%
Pay on delivery 8%
Debit card 6%
6 Bil. USD
Population: 49 Mil.
Internet Usage: 67%
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