To mark its 50th anniversary, INTAL is organizing special events and publications that focus on...

To mark its 50th anniversary, INTAL is organizing special events and publications that focus on the future of integration. One of the core themes is regional trade in the era of disruptive technologies.[1] Various articles are being included in the INTAL Monthly Newsletter throughout 2015 in connection with this topic. Earlier issues have analyzed the impacts of technological change in general on trade, ICT-based services, digital manufacturing, the bioeconomy, nanotechnology, and big data’s potential for increasing productivity.

This article examines the major global trends in the field of cross-border e-commerce and analyzes both the challenges to the international integration of Latin America and the Caribbean (LAC) and the opportunities this presents, particularly for micro, small, and medium-sized enterprises (MSMEs).


What is e-commerce?

In the last few years, a large number of applications of information technology (IT) have brought about a revolution in forms of commerce that can be observed both within countries and in cross-border trade. The reduction in the cost of information and the creation of a global network has expanded markets and reduced the borders to trade.

The most significant of these developments include e-commerce, which entails the purchase and sale of goods or services via electronic means such as computers, cell phones, tablets, and other devices. While the operation is agreed on electronically, the payment for and/or delivery of the goods and services in question do not necessarily take place online (WTO, 2013).

It is useful to be able to identify different types of e-commerce according to which players are involved:


  • B2B (business-to-business): E-commerce between businesses. One example of this is the Chinese company Alibaba, the world leader in the B2B segment, which is used for transactions between wholesalers and distributors.
  • B2C (business-to-consumer): Companies sell their goods or services electronically to the general public. Some companies choose to sell their products from their own websites or mobile applications, as is the case with airlines. Other companies use general intermediaries such as AliExpress (owned by the Alibaba group) or ones that specialize in a particular sector (such as Airbnb for tourist accommodation or Etsy for crafts). In many cases these are companies that have incorporated online sales in a way that complements their traditional brick-and-mortar stores. For example, Falabella, a chain of department stores owned by the Chilean group Cencosud, has become one of the major online retailers in LAC. Some companies, however, sell exclusively online. This is the case with com, the travel agency with the highest sales volumes in LAC.
  • C2C (consumer-to-consumer): Transactions between individuals. Examples of these are auction sites like eBay and the Argentine firm OLX. Other platforms, such as the US-based Amazon or Argentina’s MercadoLibre, combine both B2C and C2C transactions.
  • B2G (business-to-government): Transactions between firms and government, as is the case with online public procurement (such as Mercado Público de Chile).
  • C2B (consumer-to-business): Platforms through which consumers can sell products to firms, which generally then resell them. For example, the Argentine firm Ropanroll acquires used children’s clothing which it then resells (B2C), and all transactions take place exclusively online.

While some authors use a separate category, m-commerce, for e-commerce using mobile devices, all transactions using smartphones, tablets, or other online objects (e.g. Dash Button[2] or wearables) can be assigned to one of the groups mentioned above.


The evolution of e-commerce


Since it first began, in the second half of the 1990s,[3] e-commerce has grown significantly throughout the world, driven by the spread of high-speed internet connections, smartphones, tablets, and other devices.

Given how new these phenomena are, only partial indicators of their development are available. Using a sample of countries, the Ecommerce Foundation estimated that online sales of goods and services in the B2C segment in 2015 stands at about US$2.3 billion,[4] which implies a cumulative annual average growth of 22.1% since 2011. It is estimated that 42.7% of internet users are e-shoppers. That is to say, there are more than 1.2 billion people who buy goods or services online. The number of online buyers has increased by a cumulative annual average of 11.6% over the past four years (Figure 1).[5]


Figure 1. Global e-commerce: Number of e-shoppers and sales for the B2C segment

Millions of people and millions of US$

Note: * Estimates or projections. Source: Ecommerce Foundation (2015) and Statista (based on eMarketer surveys).

Manyika et al. (2014) argue that the impact of digitization on e-commerce can mainly be seen in three channels. First, new digital goods and services (e.g. mobile applications) or through physical-to-digital transformation (e.g. e-books). Second, “digital wrappers” which increase the value of physical goods, such as digital tracking systems or websites that provide consumers with information to improve their decisions (e.g. TripAdvisor for tourism). Third, platforms that function as intermediaries between those who want to buy and sell. Examples of this are major players in global e-commerce like eBay, Amazon, and Alibaba, among others.

It should be mentioned that the growth of e-commerce has gone hand-in-hand with the development of online payment systems such as PayPal (eBay) or MercadoPago (MercadoLibre), which facilitate transaction payment and safeguard this in return for a commission.


Cross-border e-commerce

The impact of these new technologies on international trade flows is particularly important because of the potential for market expansion that they imply, which has yet to be fully taken advantage of. According to the Ecommerce Foundation (2015), in 2014 cross-border online sales from the B2C segment totaled US$ 328 billion at the global level, the equivalent of 1.4% of global exports of goods and services and 16.9% of global B2C e-commerce. These transactions involved 309 million consumers, that is to say that 27.1% of the people who make online purchases acquire goods or services from abroad. Although the relative importance of cross-border e-commerce is still limited, it is expected to expand over the next few years. Some estimates indicate that in 2017 international transactions will represent more than 40% of e-commerce in Asia, more than a third in the United States and the EU, and approximately 18% in LAC (Suominen, 2014). Likewise, it is estimated that in 2020 more than 1 billion people will make cross-border purchases online (Ecommerce Foundation, 2015).


Figure 2. Share of international e-commerce

Share in global exports, global e-commerce, and online shoppers. As a percentage.

Source: Prepared in-house using data from the Ecommerce Foundation and the WTO.

Source: Prepared in-house using data from the Ecommerce Foundation and the WTO.

In addition to the recent dynamism of international capital flows, e-commerce is characterized by the high levels of internationalization of the firms involved in it. For example, nine of every ten eBay commercial sellers are exporters, a proportion that is significantly higher than the share of exporting firms in the total number of firms in in any given country (Figure 3). This is possible because digitization has significantly reduced the costs of disseminating and distributing goods and services. While cross-border e-commerce exposes firms to much greater competition, it also reduces the barriers to entry in international markets. As such, e-commerce enables many MSMEs and even individual sellers to access foreign markets that had formerly been almost exclusively limited to large corporations (Manyika et al., 2014).


Figure 3. Share of exporting firms among online commercial sellers and offline MSMEs

Selected countries. Percentage of the total.

Note: Commercial sellers are those with annual sales of over US$ 10,000. Source: Manyika et al. (2014).

Note: Commercial sellers are those with annual sales of over US$ 10,000.
Source: Manyika et al. (2014).


From the consumer side, e-commerce in general—and cross-border e-commerce in particular—enables access to a greater quantity and variety of goods and services. It also reduces the cost of gathering and comparing information on potential sellers of these goods and services, which can improve decision-making. For example, many platforms allow the consumer to identify all the commercial sellers of a product, compare prices, see other users’ comments on the product and the seller’s reputation, etc. In addition, in many cases e-commerce allows goods and services to be purchased from abroad without the need for an intermediary.

International e-commerce is highly concentrated in a handful of countries: 47% of those who made international online purchases in 2013 bought goods or services in the United States, 38% in the United Kingdom, 31% in China and Hong Kong, followed by Canada (17%), Australia (16%), and Germany (13%) (Ecommerce Foundation, 2015).

Despite the dynamism of cross-border e-commerce, it faces several major limitations. For consumers, the main barriers are not speaking a given language (many websites only contain information in the language of the country where they are based or, at the very most, in English), concerns about personal data protection, and fear of fraud. While this last factor is not limited to international e-commerce, it is more pronounced in the case of international transactions than domestic ones (Manyika et al., 2014). Sellers, for their part, primarily face customs barriers, other regulatory restrictions (conditions for establishment, specifications on encryption methods, labeling requirements, among other things), corruption in customs services, limitations of scale, lack of information, difficulties related to the enforcement of intellectual property rights, etc. Since online sellers tend to export to more markets than offline ones,[6] the regulatory differences between destination markets create additional difficulties (Kommerskolegium, 2012).

As in other spheres which are being profoundly changed by technological progress, the regulation of international trade advances much more slowly than that trade itself. At the end of 1998, when international e-commerce was still in its infancy, the World Trade Organization (WTO) agreed to develop a work plan on this issue. However, seventeen years later, it has still not decided how it will tackle e-commerce and has only agreed not to impose customs duties on such transactions (Gayá, 2015). Meanwhile, some countries have signed regional agreements that include provisions on e-commerce: they mandate the free flow of information, the elimination of tariffs from cross-border online transactions, and the technological neutrality of e-commerce regulations, among other factors.


E-commerce in LAC

According to estimates from Internet World Stats, in 2014 there were more than 320 million internet users in LAC. It is estimated that 110.1 million people will make online purchases in Latin America in 2015 (+11.3% y-o-y), the equivalent of 9.7% of the total global online shoppers.[7] As such, online sales in the B2C segment for 2015 will stand at around US$ 88.3 billion (up 24.2% on the previous year).[8] While these levels are low in comparison with other regions, e-commerce is expected to grow steadily in LAC and reach US$ 139.3 billion in in 2018.

Brazil and Mexico account for 36% and 20% of e-commerce in LAC, respectively (Kwakyi, 2015). The average annual expenditure on online transactions in 2013 was US$ 662 per e-shopper in Chile, US$ 513 in Brazil, and US$ 314 in Argentina, far below the world average of US$ 1,304 (Ecommerce Foundation, 2014).

The majority of internet users in LAC go online using mobile devices, which is also how they make their purchases. Almost half the people who buy goods or services online in Mexico use their cell phones for these transactions, whereas in Brazil one in every three e-shoppers do so. In both countries over 50% of the people who shop via cell phones and tablets do so using specialized applications for this purpose (eMarketer, 2015).

No precise information is available about cross-border e-commerce in LAC, with the exception of specific data for certain countries. In Brazil, 10% of e-shoppers buy from foreign suppliers. In 2014, 80% of these people made purchases from suppliers based in the United States. Next in order of importance is China, chosen by 48% of e-shoppers, the United Kingdom and Hong Kong (both at 17%) and Canada (14%). Computers represent a quarter of cross-border online purchases in Brazil, followed by electronic products (21%), clothing and accessories, and health and beauty (both at 20%). While there is no detailed information on international online transactions for other countries in the region, tourism-related services—many of them abroad—stand out among the main e-commerce sectors in Argentina and Chile (Ecommerce Foundation, 2014).


Commercial agreements and e-commerce in LAC

Several countries in the region have signed trade agreements that include provisions on e-commerce with both regional and extraregional trade partners. The most active countries in this regard have been those of the Central American Common Market, the Dominican Republic, Colombia, and to a lesser extent Peru, Chile, and the CARIFORUM countries (Table 1).

Table 1. Agreements that include provisions on e-commerce

Source: Prepared in-house using data from SICE.

Source: Prepared in-house using data from SICE.

Opportunities and challenges for LAC

The development of cross-border e-commerce presents major opportunities for improving the international integration of LAC by reducing the cost of accessing new markets, especially for MSMEs. Companies can reach potential customers all around the world through their own websites or third-party applications and platforms. Many services can easily be provided remotely, while the distribution channels that have developed for goods facilitate foreign sales even for very small volumes. For example, in the region there are several initiatives to promote exports through postal services, and many of the major players in the global e-commerce market have alliances with mail and logistics companies to improve distribution.

Other tools such as MercadoShops facilitate MSMEs’ access to e-commerce through standardized technology for online sales, inventory management, and online payment systems.

However, cross-border e-commerce also entails significant challenges for the region:


  • Internet penetration In LAC, 52.7% of the population has internet access. While this share is higher than the global average (42.4%) and is the highest among groups of developing countries, it is still well below the average for developed countries, which limits the possibilities of benefiting from cross-border e-commerce. Regardless, levels of internet penetration vary widely throughout LAC: in some Caribbean countries, nine of every ten people has internet access (a level similar to that of the Scandinavian economies), while in others this figure stands at less than 20% of the population (Figure 4).

Figure 4. Internet penetration in LAC countries and other selected groups

Data for 2014

Notes: ARG: Argentina. ATG: Antigua and Barbuda. BHS: Bahamas. BLZ: Belize. BMU: Bermuda. BOL: Bolivia. BRA: Brazil. BRB: Barbados. CHL: Chile. COL: Colombia. CRI: Costa Rica. CUB: Cuba. DMA: Dominica. DOM: Dominican Republic. ECU: Ecuador. GRD: Grenada. GTM: Guatemala. GUY: Guyana. HND: Honduras. HTI: Haiti. JAM: Jamaica. KNA: St. Kitts and Nevis. LCA: St. Lucia. MEX: Mexico. NIC: Nicaragua. PAN: Panama. PER: Peru. PRY: Paraguay. SLV: El Salvador. SUR: Suriname. TTO: Trinidad and Tobago. URY: Uruguay. VCT: St. Vincent and the Grenadines. VEN: Venezuela. Source: Prepared in-house using data from Internet World Stats.

Notes: ARG: Argentina. ATG: Antigua and Barbuda. BHS: Bahamas. BLZ: Belize. BMU: Bermuda. BOL: Bolivia. BRA: Brazil. BRB: Barbados. CHL: Chile. COL: Colombia. CRI: Costa Rica. CUB: Cuba. DMA: Dominica. DOM: Dominican Republic. ECU: Ecuador. GRD: Grenada. GTM: Guatemala. GUY: Guyana. HND: Honduras. HTI: Haiti. JAM: Jamaica. KNA: St. Kitts and Nevis. LCA: St. Lucia. MEX: Mexico. NIC: Nicaragua. PAN: Panama. PER: Peru. PRY: Paraguay. SLV: El Salvador. SUR: Suriname. TTO: Trinidad and Tobago. URY: Uruguay. VCT: St. Vincent and the Grenadines. VEN: Venezuela. Source: Prepared in-house using data from Internet World Stats.

  • Banking services E-commerce requires effective online payment systems. In LAC, low banking penetration and the preference for the cash economy (which accounts for 91% of payments in the region) is a constraint in this regard. In addition, a large share of the consumers in LAC with bank accounts do not have international credit cards (this is true of 70% of e-shoppers in Brazil) and there are high commissions for transferring money abroad through other channels (Suominen, 2014). In this regard, payment systems such as Mercado Pago or PayU (DineroMail) not only allow you to pay by credit card, but also by cash at payment points, and by adding money to your account balance.
  • While there are often lower barriers to importing and exporting through e-commerce than through traditional channels, especially for MSMEs, many companies and consumers do not have the knowledge necessary to enable them to take advantage of the potential benefits of e-commerce. According to Suominen (2014), only 40% of LAC firms have their own website, and one in five MSMEs does not even use e-mail as a means of communicating with customers or suppliers.
  • Regulatory issues. In several LAC countries there are regulatory obstacles to the development of e-commerce. For example, one condition for accessing the Brazilian market is installing servers within the country, while in Argentina the establishment of a maximum annual amount that consumers are allowed to spend on online purchases from outside Argentina resulted in a drop in purchases on international sites like eBay, Amazon, or AliExpress.


In conclusion, e-commerce is growing fast and cross-border transactions are increasingly relevant. These trends have a significant impact on markets: on the one hand, they broaden the range of information available to the consumer, along with the quantity and variety of goods and services available for purchase; on the other hand, they facilitate many companies’ access to international markets, especially in the case of MSMEs, and increase competition. The phenomenon of e-commerce entails important opportunities for improving the international integration of LAC, but for this to be successful, some significant challenges must first be addressed.





Ecommerce Foundation. 2014. Latin America B2C E-commerce Report 2014. Light Version. Amsterdam.


—–. 2015. Global B2C E-commerce Report 2015. Amsterdam: Ecommerce Foundation.


eMarketer. 2015. B2C Ecommerce Sales Approach $90 Billion in Latin America [JULIETA: este vínculo no se puede abrir]. March 26.


Gayá, R. 2015. “El sistema multilateral de comercio y las nuevas tecnologías,” [The multilateral trading system and new technologies] in: Integration and Trade No. 39. Buenos Aires: IDB/INTAL. Mimeo.


Kaplan, M. 2015. “Ecommerce in Latin America: Challenges, Opportunities,” Practical Ecommerce. February 26.


Kwakyi, G. 2015. “The Cross-Border Series Part 3: Landing An E-Commerce Strategy In Latin America,” in: Search Engine Land. July 28.


Kommerskolegium. 2012. E-commerce—New Opportunities, New Barriers. Sweden: National Board of Trade.


Manyika, J.; Bughin, J.; Lund, S.; Nottebohm, O.; Poulter, D.; Jauch, S.; and Ramaswamy, S. 2014. Global Flows in a Digital Age: How Trade, Finance, People and Data Connect the World Economy. McKinsey Global Institute. April.


Suominen, K. 2014. Aid for eTrade: Accelerating the Global eCommerce Revolution. Center for Strategic and International Studies (CSIS).


World Trade Organization (WTO) 2012. E-commerce in Developing Countries. Opportunities and Challenges for Small and Medium-Sized Enterprises. Geneva.




[1] This article was written by IDB consultant Romina Gayá.

[2] Dash Button is a wireless device launched by Amazon in mid-2015 that can be placed on any surface and allows you to purchase a given product and have it sent to your home by simply pressing a button (Gayá, 2015).

[3] As a point of reference, eBay and Amazon were established in 1995, and Alibaba and MercadoLibre in 1999 (Gayá, 2015).

[4] These transactions include sales of goods and services fully or partially agreed upon by making complete or partial use of remote communication networks, that is: online transactions between businesses and consumers via personal computers, laptops, tablets, smartphones, wearables, email, QR codes, etc. They include value-added tax and other sales taxes, as well as distribution and application costs, but not profits. They do not include C2C or B2B transactions, online gambling and gaming, vehicle and real estate sales, public utilities, loans, mortgages, bank drafts, savings, stocks, or bonds.

[5] Source: Ecommerce Foundation (2014) and

[6] For example, small companies that export via eBay sell to an average of 28 different countries, while MSMEs that export via traditional channels only do so to three destination markets (Manyika et al. , 2014).

[7] Source:

[8] Source: