AN E-WORLD OF OPPORTUNITIES

After the impact of the pandemic, e-commerce is experiencing a moment of expansion that seeks to consolidate itself through the digitalization process that Ecuador has been undergoing for years.

ECUADOR IS ALSO PART OF THE TRANSFORMATION that the e-commerce wave is bringing to the world. With a figure of USD2.3 billion in 2020, the country recorded online sales that were 39.5% higher than the USD1.65 billion in 2019, according to data from the Chamber of Electronic Commerce of Ecuador (CCCE). This is a significant increase that partly suffered a boost from the effect of the COVID-19 pandemic; however, it was already a growing trend for years. For more annual data, digital sales were USD949 million in 2017 and USD1.37 billion in 2018.

The CCCE forecast is for 20% YoY growth in 2021, with final data not yet available at the time of going to press. As in the rest of the world, pandemic lockdowns also played a role in encouraging Ecuadorians to shop via their computers and smartphones. But there are several fundamental components of the country's economy that were already laying the groundwork for e-commerce adoption to move forward.

There are some 12 million internet users via computer, approximately 69% of the population, while there are up to 15.6 million internet connections via cell phone, 89% of the population. This context, coupled with the impact of the pandemic, has motivated many companies to get started in online advertising. According to a survey conducted by the CCCE of 126 companies in May 2020, when COVID-19 had already been disseminated, 40% of respondents stated that their next change in the company would be to create a tool that would enable e-commerce.

“We saw great demand during the pandemic, and we did not falter on hiring and providing training to ensure we have the best talent on our team,” said Pierangela Sierra, CEO at Tipti, a fast-growing online delivery platform for groceries and retail products in Ecuador. The company, which received an award from the Ecuadorian chamber of commerce for best mobile initiative, currently has about 350 employees, up from 30 in March 2020. “We see great opportunities to grow the tech industry because there are many needs that could be addressed with these ventures,” she said.

One area where startups can make a significant change is in financial inclusion. According to data from the Central Bank of Ecuador, as of September 2020, 72% of citizens had a savings account, a percentage that is still far from that of developed countries. In an attempt to close this gap, the Colombian unicorn Rappi is focusing on a new service called "Rappi Bank" that seeks to move the continent forward in financial inclusion. And Ecuador is also part of those plans.

“Bank penetration is still extremely low in Latin America,” said Alejandro Freund General Manager of Rappi in Ecuador. In an interview with The Business Year, Freund said that Rappi Bank is a partnership with local banks that has already turned the company into the second issuer of credit cards in Mexico and Colombia each month. “We will see our valuation increase by a few fold once the Rappi Bank vertical materializes. We are definitely planning for this in Ecuador,” he said.

With a valuation of USD5 billion, Rappi is an on-demand delivery company that during the pandemic experienced a significant surge in demand that caused the number of delivery drivers to quadruple in just a few months. “We jumped from 100,000 downloads to over 1 million. We had about 500 deals with restaurants and allies when we started, and we went to over 3,500,” said Freund, who added that orders also increased as much as ninefold from March 2020 to December 2020 in Ecuador.

Another company that has accelerated its growth with the abrupt wave of digitalization sweeping the country is PedidosYa, a pioneer of q-commerce (quick commerce) in Ecuador. This type of commerce aims to deliver products almost instantly. “We deliver groceries directly from stores fully operated by us, generating a completely different experience of what consumers were experiencing before with traditional brick-and-mortar stores,” said Alejandro Figari, managing director of PedidosYa in Ecuador. In that country, it operates ten dark stores that optimize the ordering process to complete delivery in 10 minutes.

All these advances in the digital economy are opening the doors to generate thousands of jobs and foster regional development. Businesses such as restaurants, stores, pharmacies and supermarkets can increase their sales thanks to the expansion of sales channels that allow them to transport their products to end customers. Meanwhile, the work of riders appears as a new type of employment that generates new job opportunities for Ecuadorians. “We will have every restaurant and store available in the country, and we want our service to be available to everyone in Ecuador; as it is one of the countries in the region where the company is putting heavy focus on because of its immense potential for growth,” Figari concluded.

E-commerce is on the rise in Ecuador, boosted by a tech-savvy population and the necessity of COVID-19 lockdown