Amazon expected to take giant steps into the Colombian market

By March 13, 2018

Latin America will now have its fourth Amazon office as the e-commerce giant decides to set up shop in Colombia. Having already established themselves in Mexico, Brazil and Argentina, the online behemoth will lurk into new offices in Bogotá this year.

The entry of Amazon into Colombia is being received warmly by Colombian economic and promotional institutions, including Procolombia, with many hoping that the company can be of great boost to the country’s economy as well as alleviate the 9% unemployment rate in the country. Felipe Jaramillo, president of ProColombia said to El Universal that “This is a very important vote of confidence in the country and an invitation to companies to enter the dynamic modes of innovation and the use of big data towards internationalization.”

Though the move will add more jobs to the economy, employment opportunities at Amazon have not been without its share of controversies. In Germany and Italy, the experience has been a sour one with many workers complaining of strenuous working hours where more and more is expected within a shorter period of time. Workers protested across many facilities in Germany and Italy asking for a fairer hours scheme that would make for a better work/life balance. Unions in Colombia will no doubt take interest in Amazon’s decision to move there.

Competitor MercadoLibre will also look at the news with great interest in a market where penetration on digital goods is still low. Only 1% of sales in Colombia is from online sales and, of this 1%, most are in clothes, footwear, technology and airline tickets. On the other hand, the US has 8% of its sales transacted online and the number is as high as 13% in China. “The arrival of Amazon should think less about how that cake is going to be divided from the market we have today and more about how each slice will grow,” said Jaime Ramírez, Country Manager of MercadoLibre to news website Portafolio. Ramirez also noted that when Amazon entered Mexico, their sales accelerated rather than dissipated.

In moving to Colombia, Amazon will need to solve problems of logistics as much of the infrastructure within the country isn’t as developed as Argentina. The country spans the breadth from the Amazon to the oceans of the Caribbean and the Pacific. Some believe however, that the challenges might be met by a company as large as Amazon, having innovated the use of drones for parcel delivery, and could even be an important hub for the continent. “Colombia should take advantage of its geographical location in the continent and its new Bogota airport to become a parcel hub, that includes offering competitive freight and much more progress in banking processes,” said Jan Gabriel Perez, executive director of Invest in Bogotá, speaking to Dinero .

Meanwhile, Colombian consumers may be licking their lips at the thought of having Amazon at their doorstep. Lovers of Amazon’s competitive book sales will unfortunately have to wait though as the Bogotá office will initially focus on electronic and kitchen appliances before adding new items to their sales list.