Case Study: Ecommerce Opportunities in Chile and Latin America

By: Nathan Lustig

In late 2012, I met up with two ex startup chile friends over beers. Like most beery conversations between entrepreneurs, the conversation devolved into new business ideas. All three of us had seen ecommerce’s steady growth in Chile and were certain that it would continue to grow toward levels seen in other developed markets. After a few more beers, one of us said, “why don’t we just start a small ecommerce business, it’s the best way to learn about the market and see where the real opportunities are.”

That conversation led to more conversations and we got serious about launching a small ecommerce business to really get a handle on the market. But what product should we sell? And how would we validate the market to know if the product we wanted to sell made sense? And how would we do it without spending huge amounts of money?

I’m writing this post to shed light into our thought process and to show how we validated our ecommerce business without spending a single dime (peso in this case) for two reasons:

>> To give an overview of Chilean (and Latin American) ecommerce opportunities
>> To help other entrepreneurs think about how they can validate their own ideas without spending months and thousands of dollars buying inventory, developing software and wasting time on unimportant things.

By now, almost all entrepreneurs know about lean startup methodology and try to use it, but the how remains mysterious to a high percentage of entrepreneurs. I hope this post is useful.

Preview: tl;dr (Too Long Didn’t Read)

After much research, we launched La Condoneria, to sell condoms online in Chile. We validated the opportunity by spending less than $100 and didn’t build any technology. We learned a ton, reached $8000 monthly sales and 100k unique organic traffic using Jumpseller, a Latin American Shopify.

We tried to scale by creating our own product or taking representation, but because of regulatory issues based on the product, we decided the best we could do is a small business. We believe that the two best ways to make money in Latin American ecommerce are by having exclusive representation of a product, or creating your own product, a la Warby Parker. We believe there is a massive opportunity in full stack ecommerce startups in Latam.

Step 1. Research

We first wanted to see if countries adopt ecommerce in a predictable manner. We knew that ecommerce in Chile was growing at 30% per year, but the vast majority of people hadn’t ever bought anything online. We found a Forrester report that showed the phases of ecommerce adoption. It corroborated our hypothesis that new markets tended to follow similar paths:

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