Report from the Latin America E-Commerce Summit in Miami

Latin America Will Be The World´s Fastest Growing Regional Internet Market

Madanmohan Rao 12.04.2000
Report from the Latin America E-Commerce Summit in Miami

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Low PC penetration, high access costs, low credit card usage and not enough locally relevant content or services - despite such thorny issues in the regional Internet market, over 500 delegates form across the Americas and parts of Europe gathered recently in Miami for the first Latin America E-Commerce Summit.

Hosted by New York-based research group Jupiter Communications, the conference focused on regional similarities and contrasts among the 26 million online speakers of Spanish and Portuguese across the globe.

Indeed, it is probably Latin America that offers one of the best case studies worldwide of how the Internet can simultaneously be a local, regional, transcontinental and multilingual medium for content and commerce.

"The objective conditions and people´s perceptions of the Net are changing throughout the region. Thousands of Internet companies are now being created, and the worldviews and lives of millions in the region are being transformed by the Net," said keynote speaker Fernando Espuelas, CEO of StarMedia, the leading media player in the Latin American Internet market.

Latin American growth in the Internet user base will far exceed that of other regions in the world, according to Jupiter Communications. The overall number of online users in the region is expected to shoot up dramatically to 67 million users in year 2005.

In 1999, Latin America had about 11 million users of the Internet, as compared to 48 million in the Asia-Pacific, 58 million in Western Europe, and 109 million in North America.

Access models

Some of the most outstanding innovations in the region are probably in the area of free ISPs, community access models, and e-commerce logistics systems.

Bradesco and Unibanco, the largest and third largest Brazilian banks respectively, are the first major regional players to launch free Internet access for their account holders.

Terra Networks, the recently-debuted Internet branch of Spanish telco Telefonica, is currently a leading ISP in many Latin American countries. Terra Networks has already launched its free ISP edition for Brazil, called Terra Livre. The leading media player StarMedia Network has also launched a free ISP throughout Latin America called GRATIS1.

One of the most powerful access innovations comes from Peru, where the Rede Cientifica Peruana (Peruvian Scientific Network - RCP) pioneered the concept of Internet community centres in the early 1990s.

"Internet access through leased lines and shared devices in community centres - not just individual dial-up access - holds the key for growing the Internet as a mass medium in emerging economies," said Jose Soriano, founder of RCP. RCP is exporting this model of affordable Internet access (now available for under 40 cents an hour in Peru) to Colombia, Argentina, El Salvador, and Brazil, said Sariano. "We are also working with World-Tel to extend this model to India," he added.

RCP plans to invest $40 million this year to grow the community centres in Peru and add services like VoIP (Voice over IP). Local access must be coupled with local transactional content to boost national e-commerce, Sariano said.

Portals and verticals

"Local content and local personalization are key to domestic growth of the Net. We do not believe in presenting a U.S.-centric or European version of the Net to Latin American users," said Adrian de Lop Freideberg, CEO of Mexican Internet media company Libertis.

Major portal players in the region include StarMedia, Universo Online, El Sitio, Yahoo and AOL, and a battle for early branding in the Latin Internet market is well under way.

Universo Online, a joint venture of Brazil´s largest newspaper and magazine groups, has now crossed 1.5 billion page views a quarter - reportedly making it the world´s most-visited non-English portal.

In addition to mass-market portals, verticals are also proliferating in the region focusing on finance (Patagon.com, ZonaFinanciera, LatinStocks), health (Salud.com, MedicoUno, Salutia.com), auctions (MercadoLibre, DeRemate.com, Lokau), e-tail (Submarino, LaLibreria, Fiera, Espanol.com), travel (Viajo), sports (Sortsya, Futebol Total), and children´s fare (Aprendiendo.com).

Dot-Com Bubble

Due to the huge amount of dot-com activity in the region and growing acceptance of Internet business models, upto 15 Latin American Internet companies are expected to go public on the U.S. NASDAQ exchange this year, and another 50 next year.

Cities like Miami in the U.S. are emerging as a major hub for e-commerce companies operating in Latin America; Miami also happens to be one of the most visited destination cities for shoppers and tourists from Latin America.

But consumer challenges lie in increasing overall awareness about the individual and societal benefits of Internet access, and providing them with locally relevant content and services that are key to their personal and professional lives.

"There are also lots of dumb U.S. investors chasing Latin Internet stocks, and there is a real concern that losses on their part may lead to a backlash against the overall Internet market here which will hurt us all," warned Argentinian Wenceslao Casares, CEO of online finance site Patagon.com.

[mailto] Madanmohan Rao is an Internet jornalist in India.