As a target destination for startups in e-commerce and Internet advertising, Colombia is booming. This has led to the development of new and outstanding digital companies. In today’s technological age, almost all significant business relationships of the organization, such as customers and suppliers, are made and controlled through technology.
Core processes are completed through virtual networks, such as social networks, web pages or applications, which cover the entire company or are linked to multiple organizations both nationally and worldwide. As with any other country, online services are key to business success in Colombia. However, as a developing country, quality e-commerce is very much in hot demand. Learn about the environment of e-commerce and technology in Colombia and understand the potential for success for investors considering company formation in this sector.
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E-commerce is a formidable force in Colombia
Digital companies offer extraordinary opportunities to establish a more flexible global organization and management. In the month of November 2018, over 10 million visits were made to e-commerce sites.
Companies can offer attention to customers at any time of the day, from anywhere in the world. It is increasingly clear that digital marketing and commerce is a focus that drives growth and transformation.
As Colombia’s main sectors grow and develop, so too does the demand for quick, convenient electronic sales and services. In the digital era, consumers are increasingly turning to websites and apps to fulfill their needs. E-commerce in Colombia helpfully complements strong industries such as cosmetics, retail, textiles, and other services.
Digital developments in Colombia
The issue in the particular case of Colombia, a country that has become a strong investment objective for entrepreneurs both big and small, is becoming more and more attractive in the e-commerce sector. “It’s not just having a web page, but digital DNA. It is natural for service companies to move faster in this process. There are different speeds and capacities that one sees in the sectors,” explains Santiago Pinzón, vice president of Digital Transformation of the Andi (National Association of Businessmen of Colombia).
Internet coverage in Colombia reaches 98% of the municipalities, and at least 72% of households have a smart-phone device. This allows companies to advance with emerging technologies such as Apps, robots, augmented reality, internet of things, cloud computing, and 3D. These technologies form part of the so-called fourth industrial revolution. Importantly, the percentage of Colombia’s population living in poverty fell from 42% to 27.8% from 2008 to 2015. Colombia is now supporting a growing middle-class with consumption needs in line with other modernizing economies.
The most common technological use among Colombians is using a smart cell phone for banking transactions, finding an address to avoid congested streets and save time, and even asking for a taxi. An example of Colombia’s e-commerce development is the successful company Rappi, founded in 2015 in Bogotá. With Rappi, customers can use the application to order products and have them delivered to their home. The application offers everything from meals and household products, to cash service.
An example: How does Rappi work?
A Rappi customer looks for a restaurant, supermarket, or store – whether a small, boutique shop or the biggest and most prolific chain – and makes an order for the items they want from that store.
A purchase order appears on the cell phone of the Rappi delivery person closest to that establishment. The delivery agent makes the purchase and then takes it to the address designated by the customer. Once delivered, the payment is taken out of the client’s account, thus ending the service. Rappi is responsible for arranging the payment of their commission for the delivery agent with the delivery person.
Challenges and opportunities for tech businesses
Nonetheless, there are many examples of emerging companies in the Colombian market, which offer a variety of products and services, through applications or web pages. However, companies that want to adopt this new business model of digital transformation find barriers such as lack of culture (74.1%), ignorance (61.6%) and budget (56.3%).
But the country has a broad portfolio of market opportunities to create or host digital companies. The products and services sector needs new offers. There are many local markets that continue using the telephone delivery/order service, unaware of the help that a tool such as a cell phone or computer can provide. Another sector that is very strong in Colombia is tourism. The country offers hundreds of touristic destinations, internationally attractive, but does not know the benefit that an application or a virtual commerce platform can bring.
Furthermore, in the United States, for example, the security system installed in homes is very common and used in many homes. In the case of Colombia, this system is only implemented in high-income households that require a lot of security, and companies, banks or government entities. Reinventing the service digitally to be able to offer it to more people and expand the market would bring great economic success.
Enhancing the digital commerce sector has flow-on benefits for Colombia. Using our example above, in addition to offering services to a wider range of consumers improved access to security would contribute to the overall security of communities and cities.
Undoubtedly, Colombia is a reliable target market, since it is in an emerging digital stage which craves success in the process of internationalization and integration with the global economy.
Biz Latin Hub: your Latin American partner
When operating in new Latin American countries, having a trusted local partner can aid in your growth and commercial success. At Biz Latin Hub, we offer a range of back-office services designed to help you understand the local market and to navigate its complexities, ensuring a successful international expansion with minimal headaches.
To find out more about how we can help, email here and we’ll get back to you with a personalized strategy to support your business and expansion goals.
Watch our short video below for more information on Colombia’s appeal as an ideal business destination.
- Automatización: la principal inversión tecnológica de las empresas, según encuesta. Revista Dinero. Marzo 2018.
- Nuevas tecnologías, apuesta de empresas para transformar sus negocios. El Tiempo. Octubre 2017.
- Tecnologías emergentes en Colombia. Colombia Digital.
- Economía digital. ANDI
- Comportamiento macroeconómico del sector TIC en Colombia. MINTIC
- Digital Transformation Initiative. FEM
The information provided here within should not be construed as formal guidance or advice. Please consult a professional for your specific situation. Information provided is for informative purposes only and may not capture all pertinent laws, standards, and best practices. The regulatory landscape is continually evolving; information mentioned may be outdated and/or could undergo changes. The interpretations presented are not official. Some sections are based on the interpretations or views of relevant authorities, but we cannot ensure that these perspectives will be supported in all professional settings.