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SEPTEMBER 2000 |
MARKET
ANALYSIS: E-commerce Opportunity: Regional vs. Local Approach SUCCESS FACTORS: Online Payment E-STATISTICAS: Where Online Purchases are made . |
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Mexico City Office Sao Paulo Office |
 MARKET
ANALYSISE-commerce Opportunity: Regional vs. Local Approach With Latin American Internet penetration levels still low, e-commerce entrepreneurs feel obliged to take a regional approach in the hope of building critical mass. Many will fail. Unlike the EEC and NAFTA trade blocks, Latin American economies are not yet integrated. For many of the same reasons that Mexican companies have failed to expand into Argentina, Chile or Colombia in the brick and mortar world, domestic e-commerce start-ups face serious challenges in their pursuit of a regional strategy. The lack of integration encompasses trade, media and travel as well as other aspects of the economy. These impediments work against the e-commerce startup seeking to implement a regional strategy. The problems are compounded by the fact that in Latin America personal contacts are still key to business success. Logistical problems abound, and are exacerbated by a jumble of trade regional barriers. Intermediaries are stepping in to fill gaps in Latin American on-line order fulfillment capabilities. For now, margin killers like buy.com and product integrators like amazon.com are leading the pack on the basis of low prices. Over the next few years, on-line intermediaries that focus on service, like Decide.com, are likely to dominate the market. To view
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 market research market profile benchmarking market entry viability market trend analysis new product testing customer satisfaction studies market
intelligence market entry |
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FACTORSOnline Payment The anticipated explosion of Latin American e-commerce markets is heavily dependent on substantial improvements in credit card infrastructure and integrated on-line purchase solutions. Achieving the more optimistic estimates will be difficult without software solutions and other technologies to facilitate online purchases. Years of high interest rates and rampant inflation have motivated merchants and buyers alike to shun credit cards in favor of cash. Buyers in Latin Americas' four largest economies still prefer to pay cash for the bulk of their purchases. Moreover, only 15% of Internet users in the region made an on-line purchase in 1999. Even if credit card use rises dramatically, most on-line merchants will not be ready to handle the surge. In the belief that boosting traffic to their web pages is the principal means of increasing sales, merchants allocate an average of 60% of their costs to web-site promotion with only 5% going to technology solutions. And for their part, technology providers are lurking for the anticipated market surge, before they invest in the region. Latin American B2C sales are unlikely to reach the hoped-for US$2 billion mark by 2003. But this is only a matter of timing. The foundations are being laid now for explosive growth after 2003. To view
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 E-STATISTICASWhere Online Purchases are made The experience of Latin American countries varies widely when it comes to where and how B2C e-commerce transactions take place. In this feature, the foreign penetration into local markets is compared for Europe, the United States, and the key Latin American countries. Brazil's unique language and bureaucratic import control system has pushed it ahead of Europe in terms of the market share going to local sites. Mexico is on a par with Europe, but has much more foreign penetration than the United States. Other Latin American countries are developing their e-commerce capabilities, but still lag behind the mainstream countries by a wide margin. To view
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 AMEX Avery Dennison BBDO Booz, Allen & Hamilton Citicorp International Computer Sciences Corp. Conagra |
 INFOAMERICAS
E-PROJECTSSEPTEMBER 2000
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tendencias |
With offices in
Miami,
Mexico City,
Sao Paulo |
