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Wednesday, September 22, 2021

Online sales in Latin America: the challenges behind the opportunity

Galit Flasterstein
Galit Flasterstein es una fanática de la feria y amante de los viajes. Esta costarricense no podía creer que hubiera tanto talento en su país que no llegaba al mundo, por lo que decidió poner en marcha su propia empresa para ayudar a crecer a estas talentosas y talentosos creadores. Obtenga más información sobre Local Keeps, sus Creadores y sus productos aquí. / Galit Flasterstein is a farmer’s market fan and travel lover. This Costa Rican couldn’t believe there was so much talent in her country that was not reaching the world, so she decided to launch her own enterprise to help these talented makers grow. Learn more about Local Keeps, its Makers, and their products here.

You have a great product that you’re certain will sell in the thousands if it only were available to all those international buyers. You decide you should start promoting your product so that people can buy it—both tourists coming into Costa Rica, and people who live abroad. Now, how shall you start?

You may be thinking of offering your product to a travel agency, or perhaps setting up a Facebook account. You may be imagining: Presto! Buyers will be coming in and you’ll become viral overnight, pay off that loan you have been carrying on your shoulders all these years, and even travel a little. It all sounds very dreamy and hopeful, but is it doable?

Selling online is much harder than the media would have us believe. We constantly read about online companies that launched and made millions, especially during COVID-19 times. But how realistic is to think that anyone can do it just by wanting it?

From my own experience, selling and growing your sales online is very difficult. It requires a lot of planning, surrounding yourself with the right people, making great alliances, investing, and most of all: a whole lot of patience.

When I launched my company Local Keeps, my vision was to help small and medium-sized Costa Rican entrepreneurs grow through sales to international markets. Local Keeps was going to become an online marketplace that would enable US and world buyers to get products from Costa Rica. We would take care of everything: packaging and shipping, as well as customer service and marketing. We interviewed over 100 entrepreneurs, tested over 1600 products, set up a fancy website and invested in Facebook ads.

Galit (center) with the Makers from Roble Rojo. Courtesy of Local Keeps / El Colectivo 506

The result: we only reached a few sales in the first 6 months.

I was demoralized and thought that my dream would probably have no “coming true.” Through those first few months and even the first year of sales, I realized that I had made several key mistakes. First, I didn’t know anything about e-commerce, and relied on outsourced marketing agencies to promote my business. These agencies didn’t know much about e-commerce either, because it turns out online sales in Latin American account for only 9% of all sales: most companies in the region are small and cannot export, and therefore, most marketing agencies don’t have the expertise to truly promote e-commerce. The end result was that I had to learn how to market my business and my products myself, which took well over a year.

Second, your e-commerce is a tiny island in a huge ocean, and getting this island noticed is no easy feat. You need to try several marketing efforts and see what is best for your business, what truly gets buyers’ interest. Prepare to invest a lot of money, and to lose money. And if you’re planning to promote through a travel agency or hotel, know that their main business is to sell their own services. Most probably, they won’t have time to promote your product. I know. I experienced it in the flesh, and it makes total sense now that I look back.

Third: easy, guaranteed and affordable shipping is key for any online marketplace. Buyers in the US are used to paying little to no shipping fees in their purchases. If you’ll be charging them $30 in shipping for a $10 product, they will not buy it. Moreover, if you cannot get your products in a secure way to wherever they’re going, you’ll have angry customers and bad references. And finally, unless you’re selling crafts, which customers know take a longer time to get made, you’ll be expected to ship your products within a week. If your courier takes a month to get your products to buyers, they will not be happy.

Galit (center in blue), directing a workshop with a Local Keeps’ Maker. Courtesy of Local Keeps / El Colectivo 506

Fourth: think long and hard about whether you’re ready to grow. The idea sounds wonderful. Just sell thousands of units, and you’ll get to live your dreams. But are you really ready? Will you be willing to invest in more raw materials, hire new personnel, sleep even fewer hours per night to get your production to grow?

At Local Keeps, whenever we interviewed new makers (that’s what we call our suppliers), we asked: do you have the capacity to grow, to scale? Every single time, we got the same answer: “Yes, of course.” But when Local Keeps’ sales started to grow and we started to order more and more products, some makers realized they were either not ready to scale or not willing to. They actually preferred to keep their peace of mind and keep producing at their own pace, forgoing the dream of growing.

My last piece of advice is also the most important one. rite down why you’re doing what you’re doing, and say it out loud. Why do you want to sell online? What will you accomplish? Will your product have an impact on somebody else’s life? Are you going to be selling something different from your competition? Even think about the vision for your enterprise: is it to help your community in a certain way? To give others the opportunity to taste, touch or smell something they’ve never seen before? Our business, as well as our lives, has to have a purpose. Making money is not the purpose. It is the result of how we carry on with our lives and our business.

As an entrepreneur and as a person, I have always thought that whatever we do has to have a why behind it, a purpose. If we have our why clear and certain, it will be much easier to endure the hardships of entrepreneurship. Keep dreaming, but make sure to also keep your feet steady on the ground.

Galit Flasterstein is a farmer’s market fan and travel lover. This Costa Rican couldn’t believe there was so much talent in her country that was not reaching the world, so she decided to launch her own enterprise to help these talented makers grow. Learn more about Local Keeps, its Makers, and their products here.

Local Keeps’ Makers during a workshop in August 2019. Courtesy of Local Keeps / El Colectivo 506

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