Ingeniero

[Special report : e-commerce in Latin America June 2010]

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The strength of e-commerce
Driven by Brazil, tourism and by determined retail merchants, electronic commerce continues to grow in Latin America.

elax… Those who feared that the developing e-Commerce business in LAC was going to be another victim of the global financial crisis, can release a sigh of relief. The Internet as adistribution channel of products and services continued to grow despite the collapse of economic indicators around the globe. According to a study conducted by AméricaEconomía and commissioned by the payments company Visa, eCommerce to consumers (B2C) grew 33.2% in 2009 representing US$21.175 billion in Latin America & the Caribbean. In 2010 forecast of another 27% is expected by the end of the yearbringing the total close to US$28 billion in B2C. In the midst of a season filled with decreasing economic and financial indexes, the growth was expected. eCommerce reflects a profound change in the way consumers relate and behave with companies that provide them with products and services. These behavior trends experience little impact from the negative GDP reports or confidence decline ofinternational investors in the market. To see it a different way, despite the market stagnation, many of the fundamental components that drive eCommerce continue developing. PC and Broadband penetration grew at a rate of 20% & 15% respectively (at the end of 2009, there were 150 million PC users and 40 million with access broadband in the region). Simultaneously, access to a variety of payment methodswas available

PICTURES: PATRICIO OTNIEL

as banking service was used by more and more people. And that’s not the end of the story. Airlines and large retailers began offering increasingly more sophisticated offerings which paved the way for small and medium businesses to perfect their on-line business models. Demand also grew by a generation being educated on-line, joining the labor force, andable to satisfy their consumption needs via the Internet. The perception of security also improved (see graphic) which facilitated the move towards on-line purchases. “In Latin America, we finally reached a critical mass of users so that many business models on the Internet can rapidly produce revenue”, says Alec Oxenford, founder of the online auction house DeRemate. com (purchased byMercadoLibre.com), who is currently the head of OLX.com, an online service for free ads with a global presence. Another observation drawn from the study was the unbalance growth that was experienced. In several markets, the market crisis was a justification to postpone the technological and logistic investments that were necessary to improve their on-line business models. This decision impeded the growth ofproducts and services acquired through this channel. An example of

CLICS & MONEY
30.000 25.000 20.000 15.000 10.000 5.000 0 1,866.4 2003 3,042.1 2004

Total spending in e-commerce B2C in Latin America (US$ millions)
Source: América Economía Intelligence

34,497.3

27,597.9 21,774.9 15,645.0 10,572.5 7,542.5 4,885.0

2005

2006

2007

2008

2009
Brazil Mexico

2010p
ChileLatam

2011p

MAturINg MArkEtS
B2C as % of PGB
0,9% 0,8% 0,7% 0,6% 0,5% 0,4% 0,3% 0,2% 0,1% 0,0% 0.19% 0.14% 0.09%0.11% 0.05% 2003 0.13% 0,11% 0.07% 2004 0.26% 0.20% 0.18% 0.33% 0.32% 0.24%
Source: América Economía Intelligence

0.84%

0.64% 0.54% 0.42% 0.36% 0.27% 0.18% 0.10% 2006 0.13% 2007 2008 2009 0.52% 0.35% 0.52%

0.30%

0.07% 2005

this, were the retailers in Colombia andPeru who showed significantly lower growth rates. The Colombian group Éxito, the biggest retailer in Colombia,

is only now making the investments necessary to develop their on-line business in 2010 (see The Role of the Owners case).

Scattering beans around the World
he click that allows your ecommerce business to be taken to any part of the world, resulted very true for Costa Rican of...