Colombia - eCommerceColombia - eCommerce
eCommerceeCommerce in Colombia has improved substantially within the last year. There were 32.7 million internet connections registered in the last quarter of 2018. According to the Colombian Chamber of Electronic Commerce (CCCE), eCommerce grew at an annual rate of 20% in 2017 and represented 1.5% of Colombia’s annual economic output (GDP) in 2018. Factors that are driving growth in eCommerce in Colombia, particularly in the B2C segment, include greater accessibility to web services (through smart phones, etc.) and an increase in online services, especially banking and online payment services. B2B eCommerce in Colombia is becoming more common but is constrained by poor infrastructure, especially highways that connect to sea ports, which complicates supply chains.
Table 1: Colombia eCommerce as a Percentage of Annual Gross Domestic Product (GDP), 2015-2018
|Year||eCommerce as a Percentage of Annual GDP|
The United Nations Conference on Trade and Development (UNCTAD) B2C eCommerce Index 2018, which ranks levels of eCommerce based on internet use, secure servers, and credit card penetration, among other factors, ranks Colombia 74th out of 151 countries, behind other Latin American countries like Chile and Brazil.
Colombians’ preferred method of payment continues to be credit card and bank account debit, according to the CCCE. However, Cash on Delivery (COD) is a popular eCommerce trend in Colombia and the use of digital payment systems such as PayU is also common.
The main statutory provisions in Colombia for eCommerce are found in three laws: Law No. 527 of 1999 (the “eCommerce Law”), Decree No. 333 of 2014, and Decree No. 2364 of 2012. The eCommerce Law regulates information that is generated, transmitted, received, or stored through electronic, optical, or other similar means, such as electronic data interchange (EDI), the Internet, and email. The law also regulates other issues in connection with eCommerce.
In line with the precedent set by the original eCommerce Law, Articles 15 and 16 of Law No. 1676 from 2013 establish that documents or agreements that constitute guarantees upon mobile assets can be contained in data messages without losing validity or enforceability to the extent that there is evidence of mutual consent for the establishment of the guarantee on the assets. Similarly, Decree No. 805 of 2013 allows for merchants to keep their business and corporate books in data messages.
Decree No. 2364 of 2012 regulates all types of electronic signatures, whereas Decree No. 333 of 2014 specifically regulates digital signatures and certifying entities. The most significant contribution of these legal norms is to confirm the validity of digitally signed electronic documents, as long as they are verified by a certifying agency or a reliable and appropriate method to identify the signatory has been used.
On April 18th, 2016, the new electronic invoicing model adopted by Colombia officially went into effect. This new model is defined by Decree 2242 of 2015, which seeks to expand the use of electronic invoices in Colombia, bringing with it the benefits expected by DIAN (Colombia’s National Tax and Customs Directorate) both for those who invoice electronically and for those who acquire goods and receive electronic documents, facilitating the conditions of issuance and interoperability among all participants.
According to BMI Research, Colombia offers a weak operational environment for eCommerce, particularly because of poor internal transport networks that are underdeveloped and inadequate to meet demand, causing significant costs and delays to supply chains.
Smartphones are ubiquitous in Colombia and internet service is relatively affordable and fast. Wi-Fi internet connections are available at most coffee shops, hotels, shopping malls, and many retail outlets. These factors bode well for purchases made online and the future of eCommerce in the country. Many of Colombia’s major banks, such as Davivienda, are offering online payment apps for mobile phones that allow one-click payment linked to credit cards and bank accounts.
According to the “E-Commerce in Colombia” article by Nielsen, in Colombia approximately 58% of e-commerce traffic is through mobile devices. Only one in four buyers who have a tablet use it to make purchases online. The recent trend in “mobile shopping” has seen strong growth in Colombia where smartphone penetration is higher than in many other countries in the region.
Despite a general mistrust of eCommerce in Colombia, the growth of internet connections and use of smartphones are allowing for an increase in online transactions. Colombians’ online purchases can be broken down as follows: Financial (17%), Retail (15%), Government (13%), Communications and Technology (11%), Transport (9%), Entertainment (9%), Enterprise Services (7%), Education (6%), Public Services and TV Subscriptions (4%), Health and Beauty (4%), and Other Services (3%).
Digital marketing in Colombia has exploded and changed the traditional marketing mix, tools like Google AdWords or social networks such as Facebook Ads are used in Colombia to launch simultaneous campaigns at affordable cost, reaching the people who meet the audience profile to be targeted. In Colombia, social media is used to promote eCommerce websites and is a powerful tool of communication that some companies use to reach customers and to position brands. Facebook, Instagram, YouTube, and Twitter and are the most popular.
With 31 million users in Colombia Facebook is the most popular social network, Instagram has been among the fastest growing social networks with 10 million users, Twitter has 2 million in Colombia and is used primarily to find out about transportation and entertainment; Transmilenio, Avianca and Tu Boleta (concerts and events) remains to be the brands with most followers in the country.
Companies in Colombia can use online retailing to sell products of third-party merchants on sites such as www.linio.com as a channel that allows them to reach a wider audience and create a stronger presence. The most prominent Colombian online commerce platforms include www.mercadolibre.com.co, www.olx.com.co, and www.dafiti.com.co. Most Colombians are currently shopping directly from websites. However, this trend is changing because the younger generation is using social media like Instagram to buy online.
The most common eCommerce challenges companies will face when entering the Colombian market are local regulations and local payment methods (credit card, bank account debit, cash on delivery/COD, and digital payment systems such as PayU). According to Allpago, tighter rules have been introduced to regulate the industry. Institutions such as Incocrédito are highly involved in managing and monitoring merchant information to minimize fraud, as is the Finance Superintendence, which recently introduced a Financial Inclusion Bill. As an example, Decreto 587 from October 2016 lays out specific rules about chargebacks and the protection of the online customer.
Intellectual property right laws in Colombia do not provide adequate protection at international standards and need to be updated. The IPR regulatory regime for eCommerce in Colombia falls under the Copyright Law 23 of 1982; Decision 351 of 1991; Cartagena Agreement, decree 162 of 1996; and Trademark Rules decision 486 of the Cartagena Agreement.
Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.
Colombia eCommerce Industry Trade Development and Promotion eCommerce