A discussion draft of the Online Sales Tax Simplification Act of 2016 is expected to be introduced in Congress soon.
The online marketplace says sales are growing about 200% annually in its top Latin America markets of Chile, Venezuela and Peru.
Traetelo is Spanish for "bring it," and e-commerce marketplace Traetelo.com is doing well by its name, bringing coveted Western goods to consumers in Spanish-speaking Latin American countries outside the dominant Latin American e-commerce market of Brazil.
“Spanish Latin America, for us at least, is where the gold is,” says CEO Federico Torres. Consumers in the region are hungry to get their hands on Western products, and about 80% of goods sold via Traetelo.com are from the United States, Torres says. Traetelo.com has sold about $20 million worth of merchandise online via its marketplace since 2010, and sales are growing about 200% annually on average in its top Latin America markets of Chile, Venezuela and Peru, compared with 25% a year in Brazil, Torres says.
That disparity stems in part from the notoriously high customs and duties fees Brazil levies on foreign goods coming into the country—fees that often amount to as much or more than the product price itself, Torres says. But Traetelo’s concentrated efforts also play a role. “We are very much focused on Spanish-speaking Latin America,” Torres says. “And we are focused on lower-income consumers who do not have a credit card, are worried about the final price of the product (with shipping, customs and duties fees) and may have not bought before on the Internet.”
About 60% of shoppers prefer to pay with cash when items are delivered to their doors, Torres says. “It seems hard to understand, but in this region, not having a credit card does not mean you do not have buying power,” he says. “It’s harder in this side of the world to go forward with an e-commerce entrepreneurship, especially because some things that seem to be basic in U.S, are pretty much undiscovered in Latin America. We’ve had to rhino our way through the whole venture.”
While Brazil’s online sales are triple those of Argentina and Mexico combined—totaling $15 billion for 2013, up 21% compared to $12.4 billion, according to Forrester Research Inc., some less mature markets such as Mexico are growing at a faster clip. Online sales in Mexico, for example, grew nearly 30% from $1.7 billion to $2.2 billion in 2013, according to Forrester, which excludes ticketing and travel in its estimates.
Offering hard-to-find goods and making shopping as easy and hassle-free as possible for shoppers are the keys to growing sales for Traetelo.com. For example, Traetelo.com shows Latin American shoppers all of the fees including all shipping, taxes and customs at checkout so consumers aren’t hit with surprises. It also worked with local banks to accept local debit cards. Once it began accepting local debit cards in Chile, conversion rates increased more than 35% for that country, Torres says.
Traetelo in 2012 commissioned communications agency JWT to conduct a survey of 7,000 Latin American consumers on their online shopping preferences. More than 60% of potential first-time online buyers said they would not buy from an online store that didn’t provide a guaranteed final price including shipping, customs and duties at checkout, and 40% of potential cross-border buyers said they would not buy again from an online store if it failed in accurately estimating the final shipping, customs and duties costs. “That’s why we have focused on building an international e-commerce engine that automatically calculates and guarantees an all-inclusive price for any item that is offered in our marketplace,” Torres says.
Traetelo uses DHL Express to offer express shipping from the U.S. to shoppers in Latin America and integrates with ChannelAdvisor, a vendor that helps merchants list products and manage their sales on several marketplaces including eBay Inc. and Amazon.com Inc.
E-commerce is growing in Latin America and not only in Brazil, as Traetelo has found. “We strongly believe this is the one emerging market with an incredible growth potential that is recognized by many, but is still considered too risky or complicated for many,” Torres says.