Growing Online Shopping Among Latinos

  |  December 6, 2011   |  Comments

Understanding the dynamics and challenges facing Latinos and online shopping can help fight preconceptions and increase sales.

When it comes to Latinos and online shopping, there are still lots of preconceptions. "Hispanics don't buy online"; "Spanish-dominant Latinos represent no potential for online businesses"; "Latinos don't want to do their online shopping in Spanish." These are some examples of the most frequently used reasons of why some companies are still doing barely anything to grow their business among online Latinos.

Understanding the dynamics and challenges facing Latinos and online shopping can help fight these preconceptions and definitely help increase sales.

Latinos are not only buying online, but they are also spending more per transaction. According to Terra and comScore, Hispanics spent more per online transaction than non-Hispanics: $103.19 vs. $90.82, respectively.

The Language of Online Shopping

The notion that low-acculturated or Spanish-dominant Latinos don't shop online isn't necessarily true. Neither is the preconception that Latinos don't want to shop in Spanish. It's like we're confusing not having a choice with what consumers really want. If companies aren't providing the right approach (e.g., full e-commerce in Spanish), why would consumers react positively to it?

When Spanish-language web content ends just before checkout and concludes in English, conversion rates fall off sharply (as much as 90 percent), according to author Joe Kutchera.

Let's review some facts that show that Spanish-dominant Latinos are actually buying online.

As I said before, Spanish-dominant and/or bilingual Latinos spend more dollars per transaction and per buyer compared to English-dominant Latinos. They also spend more dollars per transaction vs. non-Hispanics. A great example is Best Buy. Users of its Spanish language website spend twice as much time and twice as much money per visit.

The Cultural Challenge

There are some specific cultural nuances that affect Latino behavior and need to be addressed by brands.

Familiarity is key: 42 percent of Latinos only make purchases from online retailers/stores that they're familiar with.

Transparency and trust are also important: testimonials from other Latino customers showcasing security verification logos (VeriSign, for example), clarity, and simplicity throughout the purchase process help in increasing purchase rates. The need to interact with a person is critical for most Latinos, no matter the level of acculturation. Companies should provide alternative ways of customer support (chat, phone, email, etc.) and make sure that they're clearly communicated across their website.

Providing personal information is also a sensitive matter among Hispanics. In order to reduce dropout rates, companies need to reduce the amount of information required (e.g., many Latinos don't want to provide their SSN, so allow using other types of identification).

Credit cards are another barrier to online shopping among Hispanics both from a penetration and trust perspective. Although penetration among Latinos has grown (42 percent), it's still low compared to non-Hispanics (68 percent). Marketers need to provide alternative solutions to deal both with non-credit cardholders as well as with those Latinos that don't want to provide their credit card information online. Dish Latino has a great approach to solve this issue: it asks customers upfront if they have/want to provide their credit card information. A wide range of payment methods is offered as an alternative to not having a credit card.

A Hybrid Approach to Shopping

Online shopping is growing among Latinos at a fast rate. Today, 19 percent of Hispanics are regularly shopping online, and 16 percent of Latinos are shopping via their mobile phone (vs. 11 percent for non-Hispanic whites). In order to increase their share among Hispanics, marketers need to develop a hybrid model that combines the best of both worlds: online and offline.

According to Google, 47 percent of Hispanics use the Internet as their primary source for retail-related shopping (vs. 41 percent non-Hispanics). The Internet is playing a critical role in the decision-making process and very few marketers are using it in a smart way to capture the Latino consumer. Companies should provide online tools that help Latinos make their purchase decision: product information, price comparison, evaluating options, and or making the final decision.

If the consumer doesn't want to complete the whole purchase online, companies could instead be sending more qualified leads to either their call center or stores.

Also, Latinos react very positively to a hand-holding approach. A step-by-step, clear process can help. Or having video tutorials, as Allstate does, that walk the consumer through the process in a very didactic way.

The Importance of Mobile

Latinos are leading the mobile web both by showing the highest smartphone penetration as well as by using it as their primary source of accessing the web. That pattern is also evident when it comes to shopping: over 40 percent of Hispanics compare prices and locate retailers via smartphones, making mobile an important tool for e-commerce.

As you can see in the following chart, Latinos overindex vs. non-Hispanic whites in using their mobile phones throughout the purchase process.

mobilechart

When it comes to Latinos' online shopping behavior, marketers need to get past the obvious preconceptions. Market dynamics have changed: Hispanics now represent the fastest growing online segment. It's time to start growing online shopping among Latinos.

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ABOUT THE AUTHOR

Gustavo Razzetti

Gustavo Razzetti is EVP, Managing Director of Lapiz, the Latino shop of Leo Burnett. He has 20+ years of experience in integrated marketing communications in U.S. and Latin American markets.

A change agent, with the expertise of transforming agencies into digital at the core shops, Razzetti has become one of the leading voices when it comes to understanding the new market dynamics of US Latinos.

Former Chief Strategy & Engagement Officer at Grupo Gallegos, president of GlobalHue NY and CEO of Euro RSCG Latino. Razzetti's career is marked by extensive experience working with top consumer brands such as Comcast, Walgreens, Verizon, Nestlé, Chivas Regal, General Motors, Coca-Cola, and BBVA, and 200 others. He also served as CEO of Euro RSCG both in Puerto Rico and in Argentina. Prior to that, Gustavo was CEO and founding partner of WhyNet - the no. 1 interactive agency in Argentina.

Strategist by conviction, digital pioneer by choice, leader by evolution; Razzetti has received recognitions that include Effie awards, Gran Prix AMBA, Euro RSCG's CBI Award, and Strategic Planning Director of the Year, McCann Erickson. Many of the campaigns he strategically led won Cannes, Clio, New York Festival, London, and FIAP awards, among others.

On a personal note, Gustavo loves scuba diving, bicycling, gourmet cooking, and fine wines.

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