Latin America: Urbanised consumers offer strong product testing grounds

Latin America holds one of the world’s most urbanised populations, which offers start-ups direct access to huge consumer markets at relatively small input and marketing costs. Urban telecom networks are able to cover the majority of populations in markets such as Brazil and Mexico. New tech communities are sprouting up in the region  to serve the 200-million-plus population that is increasingly reliant on internet and mobile technology. The rise of copy-cat sites in the region (mimicking successful sites such as Uber or Amazon) and a growing pool of IT talent are encouraging a larger number of exits, while business transfer agents are seeing more business in the region.

Latin America‘s concentrated urban population allows digital firms to capture huge and higher-spending consumer markets, without the need of rolling out nationwide coverage. For example, almost 90% of Brazil’s population is urban, amounting to a large urban consumer market of 168 million that can be accessed relatively easily by operators and providers of e-commerce services and other delivery- or service-based products.

The region’s demographic environment is providing strong opportunities for online marketplaces especially, which function better in retail-dense, IT-ready, high Internet-usage urban markets where consumers feel comfortable using the latest technologies. Regional online sellsumer powerhouse MercadoLibre has been able to see surging growth as a result, with revenues rising strongly since 2012. Urban infrastructure is well-suited for next-generation services such as fibre-optics and 4G LTE, and local providers can reach high population coverage with these networks as a result. Urban Latin Americans could offer a strong market for speed-dependent online segments such as digital media and gaming.

Some of the region’s most attractive urban telecom markets include Mexico City and Sao Paulo, with their multimillion populations becoming hubs for social media, crowdsourcing and business IT usage, in contrast to underdeveloped rural areas. Urban markets across the continent are increasingly unlocking their digital potential, and the telecom environment will be significantly improved by the rollout of mobile broadband networks such as 4G LTE and fixed fibre-optic connections. Brazil is in the process of delivering high-speed mobile broadband across its major urban enclaves, while Mexico and Colombia are also expanding services rapidly to cover their large populations. Strong broadband connectivity will help make the region’s urban areas hotbeds of digital consumption;

However, although a number of Latin American states, such as Mexico, Chile and Brazil, have launched broadband programmes aimed at closing the digital gap between rural and urban areas, most commercial operators continue to sidestep infrastructure investment projects outside of developed, urban zones. It is likely that once cities in the region become oversaturated with mobile and broadband services, there will be greater incentive to move into rural areas to capture minority markets.

 

 

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