The past day without VAT broke records in electronic commerce in the country. Sales were higher compared to days such as cyber Monday, which already has a certain tradition among Colombian consumers.
On multiple platforms there was a growth in visitor traffic of more than 18 times (1,700% growth) compared to an average day and some brands had the day with the highest levels of sales in their history, with growths, on average, of 5 8 times, according to calculations by the Colombian Chamber of Electronic Commerce, CCCE.
Likewise, according to an analysis by Bancolombia, 63% of purchases made with credit cards on the day without VAT were made by electronic commerce, a percentage higher than the cyber Monday of 2019.
For example, in the case of Mercado Libre, the platform had a record of more than 4 million active sessions at the end of the day, reporting an increase in traffic of more than 70% compared to traffic on a normal day, reported the company. Sales made through this site rebounded 1000%, compared to the year to date and more than 400%, compared to the week before the day without VAT.
This increased demand from buyers caused some sites to collapse and now that it is proposed, by some merchants and other sectors, that the remaining days without VAT be virtual, the concern arises if both small and large stores are ready.
In this regard, Jaime Alberto Cabal, president of the National Federation of Merchants, Fenalco, assured that businessmen are making the necessary adjustments to be more prepared for greater virtual demand, however, he acknowledges that it is not so easy.
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“I think we will be more prepared for the last day without VAT this year. This requires investments in technology, hours of work to expand the platforms, make them more versatile and faster and implies investments, “he reiterated.
Erick Rincón, associate professor at the Law School of the Universidad del Rosario, considers that electronic commerce has been growing significantly in recent years in Colombia “and before the pandemic there was already a certain habit of some people, especially those young boys”.
But he considers that what happened on the first day without VAT shows the little preparation that some shops had for such a high level of attendance and showed some deficiencies in the logistics chain. For example, some are taking 15 days or more to deliver products purchased online.
“After the pandemic, what one will see is that people who were not used to buying with electronic channels do so and it is possible that this option will remain permanently, that is, the country will have a major change from the adherence to this digital transformation of the consumer ”.
Hence, several challenges arise for the Government and for trade.
The challenges
One of the current needs to promote electronic commerce, according to Professor Rincón, is for the government to modernize electronic payment rules, a system that is expensive and does not encourage its implementation, especially in small and medium-sized businesses. “You have to have a standard that allows you to modernize this, today it represents a high cost that the company assumes and that in the end is also reflected in the consumer because the products are more expensive.”
María Fernanda Quiñones, president of the Colombian Chamber of Electronic Commerce, CCCE, considers that in the next two days without VAT it is important that the operational part of the day be reviewed due to the demands on billing, for “what we suggest a flexibility in this matter to be able to have more time in the reconciliation and billing process ”.
In the case of e-commerce platforms, he added that it is important to become technologically stronger in order to face this new reality that has led to Colombians turning to the digital economy. “In addition, having more robust platforms will give consumers the confidence to transfer their purchases to digital media and contribute to the social distancing measures that are essential in the midst of the health emergency we are going through,” he stressed.
Another challenge is that the increase in demand for internet purchases will put pressure on logistics companies, “these companies did not project the growth in demand of June 19, either, although they are adjusting their operational capacity in this situation “In the next few, the installed capacity that the sector has today will be tested.”
What about small businesses?
One of the concerns of making a day without VAT totally virtual is that not all merchants are prepared, especially small businesses that would not benefit from the activity.
For example, the shop in downtown Cali feels that it has not benefited from the rule because not everyone handles electronic payments.
In this regard, Albeiro Aristizábal, president of Grecocentro, said that the isolation did lead to the downtown business looking at the virtual option and many have migrated. “But in the day without VAT they benefit are the supermarkets and banks, not the commerce in general that still does not have electronic payments,” he reiterated.
Even so, he says that companies such as El Templo de la Moda, which had made slow inroads into virtual sales, strengthened this mechanism and today they are achieving business through this medium, similar to the sales made by 4 face-to-face stores.
The president of the CCCE considers that one of the strategies of this organization is to support MSMEs to carry out their digitization processes. “To the extent that the crisis situation does not seem to be resolved in the short term, companies will have to move towards electronic commerce channels or start their digital transformation processes in order to continue their operations.”
The truth is that electronic commerce continues to grow and in April and May there was a rise in weekly average of 12% and 73% throughout the quarantine.
Likewise, between 2016 and 2019 sales made and paid via the Internet grew 64.6% and the number of purchase transactions rebounded 171% in the same period. Annually, the average growth rate of sales has been 18%.
Other figures
According to a consumption study by the BBVA, among the sectors that benefited the most are department stores, clothing and appliance stores.
Cali, Medellín and Bucaramanga were the cities with the best performance in the clothing sector.
Although there was a growth in the consumption of both debit and credit cards, the momentum was greater in the case of the latter.
In sectors that were already showing signs of recovery, such as restaurants, fuel and transportation, there were no additional impulses for the day without VAT throughout the country.
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