Compelling business expansion opportunities are afoot in Colombia. You need only look to this May 14 story in El Tiempo, the country’s largest newspaper, to see why:
“The 30 Foreign Brands That Are Coming After Colombian Consumers,” the headline reads.
The Spanish-language story reports that 30 major international brands are eyeing Colombia as an ideal market to launch new retail efforts. Among the vanguard are several high-profile Spanish fashion brands. Other iconic brands such as Abercrombie and H&M are making moves to be within the country quite soon.
Fashion is one of several major growth markets in Colombia. According to the El Tiempo article, Colombia has already seen a 6.2% increase in catalogue and online fashion sales over 2014's sales. In recent years, the country has seen store launches for international brands such as Gap, Victoria’s Secret, Dolce & Gabbana, Burberry, Zara, Mango, Rockport, Frey Wille and others.
So what has these international brands - and many others, in other industries - keen to expand into the Colombian market? Credit years of economic growth, governmental reform, and improved infrastructure (including investments in Internet and mobile web access).
Indeed, Colombia’s story is one of “resurgence and reinvention,” an analyst for global management consulting firm AT Kearney recently wrote. “This place has every opportunity to do well in the years ahead, and deserves to be better known.”
The country now has the third-largest economy in Latin America (surpassed only by Brazil and Mexico), and has experienced explosive economic growth, particularly during the 21st century. From 1990 to 2015, the country’s GDP (PPP) grew from $120 billion to nearly $700 billion. This growth greatly impacted Colombian residents: per-capita GDP (PPP) has increased by 833%, and poverty levels dropped more than half during the same time period.
This has greatly strengthened Colombia’s middle class, according to AT Kearney’s 2014 Global Retail Development Index. Household spending is up, unemployment is down, and the middle class “is poised to spend more,” the report said. “(A) surge in credit card offers has helped increase spending on products and services that would otherwise be unaffordable.”
The nation’s economic growth has been especially robust in recent years. In Q1 2014, Colombia’s economy grew by 6.4% compared with the same period the previous year. The Economist reported that this increase overtook Peru’s, making Colombia “the fastest-growing of the bigger Latin American economies.”
Much of this growth hails from years-long governmental reforms and strong commodities exports. Oil remains Colombia’s main export (comprising more than 45% of its commodities exports), but industries such as electronics and automobile manufacturing have grown over the past 15 years. Colombia is now Latin America’s second-largest producer of domestically-made electronics and appliances, behind Mexico.
Falling oil prices in recent months have cooled the country’s growth, though perhaps not has much as some analysts have predicted. According to the World Bank, Colombia’s GDP growth rate in 2013 and 2014 was a steady 4.7%. Earlier this month, a board member of the Andean central bank predicted a growth rate of 3.5% or higher this year. That’s an undeniable decline, but better than initial forecasts of 3.2% … and it’s also better than the Latin American average, forecasted by the World Bank.
Despite recent fluctuations, many of Colombia’s residents are earning more, and are increasingly using the Internet to research and make purchases.
According to a recent Euromonitor International study, online retail sales will grow by a 25% value CAGR at constant 2014 prices. “(B)ut the predicted rate might be faster,” the report said, “since in Colombia, e-commerce is still in its developing process, with companies even more interested in developing the online channel, as well as the interest of pure e-commerce players to develop operations.
“(E)-commerce still has plenty of potential for development in the following years,” Euromonitor continued, especially considering the current improvements of Internet access in lower-income municipalities. The country now has the longest fibre optic network in Latin America. (TV Azteca, a leading producer of Spanish-language television programming, is largely behind the push, which will increase the number of Colombian municipalities with fibre-optic access to 96%.)
Indeed, Colombians are especially comfortable making online purchases in the categories of electronics & computers (43%), fashion (36%), entertainment (31%) and travel (29%). They also spend more time online each month than the Latin American average.
(You’ll learn more about Colombian’s online purchasing power in the fashion and travel sectors shortly.)
Smartphone use is exploding, too. According to data compiled by LatinLink, Colombia recently surpassed Argentina to become one of the top 3 smartphone markets in Latin America. Last year, Colombian mobile web use increased by nearly 60%, compared to 2013.
The market isn’t a perfect one, but it’s clear that major brands are seeing lots of opportunity there, and are investing appropriately.
Can your company reach these increasingly-connected consumers? You bet. Many organisations launch localised websites to complement their international brick-and-mortar retail efforts. This makes a meaningful difference in connecting with, and building trust among, new customers in new markets.
However, we've also found that companies can still generate traffic, engagement and revenue with Colombian consumers without investing in brick-and-mortar endeavours. Localised websites are driving companies' global growth, and we have the data to prove it.
The MotionPoint Perspective
MotionPoint works with companies across dozens of industries, translating their general-market English websites into other languages. We also optimise those sites' content and more for maximum engagement and conversion.
We operate hundreds of Spanish-language websites for our clients. These sites are often initially launched to engage the U.S. Hispanic market. However, as we recently reported, our clients quickly discover that these sites often generate interest and sales from Latin American consumers, including Colombians.
We recently examined the performance of nearly a dozen Spanish sites, noting the traffic, engagement and conversion hailing from Colombia-based consumers. We focused on two industries: travel and fashion. The statistics tell a very interesting story.
For instance: One international airline (which supports flights to Colombia and other Latin American countries) has seen a traffic increase of nearly 40% to its Spanish-language site in the last two years from Colombian consumers. Ticket bookings through that Spanish website from Colombians increased an astonishing 859% in the same timeframe.
Another airline supporting Latin American travel saw a 73% increase in traffic from Colombian visitors over the last year. A cross-country railroad’s Colombian-based revenue has increased 28% since last year.
The lift to travel-related sites extends to airports, too. MotionPoint operates the Spanish-language website of an international airport in the southeastern United States. This site saw a 27% increase in traffic and 17% increase in revenue from Colombian sources.
Analysis of fashion websites shows similar robust growth. One international fashion brand’s Spanish site has seen a 26% increase in traffic and 41% increase in revenue from Colombia since last year. This is especially noteworthy, considering the company does not have a brick-and-mortar presence in Colombia. (However, expansion into the market, perhaps informed by this online engagement & revenue, is presently underway.)
Another international fashion brand's Spanish site has also seen increases in traffic (40%) and revenue (27%) from Colombian shoppers. This company doesn't have a brick-and-mortar presence, either.
Finally, a major UK-based fashion retailer, which launched a Spanish e-commerce site to initially engage U.S. Hispanic shoppers, has seen a 17% increase in traffic and 25% increase in revenue from Colombia.
The takeaway is clear: Colombia's economic growth and stabilising infrastructure have created a population of financially-confident, online-savvy consumers. Companies keen to expand into emerging markets should strongly consider localising their online content for Spanish speakers, to experience similar lifts in website engagement and revenue.
Your company can win big in Colombia and other Latin American companies, too. Contact us to learn how our in-market experts can effectively localize your organisation's website to generate growth in this ever-growing market.