Prepare your e-commerce channels to capture elevated online sales
With rising price sensitivity amid elevated inflation, firms should expect sales during 2022’s VAT-free days to fall short of 2021’s tax holidays, yet still exceed those of 2020. Consumer demand during 2022’s VAT-free days will also moderate compared to 2021’s tax holidays due to the timing of this year’s first two VAT-free days, which will fall outside of the end-of-year holiday shopping period. B2C firms should ensure they are offering lower-cost product alternatives to retain price-sensitive customers. Companies should also ensure local inventories are sufficient for a spike in demand on these days. Finally, B2C firms should prepare their e-commerce channels to capture the elevated proportion of online sales that VAT-free days bring.
Overview
Colombia government announced the country will have three VAT-free days in 2022, on March 11, June 17, and December 2. During these days, sales of popular consumer goods, including clothing, toys, electronic goods, and home appliances, will be exempt from the 19% value-added tax. VAT-free days in 2021 saw exceptional sales growth, totaling over COP 31 trillion, and substantially exceeding sales seen during 2020’s tax holidays. During 2021’s VAT-free days, e-commerce sales once again represented an elevated proportion of retail sales, ranging between 6% and 9%.
Our View
With retail sales set to moderate in 2022, Colombia’s three VAT-free days, starting with the first on March 11, will present key opportunities for B2C companies to seize on temporary spikes in consumer demand.
At FrontierView, our mission is to help our clients grow and win in their most important markets. We are excited to share that FiscalNote, a leading technology provider of global policy and market intelligence has acquired FrontierView. We will continue to cover issues and topics driving growth in your business, while fully leveraging FiscalNote’s portfolio within the global risk, ESG, and geopolitical advisory product suite.
Subscribe to our weekly newsletter The Lens published by our Global Economics and Scenarios team which highlights high-impact developments and trends for business professionals. For full access to our offerings, start your free trial today and download our complimentary mobile app, available on iOS and Android.