Direct selling is fast growing in Latin America especially in countries like Argentina, Brazil, Mexico, Peru, Bolivia and Ecuador. A growing population of 662 million across Latin America and Carribean along with the 64 million US Latino population, direct selling has a treasure worth of opportunities hidden in these markets. Every Latin American country is unique with its culture, heritage, interests and preferences. Direct selling businesses must strike the right chord to discover the true potential of the markets.
The WFDSA 2023 report also points optimistically at the growing potential of the Latin American (LATAM) markets. Compared to United States 8 LATAM markets were classified as high penetration markets while the US was listed among the mid-penetration markets.
| LATAM Markets 2023 – Direct Selling Penetration | ||
|---|---|---|
| Country | Classification | Penetration rate |
| Peru | High | 0.796% |
| Bolivia | High | 0.760% |
| Ecuador | High | 0.752% |
| Colombia | High | 0.636% |
| Mexico | High | 0.384% |
| Brazil | High | 0.366% |
| Argentina | High | 0.274% |
| Chile | High | 0.150% |
| Uruguay | Mid | 0.063% |
Source: WFDSA
Know more about global direct selling market penetration
Understanding the new LATAM trend
Latin American markets were previously characterized by a traditional narrative that focuses on basic demographics and remittance patterns. Today, the scenario has grown in complexity diversified by various other factors. The LATAM direct selling industry is intertwined through the network of regional markets that stands unique with changing trends, patterns and demands while also sharing a common thread of opportunity for the success of direct selling businesses in the region.
The digital-traditional hybrid revolution
Latin America sets a strong contrast with the United States with 90% of Latinos using digital channels for managing and establishing business. Whereas in Latin America, especially in regions like Mexico, the second fastest growing ecommerce market in the world, has 50% of its workforce unbanked.
This contradiction sets the stage for "Digital Paradox Opportunity" whereby direct selling companies can create a cocktail strategy of traditional and modern ecommerce to capture the market.
Mexico is the second fastest growing ecommerce market in the world.
An excerpt from real-life success
A leading direct selling company in Colombia launched a "WhatsApp-First" strategy. This lets the distributors use WhatsApp Business API to process orders and maintain their personal relationships through traditional face-to-face meetings.
The implementation of this strategy across their direct selling network increased the company’s distributor retention rate by 47% and AOV by 33%. This accomplishment is a testimony to the capabilities of digital tools in enhancing rather than replacing the personal connections unique to direct selling.
The multi-generational pattern
Recent market research on purchasing behaviors of various Latino demographics unfolds interesting insights on the LATAM markets. The Latino consumers in the US prefer premium products 28% higher when compared to their Latin American counterparts. This comparison looks simple but holds a complex reality. These purchasing patterns throw light on the opportunities for direct selling companies to launch their products strategically in the LATAM markets.
An excerpt from real-life success
OMNILIFE-SEYTÚ and the success of their Nfuerza platform offers valuable insights into multi-generational engagement. The company observed that the LATAM markets are highly segmented. Analyzing and understanding these segmentations has helped them create tailored approaches for each age group and geography.
The Nfuerza platform was built for supporting younger Hispanic distributors for community and network building. The company achieved a sales growth of 6% and a recruitment increase of 16% in the US market.
Their achievement of 6% sales growth and a 16% increase in recruitment rate in the US market is a result of their tailored approach reflecting the cultural and generational preferences in the country.
Community commerce 2.0
Traditional direct selling has transformed into a highly potential and innovative business model. We call it “Community commerce 2.0”.
Community commerce will mark a significant era in the LATAM markets with its simple and straight forward product distribution techniques to create relationship-based communities. The manufacturing and distribution wages in Latin American countries are extremely low as compared to the earnings of Latinos in the US.
Earning $20 per hour in the US equals the same amount per day in countries like Mexico. Latinos employed in the US send remittances to their family and in 2023 this amounted to a striking $155 billion. In Mexico alone these remittances amounted to $63.3 billion.
Market impact analysis
The remittance stats represent not just financial support but a prospective opportunity for direct selling companies to invest in. Companies with Latino salesforce in the US can create what we call “Cross-border business units” to build interconnected networks with their family thus turning remittances into entrepreneurial opportunities. This requires low foreign investment and easy access to under-utilized markets.
High-impact strategies to capture LATAM markets
Localized strategies and tailored approaches will ensure big wins for direct selling companies in the LATAM markets. However, to establish a stable presence there needs a strategic implementation of various factors such as compensation plans, distributor support systems, marketing activities and an excellent understanding of customer behavior and cultural values.
Market entry and expansion
Direct selling companies entering the LATAM market can create an impactful entry by implementing the “Targeted Ripple Approach”.
What is Targeted Ripple Approach?
Targeted Ripple Approach is an expansion strategy often employed by companies planning to establish themselves in new markets. The approach is so called for the ripple effect it creates in the market through small yet high-impact initiatives gradually expanding brand reach and awareness. Influencer marketing, referral programs, etc are different types of targeted ripple approaches.
Targeted Ripple Approach starts with identifying the target audience and their preferences. Precise targeting and high-quality engagement build brand credibility and higher conversion rates. The result-driven approach is widely adopted by companies and is known to have contributed to the success of many leading businesses in new markets.
Target market identification and development
Start with a single market or if you are planning international expansion then begin with a single country or demographic.
Improvise your direct selling marketing strategy and other expansion efforts within this target market first.
Move on to find markets of similar potential through research and analytics.
Build strong leadership teams and relationships with local influencers.
Extend market-specific distributor sales training programs.
Develop compensation plans that fit in with the values and interests of targeted markets.
Align with cultural preferences
Identify regional product preferences and launch your product line based on local demands.
Research competitor pricing strategies and draft your pricing structure by considering local economic conditions.
Design marketing materials and develop content that reflects the culture and values of the region.
Set up a local advisory team to support you with every legal and market requirement in the region.
Monitor feedback and work toward continuous improvement in quality and customer service.
Adjust your strategies based on market and customer response.
Expanding your network in the new market
Identify talents through targeted recruitment strategies to create frontline sales teams.
Implement training programs combining cultural nuances to upskill local distributors.
Create incentive structures that appeal to the localites and align with region-specific regulations.
Offer mentorship programs and host mentor-mentee events.
Establish community outreach initiatives to build identity and demonstrate commitment.
Run campaigns on local success stories.
Digital integration strategy
Staying in the vanguard of LATAM markets demands a competent technology strategy and digital infrastructure. This can be accomplished through "Selective Digital Integration”, a strategic approach to adopting technologies and tools that stay close to the cultural and local preferences.
Selecting and implementing the right platform
WhatsApp Business API can be used as a primary medium for communication and order placement. It adds to the convenience of customers and distributors.
Instagram with its innovative content features and diverse audience base can serve as a platform for brand building and product showcase.
Facebook can handle community engagement and motivation for potential distributors.
Development of custom mobile apps improves distributor convenience and conversions.
Integration with local payment systems will make processing order payments and commission payouts in preferred currency easier and hassle-free.
Implementation of AI-powered customer service will boost customer satisfaction and loyalty with real-time resolution of concerns.
Optimizing digital tools for better output
Mobile-first ordering systems with offline capabilities can ensure uninterrupted order processing by allowing orders to be placed and processed even without the need for internet.
Virtual training platforms with multilingual support can train diverse workforce simultaneously across new international markets.
Various digital payment solutions integrated with local banking systems will make transactions secure and faster while staying in line with regional preferences and regulations.
Analytics dashboards for distributors will give them an overview of individual performance and help identify areas that need improvement.
Automated commission calculations ensure on-time commission payments without delays or overpayments.
Real-time inventory management streamlines the entire supply chain management process to reduce overstocking and stockouts.
Product launch and management
Applying flexible core approach to product launch and expansion in the LATAM markets can help meet unique demands and preferences in addition to retaining the product’s capabilities and value proposition. By undertaking the flexible core approach, companies can customize and localize the products to fit the regional preferences.
Identifying the essentials
Health and wellness products mindfully created to accommodate the needs of the region.
Beauty and cosmetics products tailored to the skin type and preferences of the target markets.
Household goods and durables that stick to the cultural traditions and values of a specific culture in the region.
Nutrition products with locally sourced ingredients that take into consideration the dietary habits and provide essential nutrients based on the population’s nutritional deficiencies.
Personal care items with regional fragrances, packaging styles and functionality that band together with regional grooming practices and beauty standards.
Home care products that address specific cleaning habits, environmental conditions and regional scents or ingredients.
Trending the market
Integrate regional preferences at every stage of product development.
Use ethically and locally sourced ingredients.
Respect new and changing cultural and market preferences.
Prioritize seasonal product development.
Launch premium and special edition products or bundles.
Introduce community-inspired products that symbolize values, tradition and lifestyle to connect with local consumers.
Statistical analysis of market trends and opportunities in the LATAM markets
To make a full-fledged entry into the LATAM markets, what we need is not just information about cultural preferences and local demands but a thoughtful analysis of the data patterns that are igniting the growth potential of these markets on the global ground.
Demographic analysis
The Latino population in the US now constitutes 19% of the total population, with 26% children. This is expected to increase by 2030 with Latinos representing one in every five workers in the US. We can expect that by 2035, Latinos in the US will represent an even larger share of economic activity when these young consumers enter their initial earning and spending years.
Latinos represent 19% of total US population with 26% children.
Economic trends analysis
The remittance figures in 2023 reached $155 billion, sent to hometowns of Latinos working in the US. This was a 9.5% increase compared to the previous year. In Mexico alone, remittances amounted to $63.3 billion which exceeds foreign investment and depicted 4.5% of the country’s GDP.
Remittance figures reached $155 billion in 2023.
Direct selling companies can use these insights to decode the factors influencing buying behavior of Latinos. Understanding what attracts Latinos to job opportunities can help the companies gain significant market share in the US and LATAM markets.
Trends in LATAM markets: Insights for direct selling
Recent market research reveals trends in technology adoption, market dynamics and consumer behavior in the Latin American markets.
Digital adoption
Research points at an interesting stat that 90% of US-based Latino entrepreneurs use digital channels to manage their business. The fast-growing ecommerce sector in Mexico is expected to generate a revenue of $45.27 billion in 2025, as reported by Statista. However, around half of the working population unbanked, direct selling companies setting foot in Mexico will have to adopt a combined approach blending in the digital and traditional.
Generational purchase patterns
Generation Z, the most dominant group in the LATAM population, is shaping consumer trends in the region. Leading the spending diaspora, Gen Z is influenced and excited by different factors that determine their purchase decisions.
Younger generations are keener on remodeling the current economic conditions with active financial planning. And for the same reason, there is a rising interest for financial products and services.
Younger generations rely on authentic experiences and research extensively about the product before purchasing. They use social networks for their research purposes rather than search engines.
This research behavior demands educational marketing and premium product positioning to influence the buyers in this generation. Analysis of research data also shows that Latinos are budget buyers and prefer a blend of both online and offline shopping experiences.
Cross-border commerce trends
Cross-border commerce is rising as a trend in the LATAM markets. Latinos based out of their countries are engaged in cross-border business activities and this has increased tremendously in the past two years. Direct selling companies can pick on this pace to establish new networks in the LATAM markets.
Focus on sustainability
Eco-consciousness has become an important characteristic of today’s consumers. LATAM consumers are no different. They value brands that uphold sustainability in their business processes. Consumers, especially those in the younger generations, are also willing to pay extra for products that are environmentally responsible.
Personalization demands
Consumers are more excited about the personalized product services brands offer. The demand for personalized products and services has increased in recent years. Data reveals that companies offering personalized products and recommendations tend to attract more customers and experience higher repeat purchase rates. This trend is more evident in the beauty and wellness sector with brands offering personalized product formulations and wellness plans.
Social responsibility impact
Companies that are socially responsible and contribute to the wellbeing of the community are mostly favored by consumers. They have higher customer engagement and retention rates. Community development programs and philanthropic initiatives earn fame and trust for companies in any markets of operation.
Need for transparency
Consumers trust brands that are transparent across their business and to consumers. They want to know more about the company they buy from, the products, how they are manufactured and sourced, etc.
Processes that demand transparency are
Ingredient sourcing and product manufacturing
Company values and social initiatives
Compensation plans for distributors
Environmental impact measures and sustainability efforts
Quality control and testing procedures
Community engagement and development efforts
Discover the direct selling trends and insights in the Americas in 2024.
Future foresight into LATAM markets
Looking forward to the future reveals exciting trends and futuristic innovations that will set the stage for direct selling in Latin America.
Here is a quick rundown of the growing possibilities for direct selling businesses in the LATAM markets.
Development of distributor training platform to upskill international distributor teams.
Mobile payment and social media integrations to attract entrepreneurs from younger Latinos.
Adoption of emerging technologies like Blockchain for security and transparency.
AR and VR for product demonstrations.
Launching AI-powered customer service to optimize customer satisfaction and retention rates in new markets.
Integration of predictive analytics to make smarter and more informed business decisions.
Action plan for direct selling entrepreneurs
Launching the business in the LATAM market needs a foolproof plan that covers all aspects of business, market and consumer interests.
Immediate steps (Next 90 days)
1. Market analysis and preparation
Conduct detailed demographic research and analysis of past trends and patterns in the new markets.
Analyze past and present competitor strategies and the success rates.
Identify market entry points for each market you are planning to establish.
Develop local influencer partnerships.
Create strategies that align with culture and values of the regions.
Establish legal compliance management frameworks for safer and smoother business operations in foreign markets.
2. Product strategy development
Develop products tailored to the market and consumer preferences.
Create pricing structures that suit the economic setup of the region.
Design culturally relevant packaging and marketing.
Establish stringent quality control measures in manufacturing and distribution.
Create product training materials for distributors.
Develop product launch timelines to ensure a successful launch.
3. Initial network development
Build local leadership teams.
Implement necessary training and mentorship programs.
Create appealing compensation structures specific to each market.
Establish efficient communication channels.
Develop recognition programs to keep your network active and motivated.
Create community outreach initiatives often.
Medium-term Goals (6-12 months)
1. Digital infrastructure development
Implement mobile-first ordering systems for faster and streamlined order management process.
Develop virtual training platforms for supporting distributors in real-time.
Integrate digital payment solutions to improve flexibility and convenience for consumers.
Establish data analytics systems to analyze patterns and trends that can further help improve strategies.
Develop social media strategies that can influence the purchase decisions of your target consumers.
Create automated support systems to ensure a flawless customer support process.
2. Market expansion planning
Identify secondary markets to plan our expansion.
Set expansion goals and a team to monitor your progress.
Create market entry strategies for new markets.
Establish logistics networks to ensure efficiency and uninterrupted operations.
Develop local partnerships for a worry-free expansion process.
Create market penetration plans post expansion.
Long-Term Vision (2-3 Years)
1. Market leadership development
Build strong brand presence and identity.
Develop market influence with product innovations and impactful marketing strategies.
Create sustainable growth with consistent efforts and reliable service.
Establish industry leadership through strategic initiatives and value delivery.
Implement new ideas that bring growth and competitiveness.
Create legacy planning strategies to pass on your values and impact onto your future generations.
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One final step forward to LATAM markets
LATAM population across the world and its regional markets hold infinite opportunities for direct selling businesses. Success, here, is bound by an accurate understanding of its cultural preferences, values and economic conditions. Balancing standardization with localization, digital with traditional and global vision with local execution will mark success in the history of direct selling companies in the LATAM markets.
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