E-Commerce Booms in Latin America

Spending on Web commerce in Latin America reached nearly $167 million in 1998, a 361 percent increase over 1997 levels, according to the 1999 Latin American Internet and E-Commerce Strategies study by International Data Corporation (IDC).

IDC predicts 175 percent growth in regional spending for 1999, lower than the potential spending that could be realized had the region been experiencing healthier economic conditions. The economic difficulties plaguing Brazil are expected to dampen growth.

IDC expects the region to have an above-average compound annual growth rate of 117 percent between 1998 and 2003, as the economy shows signs of improvement. Web commerce should surpass the $8 billion mark in Latin America by the end 2003, according to IDC.

Latin America’s e-commerce market is driven by its world-leading Internet user growth rate. The region had 4.8 million users in 1998, and will have an estimated 19.1 million users by 2003. According to IDC, the perceived commonalties shared by the region’s countries — culture, values, history, economics, and language — are numerous enough to believe not only in the strong potential for Web commerce, but also in the possibility that Web commerce may enable a truly unified regional market.

“As the conduit to Web commerce, the Latin American extension of the information superhighway is more riddled with silver-lined potholes than it is paved with gold,” said Annika Alford, program manager for IDC Latin America’s Internet Research. “The potential is real, but many obstacles need to be overcome before it becomes a reality.”

Obstacles impacting the region’s ability to foster e-commerce, IDC found, include weak credit card processing infrastructures, the high cost of basic Internet access to the end user, existing tariff barriers, and the high cost of logistics such as shipping. Because of these obstacles, the study found that the heavier momentum is behind the corporations in and out of the region already investing in business-to-business e-commerce solutions.