Latin America Faces E-Commerce Boom

E-commerce in Latin America will generate $8 billion in 2003, up from $170 million in 1998, according to IDC, and the majority of the sales will come from business-to-business transactions.

Business-to-business sales will represent $6.1 billion of the total revenue, while consumer sales will account for $1.9 billion.

E-commerce growth in South America is dependent on a number of issues that are currently holding up growth in the region, IDC found. Among the issues: the need for a standard security protocol, the cost of Internet access, and the logistics of shipping goods across Latin American borders. IDC reports that solving this problem will lead to more e-commerce growth in the region after 2000.

Currently, IDC predicts Argentina, Brazil, Chile, Columbia, Mexico, and Venezuela will have the strongest e-commerce markets in Latin America.

Latin American Internet users spend an average of $53 per month on service fees and local phone charges, twice the amount spent by US users. According to IDC, these charges reduce the time Latin American users spend online, thus reducing their likelihood to shop online. The high costs are also the main reason only 20 percent of the region’s computers are on the Internet.

In 1998, 74 percent of the money spent online by Latin American users went to firms outside of Latin America, IDC reports, mostly in the US.

User Profile

According to the Laredo Group, the typical Latin American Internet user is 29 years old. Seventy-one percent of the Latin American users have been online for at least one year, typically spending 9.7 hours online each week.

Seventy-six percent of the users are employed, 83 percent have a credit card, and 59 percent plan to purchase online in the future. Eighty-three percent of the Latin American users in the Laredo Group study have clicked on a banner advertisement. The study also found that 68 percent of the users in Latin America use the Internet to research products and services. Travel, electronic products, and consumer goods are the most researched products.