Despite its status as one the most stable economies in Latin American, global package delivery company, DHL, plans to shutter its e-commerce business in Chile.
Though DHL’s e-commerce division closes on April 12, the delivery company plans to keeps its other package delivery hubs running in the country.
DHL only began delivering packages from online retailers to consumers in Chile less than two years ago. Such a quick withdrawal indicates the importance of exploring both the benefits and challenges of expanding into a new global e-commerce market.
Reasons for Terminating Service
DHL decided to shutter its e-commerce service because it was not a very profitable venture. The fact that Chile’s e-commerce industry is still just blossoming and the tough competition from domestic delivery companies are what sealed its fate.
Other Problems Moving into Global E-Commerce Markets
Though Chile, as well as other Latin American countries attempt to grow their online markets, they face challenges like few practical payment options, consumer concerns about fraud, and poor infrastructure.
U.S. companies that want to compete and win in a global e-commerce market must know how effectively there, including the number of struggles they must face surrounding cross-border payments. Though Chile has a high level of credit card use and good quality roads, most of its package delivery industry largely focused on business-to-business transactions.
Those merchants that put in the time and effort to learn the cultures, interests, and preferences, including how individuals like to pay for goods and services, in the regions where they want to expand are the ones most likely to succeed.
DHL’s History in Chile
In 2017, DHL announced it was launching e-commerce service in Chile to address a growing e-commerce market. At the time of the announcement, Chile’s e-commerce market was at 3% and growth was projected to expand at a 10% annual rate from 2017-2020.
Additionally DHL provided state-of-the-art warehouse and order management solutions for online businesses while complementing its domestic pick-up and delivery service it launched a year earlier.
DHL adding fulfillment services in Chile also aligned with its strategy in expand its fulfillment centers in key international markets, giving retailers the opportunities to reach their consumers worldwide. Currently, DHL has fulfillment centers in the U.S., Mexico, Colombia, Hong Kong, India, Australia, Germany, United Kingdom, and Southeast Asia.
The Final Say
Though DHL is walking back its e-commerce services in Chile, it does not mean that others cannot thrive there. It simply shines a spotlight on the need to thoroughly explore and research a global e-commerce market, including the most common way to pay, before venturing forward. Also, it shows how difficult it can be to compete in these markets.
Making your business a global company requires time and initiative. If you are online retailer that wants to sell overseas, know the challenges and come up with strategies to handle them, such as get credit card processing for transactions outside your locale.
If you need an overseas merchant account or credit card processing to compete successfully in global e-commerce markets, then turn to eMerchantBroker.com (EMB). EMB not only works with many types of merchants and business types, including startups, it works with high-risk businesses.
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