Like most of the world, Ecuador had a tough 2020. However, we see huge potential for the market this year. If you’re looking to expand your company in 2021, Ecuador might be the ideal location. Here’s why:
Ecuador is a growing opportunity for businesses.
Ecuador looks set to make a strong financial recovery from its recent recession and the financial crisis triggered by the COVID-19 pandemic, according to Sebastian Hurtas, the president of risk consultancy ProFITAS. Hurtas confirms that “Ecuador’s economic prospects have improved, demonstrated by the dramatic reduction of it’s sovereign risk premium and an upgrading of its credit rating.”
Coupled with the forecast recovery, the shift to online shopping triggered by the pandemic has opened up a significant opportunity for international eCommerce businesses. The Ecuadorian eCommerce market is projected to reach over US$1 billion in 2021, with an annual growth rate of 7.9%. In particular, online sales of electronics and media are projected to reach US$268 million this year. User penetration of online retail is also growing fast. 30.8% of the population are forecast to purchase online this year – that’s over 2 million potential customers. By 2025, over 35% of Ecuadorians are predicted to be shopping online.
In addition to this shift to online sales, the middle-class is growing in Ecuador. From only 18% of the Ecuadorian population in 2005, the upper and middle classes now make up nearly 40% of the population, and a higher percentage in urban areas. The new middle class are recent market entrants with access to a disposable income – perhaps the ideal target for international businesses expanding into the region.
Ecuador offers a business-friendly, stable environment.
Ecuador is a relatively stable environment for international businesses. The switch to the US dollar as the national currency in 2000 has made the country a popular destination for foreign investment, and also makes the process of expanding into Ecuador far easier for US-based businesses. Additionally, dollarization reduces your exposure to the more extreme FX fluctuations that can occur in other Latin American countries.
Ecuador has been developing its presence in global markets and this can also make your life easier if you’re looking to expand there. In addition to regional trade agreements, Ecuador has a Free Trade Agreement (FTA) with the European Union, and has recently negotiated a Phase 1 Trade Deal with the United States.
As part of this move to become an international trading hub, the Ecuadorian government has taken steps to create a business-friendly environment for both local and international companies. If you’re interested in expanding into Ecuador, you may be pleasantly surprised.
Before You Expand into Ecuador
Handling online payments
If you’ve decided to expand into Ecuador, you’ll need to plan your online payment processing carefully. For one thing, only 42% of the population have access to financial services, so you’ll need to provide a cash based alternative payment method. Fortunately, PagoEfectivo has been available in Ecuador since 2019, enabling online buyers to pay for their digital transactions in cash at retail outlets nationwide. PagoEfectivo is included for all PrimeiroPay customers as part of our single, simple contract pricing.
Building your local knowledge
Ecuador can be a great opportunity for international businesses, but only if you have a clear market entry strategy and a strong grasp of local business realities and regulations. You would be well advised to partner with a local business with experience working with international companies, who can make sure you ask all the right questions and set yourself up for long-term success.
At PrimerioPay, we’re not just a payment service provider – we help bring you closer to your customers in emerging markets like Ecuador, offering local market expertise and efficient payment solutions. Click here to chat with us about how we can help you grow your business in Latin America.