This is a guest contribution to Finance TnT by Eduardo Righi, director of financial services at PayPal Latin America. The views expressed are those of the author and not of Finance TnT.
Among the many developments that took place in 2016, there were significant innovations in the technology industry. For this reason, 2017 is seen as an extremely active period for relationships between companies and technology. To shed some more light on what to expect, PayPal looks at some of the most popular predictions so far.
Internet of Things
The Internet of Things (IoT) is one of the transforming trends setting the course of the economic activity in 2017. After years, many companies in the region are finally starting to believe in the big benefits that the Internet of Things has to offer, including improving relationships with customers and driving business growth, which will enhance quality and safety while costs and risks are being reduced.
“By 2020, 50% of the G2000 will see the majority of their business depend on their ability to create digitally enhanced products, services, and experiences,” predicted IDC late last year. “Also, by 2019, spending in digital transformation initiatives will account for approximately $2.2 trillion USD (almost 60% more than in 2016).”
We have seen how several companies are increasingly concerned about keeping a digital approach within their strategy, while others understand that this is the only possible choice to go on with their business. This is due to the fact that technology is at the core of virtually every facet of our daily lives. Technology has become such an integral part of our lives that, without even thinking about it, we are constantly checking social media, buying something at our favorite online store, or sending money to a relative who lives in another country. And we do all these things with our mobile phones.
In accordance with a survey conducted by IDC on behalf of PayPal in 2015, six out of 10 Latin Americans will be internet-connected by 2018. It is no surprise that, in 2017, technologies such as artificial intelligence, IoT, robotics, and others, will become mainstream. By adopting the right attitude, companies drilling down through these trends will be rewarded with revenue growth, more customers, and, therefore, improved reputations.
According to Zebra Technologies Corporation, omnichannel retailing will grow more than multichannel as a result of using technology to deliver an optimal shopping experience both in the physical and online worlds. The growth of omnichannel strategies has forced the industry to rethink its tactics to meet consumer demands. This is especially true when it comes to shipping services — ensuring permanent and consistent service, and a smooth experience, across all available channels.
A survey carried out by Ipsos and PayPal last year reveals that shoppers in Argentina (with a 75% majority), Chile (70%) and Peru (58%) are more likely to buy from websites. There is also large growth in purchases made through apps, social media, and other methods, which should be considered for 2017 and in the years to come.
In Latin America, we see some interesting related facts. In Argentina, for instance, 10% of online shopping is made through mobile applications, 6% through social media, and 9% through other methods, such as videogame consoles. In Chile (14% apps, 8%, social, and 8% other) and Peru (20%, 13%, and 9%), the numbers are even more pronounced.
Digitalization of SMBs
Of course, we cannot ignore the purposeful step forward of small and medium businesses (SMBs) in the region (and in the world) that will remain relevant thanks to technology. Through available platforms, like PayPal, small businesses today have the opportunity to use the same methods as its competitors.
A survey by the International Labor Organization reports that, in Latin America, there are approximately 10 million small and medium companies providing 47% of the jobs in the region. In times when the global economy is contracted, the small and medium companies provide a good response rate.
In terms of SMBs, digital tourism is an industry with growth potential in the region over the next years. In accordance with a survey conducted by Ipsos and PayPal in 2016, 21% of cross-border purchases in Latin America are focused on travel and transportation.
No doubt, technology will play a key role for all type of businesses in the future, and more and more we will have to adapt our routine and daily tasks to the small (and not so small) changes resulting from technological development. Meanwhile, at this rate, maybe we are not far from having Rosie from The Jetsons helping with household chores.