visa-america-economia-ecommerce- study-2010-eng

8/7/2019 Visa-America-Economia-eCommerce- Study-2010-ENG

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The strengthof e-commerce

Relax Those who feared thatthe developing e-Commercebusiness in LAC was going

to be another victim of the

global nancial crisis, can release a sighof relief. The Internet as a distributionchannel of products and services

continued to grow despite the collapseof economic indicators around the

globe. According to a study conducted byAmricaEconoma and commissionedby 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 year bringing the total close to

US$28 billion in B2C.

In the midst of a season lled withdecreasing economic and nancial

indexes, the growth was expected.

eCommerce reects a profound changein the way consumers relate and behavewith companies that provide them withproducts and services. These behaviortrends experience little impact from

the negative GDP reports or condencedecline of international investors in

the market.

To see it a different way, despitethe 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 methods was available

Diven by Bail, oism and by

deemined eail mecans, eleconic

commece conines o o in Lain

Ameica.

PICTURES:PATRICIOO

TNIEL

[Special report :e-commerce in Latin

AmericaJune 2010]


2/16

Scattering beans around the World

The clic that allows your ecommerce busiess to be tae to ay part of the world, resulted very true for Costa Rica of Caf Britt. Actually,,95% of the USD$5.1m of coffee this famous Cetral America brad sold over the Iteret, has a US & Caadia destiatio. We epect atourist that travels to Costa Rica have a cup of coffee o the iht, arrive at the airport, by chocolate ad bas of Caf Britt as ifts, ad tae adiscout card for future o-lie purchases says Pablo Varas, Eecutive Presidet of Caf Britt who metios that mareti ad iteratioal

loistics are fudametal to his operatios. Caf Britt has ooi areemets with FedE ad DHL ad hasestablished a customer service ceter i Sa Jose whose staff is uiversity raduates ad biliual ad is able toservice cliets aroud the lobe. Eve thouh we are a small coutry, throuh the Iteret we are able to offer

ecellet service ad a very positive shoppi eperiece offeri o-lie chat assistace, direct customer service via phoe, ad resposevia email withi 2 hours says Varas. Havi see the o-lie busiess row from 15% aually, Varas epects10% epasio i 2010 fromIteratioal sales. While electroic commerce remais small i the coutry ad oly a few players with omial sales (primarily supermaretchais from the US), Varas says that may coffee compaies have looed ito commercializi their products throuh the Iteret. Most havethese efforts are short-lived whe results are ot quic to come by. That is ot how it wors positioi i the Iteret is a lo strateysays Varas. You have to ivest for the lo term, focus, ad be willi to ivest may resources.

as banking service was used by moreand more people.

And thats not the end of the story.

Airlines and large retailers began

offering increasingly more sophisticatedofferings which paved the way for smalland medium businesses to perfect theiron-line business models. Demand alsogrew by a generation being educated

on-line, joining the labor force, and

able to satisfy their consumption needsvia the Internet. The perception of

security also improved (see graphic)

which facilitated the move towards

on-line purchases. In Latin America,we nally reached a critical mass ofusers so that many business models

on the Internet can rapidly produce

revenue, says Alec Oxenford, founderof the online auction house DeRemate.com (purchased by MercadoLibre.com),who is currently the head of OLX.com,an online service for free ads with a

global presence.

Another observation drawn from thestudy was the unbalance growth that

was experienced. In several markets,the market crisis was a justication topostpone the technological and logisticinvestments that were necessary to

improve their on-line business models.This decision impeded the growth

of products and services acquired

through this channel. An example of

CLICS & MONEYTotal spending in e-commerce B2C in Latin America (US$ millions)Source: Amrica Economa Intelligence

MAturINg MArkEtSB2C as % of PGBSource: Amrica Economa Intelligence

BrazilMexico Latam

Chile

2003

0,9%

0,5%

0,7%

0,3%

0,1%

0,8%

0,4%

0,6%

0,2%

0,0%2005 20082004 20072006 2009

0.14%

0.19%

0,11%

0.07% 0.07%

0.20%

0.33%

0.32%

0.10%0.13%

0.18%

0.30%

0.84%

0.54%

0.52%

0.36%

0.42%

0.26%

0.11%

0.05%

0.09%

0.13%0.18%

0.24%0.27%

0.35%

0.64%

CafeBritt.com

0.52%

this, were the retailers in Colombia andPeru who showed signicantly lower

growth rates. The Colombian group

xito, 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).

30.000

20.000

5.000

25.000

10.000

15.000

02003

1,866.4

4,885.0

2005

15,645.0

2008

3,042.1

2004

10,572.5

2007

7,542.5

2006

21,774.9

2009

27,597.9

2010p

34,497.3

2011p


3/16

in order to become stronger in the

area of e-commerce. For example,

Walmart, which landed on the Braziliane-commerce market in October 2008,states that it aims at doubling its

digital sales in 2010. They are focusingtheir strategy on variety. The current

offer is 10,000 items, classied in 11

categories, but the company wants

to reach 100,000 items, divided in

21 sections by the end of this year.

Walmart also has virtual stores inother countries, such as Chile, under

the name of Lider, and in Mexico, withSuperama -but both of them only sellgroceries. Carrefour Brazil, which hasjust launched its e-commerce portal,has a similar plan (see The Advantage

The advantage of being last

I

Brazil, the erce battle i the area of electroic commerce (see mai article) has itesied with the arrival oflobal players competi with the locals who curretly domiate the maret. Wal-Mart joied the o-lie battle

i October 2008, ad ow its the tur of the Frech chai Carrefour, which iauurated its e-commerce operatio iMarch, alo with the aoucemet of a rather ambitious oal: to tae fth place amo the e-commerce playersi Brazil by the ed of 2011. Bei the last to joi has its beets, says Rodrio Lacerda, director of maretifor the etwor. We ca desi the site based o a ood diaosis of everythi that isoi o, uderstadi the eeds of the cosumer ad the latest treds, ad offer a moredifferetiated solutio. With a hefty ivestmet of US$ 27 millio, the roups portalwas developed i seve moths, usi all of the cocepts of the Web 2.0: users ca et iformatio about productsthrouh descriptive videos, reviews writte by other users, as well as blos, chat rooms, ad social etwors. Amoother differetiated services, Carrefours virtual store i Brazil offers eteded warraties for products ad after-salesservice. The Brazilia platform, which is the rst to be lauched by the Frech compay i a emeri coutry, willserve as a model for compaies i other coutries, such as Aretia, Colombia ad Chia.

of Being Last chart).What is really interesting in Brazil

is what might happen with Po de

Acar. This Brazilian retail giant hasrecently acquired its rivals Ponto Frioand Casas Bahia and has become

not only the leader in retail sales,

but it also reached an attractive

position in e-commerce. This company,which at the end of this survey was

experiencing a review process of its

merger with Casas Bahia, decided toconcentrate the sale of hard goods viathe Internet with a new player called

Nova PontoCom. With an estimated

sales volume of US$1,000 million for

2010, the operation was launched

already occupying second place in the

In other countries, the decrease intourism a consequence of the nancialcrisis and the swine flu- hindered

higher growth levels, one of the most

important drivers of commerce activityin the Internet. The case of Mexico is

crystal clear; tourism accounts for

nearly 70% of B2C transactions.

RETAILERS ON THE

OFFENSIVE!

In order to have a better understandingof the explosive growth of this channel,you must take a look at Brazil. Not

only is it the biggest country in Latin

America, Brazil also has the highest

usage indicators in the region. An

advantage that grew in 2009 with the

arrival of 4.4 million new Internet usersto the country, which contributed to

elevate B2C gures over US$13,000

million - nearly 61% of all e-commerce

focuses on consumers in the region.Our conservative growth estimation is30% annually in this segment until 2016,says Gerson Rolim, executive directorof Camara-e.net, the association thatbrings together Brazils e-commerceoperators.

Rolim is not alone in his optimism

about Brazil. It so happens that the bigretailers have dramatically increasedtheir technological and logistic bets

Carrefour.com.br

CONfIDENCE gOES hIghHow do yo perceive security in the operations that you realize inthe internet? Only High and Very High, as % of totalSources: AmricaEconoma readers survey, May of each year

20082010

80%

40%

60%

20%

70%

30%

50%

10%

0%

ARgEnTInA

COSTARICA

PAnAMA

BRAZIL

ECUADOR

PERU

VEnEZUELA

BOLIVIA

CHILE

PARAgUAY

COLOMBIA

MExICO

URUgUAY

LATAM


4/16

On the logistics of social networks

If you tae a close loo at Falabellas aual report, the Chilea departmet store, you wot d ayrefereces to its web site. nothi! no busiess pla - ot a sile umber. Sources withi thecompay eplai that this secrecy is due to success: the advatae that Falabella.com holds over itscompetitors is so lare, that the compay doest wat to mae ay effort to reveal the drivers of itsood results for this chael. Its cosidered to be codetial iformatio, says Ricardo Aloso,eeral maaer of Falabella.com, who oetheless admits that sales throuh his web portal are hihertha for ay Falabella store i the coutry. Sources close to the compay say that the compaysiteret sales represet 57% of those for the etire retail idustry, ad this maret share ca becormed by compari o-lie trafc data athered by sites such as Alea.com ad gooleTreds.com.

Estimates by iformed maret sources show that Falabella.com bris i 9% of the etire sales volume for the chaii the coutry, which is rouhly US$ 142 millio. Alosowot corm those umbers, but he does provide a littlemore iformatio about ey factors for Falabella.com.The buyi eperiece is crucial, he says. Accordi toAloso, just havi a ood o-lie cataloue ist eouh.Loistics is also cetral to the user eperiece. It ist

just about havi delivery trucs, but also about haviitelliet routi systems, systematic iteratio for

traci orders o-lie, adcaro loadi systems, he says.Oe ey area where may havefailed is i reverse loistics:

the process that lets a buyer retur a usatisfactoryproduct. Its a tremedously comple process, but ot

doi it well, ca ill a e-commerce busiess. I Chile,as i most of Lati America, there are o loistics servicessuitable for electroic commerce that permit roud-the-cloc deliveries at reasoable rates, for all types of oods.

So Falabella has had to put toether its ow model, followi the eample of successful e-retailers ithe USA ad Europe, which Aloso is always visiti. Aother basic factor is cotiuously observithe user. We are always watchi ad measuri what the user is doi o the site - everythi, hesays. The cotiuous observatio stratey eve eteds to social etwors. They have created a socialetwori committee to tae advatae of these two-way commuicatio chaels with customers,such as Faceboo ad Twitter, where they coduct a lot of activities ad promotios for their followers.I additio to Chile, Falabella.com also operates i Aretia, ad will soo ope i Colombia ad Peru,where the curret sites are oly iformative, ot trasactioal.

demand is not yet there. In Colombia

and Peru, the investment by retail

operators is recent and is dominated

by a few players. Only Chile, the secondcountry which features more maturityin e-commerce in the region, displayssignicant developments in a sector

dominated by Falabella.com (see FromLogistics to Social Networks case) -

Cencosud, Ripley, Sodimac and LaPolarhave signicant presence.

THE BEACON FOR SMALL AND

MEDIUM COMPANIES

To be a relevant player in the area of

e-commerce, it requires a good deal ofinvestment in technology and logisticsin order to have an efcient distributionprocess for the products sold. It is

impossible to reach sales of US$100

million unless there are substantial

and sustained nancial commitmentsfrom one or various players.

Small sized companies can get goodresults as well. As search engines

become the main research tool for

Internet users, small businessesstart having as many chances as big

chains when the time comes to makea purchasing decision. This is furtherfacilitated by sites like MercadoLibre.com, a portal that came to life offeringconsumers the possibility to auction

their merchandise. Now, 90% of its

sales have a xed price and 80% are

new goods. This shows the large

presence of small scale businesses

on that platform.One of the positive side effects

of e-commerce is that it generates

incentives for those companiesthat operate informally to enter the

legal world. This is the case with

Mercado La Salada, an important

textile center in Buenos Aires, which

released MercadoLaSalada.com, or

the Las Malvinas technology fairs

(Malvinasperu.com) and Computiendas

Falabella.com

Brazilian e-commerce segment just

behind B2W (the consortium formed bythe integration between Submarino.comand Lojas Americanas). Unfortunately,B2W has seen its advantage dwindle twoyears in a row since 2009 experiencinggrowth below the industry average andreducing its market share from 60% to47% in Brazilian retail. B2W will investaround US$100 million in technology

in 2010 to reverse the trend.

A novelty in Brazil: for the first

time, home appliances appear among

the best sellers bought online. Sales

grew by 137% from 2008, and are

positioned just behind the traditional

categories, like books, newspapers

and magazines subscriptions, and

personal care products (health, beautyand medicines).

Brazils retail outperfoms other

Latin American markets. In Mexico,

elpalaciodehierro.com is the leader,

though its a market that has not yet

bet big on this channel. In Argentina,

there are successful models, but the


5/16

The role of owners

The owers visio ad support for electroic commerce is essetial for creati a successful stratey. Just as the eecutives of the iteretuit at the Colombia grupo ito (the larest retailer i the coutry) which was bouht by the Frech supermaret chai Casio i 2007.Casio operates afliates i various coutries aroud the world, amo them Brazil. We started our o-lie operatio i 1998, but it was asmall ad rather u-ambitious uit, wori out of a tiy ofce iside the compay, says Eduardo Re Mirada, Head of Electroic ad HomeCommerce at grupo ito. But today, sice Casio too over, we live ad breathe Iteret. A importat part of thischae i midset was the eperiece provided by Casio from its o-lie portals i Europe ad Brazil where its afliate,the Etra chai of departmet stores, operates the Etra.com.br portal. Havi direct access to the eperiece of models i coutries with socio-ecoomic situatios similar to that of Colombia, drove more purpose ito the roup, which is ow prepari a series of ivestmets for reovatiits o-lie sales chael - particularly i the techoloical area where there are several bottleecs at the momet. the fact is that we haveto step up. Aual Iteret sales at ito were i the reio of US$ 15 millio i 2009, barely 0.8% of the sales of the etire roup. Sales throuhEtra.com are aroud 5% of the total sales of the afliate, says Mirada.

(Computiendasperu.com), in Peru.

Small and medium size businesses

have much to gain with electronic

commerce because of its visiblebenets, potential to access to new

markets and the dynamic nature of

the channel thats so similar to their

business models says Jos Mara

Ayuso, Global Products Executive fromVisa. In those countries with more

robust financial and technological

infrastructure we can already find

many success stories.

GOODS THATGO ACROSS BORDERS

An iPad, an Android cell phone, or thelatest PC by Sony: Perhaps, they are

not available yet at your local store, but

you can purchase them directly from

the US, at the most popular websites,like Amazon or eBay. This type of

online shopping where consumers gofor products which are unavailable at

e-commerce sites in their countries

is signicant. As a matter of fact, it

is one of the aspects of e-commerce

2005 2006 2007 2008 2009

BRAZIL 2,269.9 3,540.5 4,898.7 8,572.6 13,230.4MXICO 567.1 867.6 1,377.0 2,010.0 2,624.9

VENEZUELA 253.4 489.6 821.5 787.8 906.1

ARGENTINA 281.3 378.1 561.5 732.8 875.0

CHILE 242.8 471.8 687.5 919.5 1,027.9

EL CARIBE 387.0 565.0 660.0 754.9 868.1

COLOMBIA 150.3 175.0 201.3 301.9 435.0

PUERTO RICO 344.0 384.3 445.0 489.8 587.8

OTROS 131.3 164.8 203.0 260.9 306.5

CENTRAL AM. 189.2 359.9 499.0 563.9 637.2

PERU 109.1 145.5 218.2 250.9 276.0

LATAM + CARIBE 4,885.0 7,542.1.8 10,572.5.1 15,645.0 21,774.9

tOtAL e-consmionSelected countries/regionsIn US$ millions US$Source: Amrica Economa Intelligence

Grupo xito

with the highest growth levels.

Despite the costs of logistics and

Customs, there are an ever rising

number of Latin American consumerswho are using the Internet to shop

for products that are not found in

their countries. When the iPhone

was released in 2007, we received

an enormous quantity of orders for

the new gadget from Latin America,

says Paul Gartland, CEO at SkyBox,

a logistics company based in Miami

which receives goods bought in the

US and sends them to their Latin

American buyers. In 2009, we made150,000 shipments for products from

the US to Latin America - a rise of 18%in 2008, despite the crisis.

Because of its logistics integrationwith the US, Mexico is the country

where most purchases in American

stores originate. Many Mexicans shopdirectly from Amazon and eBay, not

having to go through an intermediateservice. Industry experts estimate thatthis volume represents a third of the

whole e-commerce in Mexico. Actually,the direct competition from the US is

one of the factors which have inhibitedMexican companies from growing in

e-commerce.

In Central America and the

Caribbean, there are also shoppers

in foreign sites due to their proximity

to the US, and their reduced markets.These consumers are used to shoppingat international sites and speak

English making the purchase even

more natural.

If there ever was a country well-

Brazil doesthe 61% of the

whole B2C inthe region


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The monthly purchase

The H1n1 swie u was ood for busiess at LeShop.com.ar. The portal was created i the year 2000 for the purpose of becomia ceter for selli food ad roceries o-lie to elimiate the eed for cosumers to o to the supermaret. The busiess swelledwhe the swie u pademic quaratied the mai cities of Aretia i July 2009. May people chose to buy their daily eeds over theIteret, with LeShop bei oe of the favorite sites, causi a rowth rate of 50% last year. Achievi this rate i a maret that is stillwary of e-commerce was due to two fudametal factors: its ow loistics ad its persoalized customer service. We uderstad that,i order to icrease our maret share ad build up customer loyalty, these two factors are the ey to buildi codece it allows us

to have a persoal service ad brea the barriers of distace that are iheret to the virtual busiess saysgozalo Toms Betez, eecutive director of LeShop. The iteret supermaret, as the compay callsitself, is said to have 35% maret share amo o-lie supermarets, a idustry which was estimated

to be worth some US$ 65 millio i 2009. This compay, which replicates the Swiss compay with the same ame, has a portal thatsimulates a stroll throuh the supermaret - eve dow to the isles ad shelves. The objective is to facilitate a chae i habits at thetime of doi the household shoppi. For this, they assi a persoal advisor to each customer who itroduces himself by ame adca be cosulted reardi ay cocer, order chae, or special requiremets. We wat the buyer to feel the warm ad pleasatservice of the typical corer store because the customer who buys over the iteret is a demadi customer who values quality,timeliess, ad the precisio of each order, says Betez.

BrAzILIAN pOwErhOuSETotal spending ine-commerce per countrySource: Amrica Economa Intelligence

BRAZIL

CHILE

COLOMBIA

MExICO

PERU

PUERTO RICO

VEnEZUELA

CEnTRAL AMERICA

ARgEnTInA

CARIBE

OTHERS

61%

5%

2%

12%

1%

3%

4%

3%

4%

4%

1%

Leshop.com.ar

known for its international shopping,

it is Venezuela. In 2007 the Venezuelangovernment allowed a US$1,500

credit limit (the Cadiviallocation) to whoeverwanted to use make

purchase via the

Internet with their

credit cards. The Cadivi allocation

caused a lower exchange rate (subsidy)

for Internet transactions causinga massive shift to international

transactions via the Internet. The

International shopping is about a third of thewhole e-commerce done in Mexico.

government not surprisingly, reducedthat limit to US$400, increased the

ofcial exchange rate and toughened

the requisites to access those dollars, allof which reduced these operations.

However, if international purchasesdrop in Venezuela, they go up in

Brazil. Even though some tariffs on

electronic products may reach 100%,

the exchange rate enriched

Brazilians have taken advantageof the higher value of their

currency to buy on the Internetmany of the products that are

not available in their country.

According to Camara-e.Net, in

2009, Brazilians spent US$620million through by this mean,

30% higher than in 2008.

Cross border purchases is a2 way street: many immigrantsto the US have replaced the

cash they send to their familiesin their countries of origin

and prefer to shop directly in

the e-commerce sites where

their relatives reside. This has

made stores like TiendasElektra.com,which belongs to the Salinas Group

in Mexico, and PriceSmart in Central

America and the Caribbean, develop

special services for those international

shoppers.

FLYING HIGH

Much of the e-commerces momentumin the region is being led by the tourismindustry, especially airlines. This drivehas nothing to do with revolutionary

offers from low cost airlines, like

Brazilian Gol, Volaris in Mexico or Airesin Colombia. In the past few years, thebiggest effort has come from long

established players which have madegreat investments to encourage the

direct sales of tickets through the

Internet. The Chilean originated Lan,

with its website, Lan.com, has been oneof the most aggressive players in this

battle: by offering strong promotional

campaigns in order to attract travelers tobuy directly on its portal and bypassingany agency that gets a commission onthe sale of tickets. In the region, the


7/16

Fans euphoria

The Aerosmith cocert i Colombia was scheduled for May 20, but i Eduardo Oleas ofce i Boota, the frezy bea lobefore. To be more precise, it started at eactly 0:00 o Saturday March 13, whe cocert ticet sales opeed o theTuboleta.com portal, owed by Colombia compay Colticets, of which Olea is the research ad developmet maaer. Atthat istat we had 85,000 people hti for 10,000 ticets, from their computers... at oe poit there were about 110,000people., says Olea. There were too may hits, too much iformatio, ad the system wet dow for a while. He recoizesthat euphoria for the cocert overwhelmed the portals techoloical ad paymet systems, which is why they are ow mai

siicat ivestmets i strethei their computer system so it ca hadle such lare volume of trasactios. Theo-lie busiess actually cosists of maai euphoric rus. Iteret is the preferred chael forbuyi ticets for lare evets with reat epectatios, such as soccer als ad major cocerts,where everyoe wats to buy the best seat before everyoe else, he says. Ad he should ow,sice his compay is the pricipal ticet sales oraizatio i the coutry. They also have presecei Peru ad Ecuador ad sell throuh various chaels: two i-perso chaels (with 70 poits of sale, as well as variousticet booths at theaters ad stadiums) ad two remote chaels (telephoe ad iteret sales). Of the total umber ofticets sold by Tuboleta i 2009, 49% wet throuh remote chaels while 22% of the total was by Iteret. However, themost epesive ticets are sold by Iteret. While the averae price of all ticets sold throuh all chaels is US$ 15, theaverae for those sold throuh Tuboleta.com is aroud US$ 30. I 2009, the total for ticets sold by the o-lie chael wasaroud US$ 20 millio. The Colombia compay also has ticet sales i Ecuador however, iteret ticet sales are almostirrelevat ulie I Peru, where the busiess is rowi. I Peru we sold 10,000 ticets i 2009 ad this year we epect tosell aroud 15,000, but the chael i that coutry is barely 25% of the remote chaels, says Olea.

TuBoleta.com

COMpuLSIVE CONSuMErSHave you shop through the internet in the last 30 days? Only positiveanswers, % of the population.Source: TGI/KMR

8,0%

4,0%

60%

2,0%

7,0%

3,0%

5,0%

1,0%

0,0%ARgEnTInA CHILE MExICO VEnEZUELABRAZIL ECUADORCOLOMBIA PERU LATAM

2,8%

3,4%3,1%

6,14%6,58%

2,94%

3,75%

3,07%

1,96%1,62%

2,76%

0,28%0,71%0,94%

1,78%

2,63%

1,75%

2,40%

1,00%

1,77%1,34%

3,72%4,01%

4,28%

1,89%1,81%

7,21%200720082009

are no physical goods to be delivered

it simply relies on the consumers

trust, as the purchase involves high

ticket items. An average ticket in the

tourism industry is worth US$900 for aseat on a plane, and US$400 for hotel

reservations, according to Despegar.

coms gures, which requires high

credibility and reliability rates to makethe transaction.

BOTTLENECKS

Despite its high growth, Latin America

remains predominantly an ofine regionmany people still not using banking

services. Many factors remain which

must evolve to reach the e-commercelevels in more developed countries.

For instance, there are challenges

to be resolved in the IT mechanisms

of transactions in many countries,

which results in additional redtape or

complications for online operations.

Logistics and mail services are alsohighlighted as important obstacles forthe completion of projects. Brazil as an

Brazilian airline Gol is still the airline

which features the most sales on the

Internet with over 90% of its revenue

being generated through this channel(though many of them cannot be

considered direct, as they are made bythe travel agencies themselves using

the airlines portal).

The novelty however, is that there

are small and medium companies fromthe industry sector which are startingto use e-commerce successfully to

make their transactions. It may be

a company that provides transport

to tourists on the Mayan coastline in

Mexico, like CancunTransfers.com, ora resort in the Caribbean, or a hostel

in Machu Picchu. Nowadays, 70%

of hotel reservations are carried out

online, says Alvaro Dago, director forLatin America of the Intercontinental

Hotels Group, which includes brands

like Holiday Inn. Although brand loyaltyis relevant in this industry, Internet hasallowed smaller companies to becomewell-known and gain positions.

The travel industry for the most part,does not have the logistical problems ofonline retailers primarily because there


8/16

Agency take-off

Use sales prices as if they were a traditioal cosumptio product. This was oe of the ideas of Despear.com wheit lauched its Despear.com Outlet Hotels iitiative, after it coviced a roup of hotels i the tourist areas ofAretia to reduce their rates by 50% ad aticipate sales for the Jauary-February 2010 seaso sales throuh theportal. This ist a isolated idea: a few years earlier, the o-lie travel aecy, which was fouded i the ieties,souht to icrease the maret share of hotels ad tour pacaes i its sales portfolio. They uderstad they eededto aim for a hiher value sector, such as the sale of hotels ad tour pacaes either from eteral tour operators or setup by themselves. The idea is that i a few years, this will accout for 50% of our sales. Eve thouh airlie ticetsaccout for 80% of their trasactios i the tourism idustry, they o loer offer the prot levels of a few years aosice the airlies are tryi to use Iteret to strethe their ow direct sales models ad have reduced commissios toaecies. This type of chae has eerated a lot of pressure i the travel aecy idustry. Its a busiess that cotiuespayi oly if you are bi, says Aretiea Cristia Vilate, co-fouder ad VP of HotelesDespear.com for Lati America. Thats where we have the advatae sice we are curretlyamo the larest three travel aecies i the reio ad we will soo be umber oe. Thecompay is actually eperieci very hih rowth rates of aroud 90% aual, which allowed itto close 2009 with a trasactio volume of approimately US$ 500 millio (the base over which they receive commissios)

- they epect to close 2010 with sales of aroud US$ 900 millio. For the year edi i April, sales totaled aroud US$700 millio, says Vilate. Despear.com has put efforts ito Meico ad Aretia, the Brazil, Chile, ad the Peru,Colombia, Cetral America ad the Caribbea, where they just recetly started operatios. I all of these areas they havetae advatae of the scales provided by a idustry that is still hihly frameted. The Brazilia maret, where theyoperate uder the brad ame Decolar.com.br, is their larest maret accouti for more tha 40% of their etirebusiesses. I that coutry, they are surpassed oly by SubmarioViaes.com, the tourist brach of the Brazilia iat B2W. Meico is its secod maret, represeti20% of all sales, the Aretia with 15%.

Despegar.com

exception, which has a high-level mailservice, the countries in this region haveinefcient and costly mechanisms fordistributing goods. These inefciencies

make it necessary for many companiesto set up their own logistics. In the USthis practice is unimaginable, where

rms like DHL, UPS and FedEx are thestores best partners.

Furthermore, signicant investmenthas to be made in technology for

companies to offer services that

really generate a differentiated user

ELECtrONIC MONEYPrefered payment system onlineFuente: TGI/KMR

80%40% 60%20% 70%30% 50%10%0%

CREDIT CARD75%

13%DEBIT CARD

3%TRAnSFER

1%CHECk

7%CASH

experiences when compared to

traditional shopping. This, in addition

to the distrust felt by a large number

of people, creates obstacles. However,

they can be overcome and each new

progress will make it possible to expandthe volume of goods and services

which are moved by our economies

along the most efcient information

highways.

METHODOLOGYEstimates by AmricaEconomaIntelligence in preparing this studyor the years 2008 and 2009 werebased on inormation providedby the ofcial sources or eachcountry (e-commerce chambers orassociations).The inormation wascategorized and supplemented with

industrial analysis and fnancial reportsrom large companies and experts,and two surveys: the TGI 2009 surveyby KMR, which was conducted ona representative sample o 24,433interviewees in eight countriesacross the region during 2009, and asurvey conducted on-line last May byAmricaEconoma, o 2,300 readers.

For those countries which donot have organizations that estimatethese purchases, AmricaEconoma

Intelligence prepared its own estimatesby taking into account other variablesrelated to electronic channel sales. Forthe purposes o this study, we defnedconsumer e-commerce (B2C) tobe those commercial transactions

which are conducted over theinternet, and which end with at least apurchase order whose fnal recipient

is a private individual. With thatdefnition, we included transactionsexecuted between consumers andretail companies, tourism companiesand airlines, between consumers

(C2C), and also transactions with the

government (on-line tax payment).

The amounts in dollars were obtainedusing the exchange rates or the last

day o each relevant year.

The English version o this

document was edited by Visa.


9/16

E-Readiness inLatin America

A report into regional conditions for e-Commerce

ExEcutivE Summary:the developmen of elecronic commerce in counry

depends on nbe of bles whh n be goped

into ve broad areas: potential demand, technological

infrastructure, penetration of payment technologies, the

stregth o suppl, a the spee at which cosumers aoptnew echnologies. a he behes of pymens compny

Visa, AmricaEconoma Intelligence nlzed eh of

one of hese bles n Ln aes ledng kes

nd deeloped n nde of e-redness whh desbes

he p of eh on o nsfo he nene no eee bsess-o-ose sles hel. i ode

to give a referential value to this indicator, two markets

(Spn nd he uS) whh despe he po o Ln

ae he deeloped e-coee o h gee

extent were also analyzed, with the aim o understanding

he regions filings nd deermining is srenghs nd

hllenges when oes o e-coee. Ln ae

score a e-Reaiess score i 2009 o 0.62 poits, whichrepresets a sigicat 47.6% rise over 2005. However, thegp wh deeloped ones ens wde: he egonl

dex s los wo-hds o Sps e-redess d js

hd of h of he uS.

On the riseEvolution of e-Readiness and the volume of B2Celectronic commerce (left axis) in millions of US$ for all ofLatin America

Source: AmricaEconoma Intelligence e-Readiness 2009e-Commerce (left)

30,000

35,000

10,000

20,000

0

25,000

5,000

1,8663,042

4,885

7,542

10,573

15,645

21,775

0.350.38

0.42

0.470.52

0.55

0.62

15,000

2003 2005 20082004 20072006 2009

0.70

0.50

0.30

0.10

0.40

0.60

0.20

0

Conditions in the region for thedevelopment of e-commerceimproved by 47.6% over thelast four years. The gap withdeveloped countries remains wide.AmricaEconomia Intelligence


10/16

a

s L aes les soe hs d spees he p ee

emphasis o iteret sales, the have move rom publishig sales catalogs

weeed ewsppes o poo ole phses. che o hs : o

Lati Americas sixt largest retail operatios, whose aual sales all excee

US$500 millio, 53% alrea have a olie strateg i place. It might ot seem much,

b epeses hh owh e oe bes d h he oewhel joy

o he e-coee ses e less h wo yes old.

I act, ma retail operators that o ot et have a olie sales strateg tol

AmricaEconoma that the pla to lauch their rst e-Commerce site i the comig

ohs. ths s ood ews o he deelope o e-coee he eo s y

expes o h he pesee o esblshed bds h e well-ow by oses

o he ee wll be po o eo L aes e sse o

elze phses ole. ths s wh hs hppeed Bzl d chle: he eos

wo led oes es o he peee o people who he de ole

phses (e-oses) e lso he wo oes whose el dses he de

he soes ods o e-coee.

This seco versio o the e-Reaiess stu, that AmricaEcoomia Itelligece

has carrie out at the request o the pamet techologies compa Visa, icorporates

he seh o ole spply s oe o s ey dos. as he o he e-redess

dex s o ele he poess de odos ey o he deelope o B2c

(busiess to cosumer) e-Commerce, the methoolog was moie to reect the olie

pesee d y o dol el opeos.

Report ofe-Readiness in LatinAmerica 2010

Read for e-CommerceSample of the most representative indicators that form the e-Readiness indexPercentual values are percentages of the populationSource: AmricaEconoma Intelligence

CountryPoPulation

(in millions)

GDP PerCaPita (in

us$)

% 25-35years olD

internetusers

PotentialDemanD

inDex

FixeDtelePhony

mobiletelePhony

PCbroaDbanDsubsCriP-

tions

Cost oFbroaDbanD

(in us$)

inFrastruC-ture inDex

arGentina 40.3 7,726 15.8% 29.7% 0.65 24.9% 122.8% 12.8% 9.1% 20.14 0.61

bolivia 9.8 1,724 14.8% 12.8% 0.32 7.3% 64.5% 2.7% 1.0% 53.00 0.19

brazil 193.7 8,220 17.1% 40.1% 1.78 21.7% 95.7% 25.0% 7.7% 15.53 0.70

Chile 16.9 9,525 14.6% 33.8% 0.50 21.1% 107.5% 18.9% 10.2% 24.38 0.59

Colombia 45.6 5,087 16.0% 42.0% 0.73 17.9% 90.3% 11.7% 4.4% 31.72 0.41

Dom. rePubliC 9.7 5,176 15.5% 25.1% 0.40 10.5% 93.1% 2.4% 2.9% 18.99 0.43

eCuaDor 13.6 4,059 15.3% 29.9% 0.44 14.6% 99.0% 15.5% 0.3% 24.90 0.40

Guatemala 14.0 2,662 14.1% 16.8% 0.36 11.5% 155.6% 2.8% 0.7% 50.01 0.37

honDuras 7.4 1,823 15.4% 15.4% 0.32 13.4% 140.7% 2.6% 0.0% 25.00 0.40

mexiCo 109.6 8,135 16.3% 29.0% 1.14 19.8% 77.6% 18.4% 9.4% 20.05 0.52niCaraGua 5.7 972 16.0% 19.2% 0.33 5.7% 71.1% 6.4% 0.8% 39.99 0.26

Panama 3.4 7,132 15.6% 30.4% 0.39 16.4% 154.6% 3.1% 6.7% 16.95 0.62

Peru 29.1 4,356 16.3% 27.4% 0.55 10.6% 73.3% 14.8% 3.1% 22.28 0.43

Puerto riCo 3.9 2 1,869 14.2% 40.0% 0.52 24.9% 149.5% 25.4% 6.2% 24.95 0.66

ParaGuay 6.3 2,337 15.6% 14.8% 0.31 8.4% 128.6% 11.9% 1.9% 24.13 0.44

el salvaDor 6.1 3,623 14.2% 11.1% 0.29 19.6% 155.3% 10.2% 2.6% 21.99 0.54

uruGuay 3.3 9,425 14.1% 41.9% 0.44 29.5% 126.0% 16.5% 7.9% 13.81 0.69

venezuela 28.6 11,789 16.1% 31.2% 0.61 22.9% 110.2% 16.3% 7.2% 13.99 0.88

latin ameriCa 547.0 7,327 16.3% 33.2% 1.11 19.4% 96.9% 17.9% 6.8% - 0.59

sPain 45.9 35,116 16.1% 57.7% 1.00 46.1% 112.9% 50.5% 21.5% 17.45 1.00

us 307.0 46,436 13.5% 78.9% 2.95 48.4% 90.0% 93.2% 25.0% 19.95 1.27


11/16

The stregth o the retail iustr, the umber o participats

which have implemete e-Commerce strategies, the umber

o pod eoes whh e lble ole d he

trac their sites geerate have bee ae to the more

h wey dos sed o eee he e-redess

iex. These are groupe ito ve broa areas to acilitate

desd s show he ble he boo o hs

pe (the ehodoloy s expled ee del o pe

8 o hs epo). Eh oe o he e-coee es s sed

o ee des whh wee he wehed o deee he

eel e-redess dex. to llow opsos bewee

Lati America a the rest o the worl, two coutries (Spai

d he uS) wh hhe leel o deelope e-coee

b whose eooes he so ls o L ae

wee lso lded he sdy. ths yes lyss s bsed o he so Sp

2009: he e-redess dex o eh oy d o eh do s obed hoh

opso wh hd d o Sp he ed o 2009.

ths L aes e-redess soe o 0.62 o 2009 es h s odos wee

the equivalet to 62% o Spais i that ear. However, this represets a cosierable

rise rom the score o 0.42 that the regio achieve i 2005, implig a improvemet

o 47.6% i the coitios or e-Commerce over the last our ears.

The expectatio is that this iicator will rise b aother 10% i 2010. Brazil is the

Report ofe-Readiness in Latin

America 2010

Internet times twoComparison of percentage of the population which usesthe internet, 2005 vs. 2009Source: AmricaEconoma Intelligence

ecuador

honduras

argentina

0,9

0,5

0,7

0,3

0,8

0,4

0,6

0,2

0,1

0

bolivia

doMinican

reP.

chile

sPain

nicaragua

Paraguay

us

brazil

Mexico

Puertorico

Peru

uruguay

coloMbia

guateMala

PanaMa

elsalvador

venezuela

2005

2009

CreDitCarD

DebtCarD

atmbankinG

inDexmobile

broaDbanDe-buyers

onlinePurChases

teChnoloGyaDoPtion

inDex

onlinetaxPayers

mayorretailers

online

PotentialsuPPlyinDex

e-reaDinessinDex

40.8% 40.7% 15,000 0.34 3.32% 3.48% 875 0.32 0 2 0.09 0.46

2.2% 12.7% 908 0.04 0.32% 1.50% 44 0.20 0 0 0.00 0.17

71.2% 123.0% 174,255 0.97 4.27% 9.73% 13,230 0.61 0 10 0.33 0.95

53.2% 48.0% 7,562 0.70 3.41% 7.02% 1,028 0.55 131,974 6 1.06 0.63

16.6% 33.0% 9,274 0.20 1.85% 4.02% 435 0.20 - 1 0.07 0.36

16.7% 30.8% 2,000 0.17 1.38% 4.16% 209 0.34 - 0 0.00 0.31

14.2% 19.7% 1,340 0.13 0.60% 2.50% 71 0.15 - 0 0.00 0.26

8.6% 12.5% 1,254 0.09 0.76% 2.02% 77 0.21 9,500 1 0.06 0.25

8.1% 11.6% 735 0.10 0.70% 1.99% 28 0.20 - 1 0.06 0.25

10.8% 53.0% 39,856 0.20 0.99% 4.30% 2,625 0.31 418,972 11 0.22 0.5310.8% 12.3% 568 0.10 0.35% 1.79% 12 0.15 - 1 0.06 0.20

15.7% 56.5% 944 0.62 1.52% 2.94% 102 0.26 - 0 0.00 0.43

16.1% 46.9% 3,763 0.22 0.53% 3.14% 276 0.20 34,049 1 0.13 0.34

33.8% 42.5% 1,478 0.42 4.91% 3.30% 588 0.59 - 0 0.00 0.50

12.2% 11.7% 526 0.14 0.61% 2.04% 38 0.24 - 0 0.00 0.27

7.2% 14.9% 694 0.10 0.80% 2.04% 46 0.33 - 1 0.06 0.30

51.5% 43.9% 1,985 0.58 4.85% 5.12% 82 0.36 - 0 0.00 0.48

24.5% 51.0% 15,124 0.34 0.86% 5.16% 906 0.34 0 0 0.00 0.45

37.6% 69.6% 277,266 0.51 2.50% 5.90% 21,775 0.41 0.22 0.62

95.4% 67.0% 61,374 1.00 11.30% 16.01% 8,400 1.00 5,630,896 - 1.00 1.00

187.8% 165.1% 500,000 2.14 14.59% 74.00% 146,420 2.25 98,000,000 - 2.25 2.12


12/16

coutr with the highest e-Reaiess score i the regio, ollowe b Chile a Mexico

(or a more etaile aalsis o each coutrs e-Reaiess, see the al pages o the

epo).

DEficit in infraStructurEEcLac s o wo op h wll see o ede he pe o bodbd

seel oes L ae. cos o ess s oe o he bes o he sped

o bodbd oss he eo. the pl s o op ded o ll hese oes

egotiatios with iteratioal telecommuicatios proviers. I achieve, it woul represet a

importat avace or the irastructure ecessar or e-Commerce,

oe o he dos whee L ae hs he os h

up to o. Toa the regio has less tha 60% o the irastructure

h Sp hs. the obsle hee s bodbd peeo.

the ole o bodbd oeos oss he eo sood

at arou 37 millio at the e o 2009, represetig almost oe

coectio or ever tee ihabitats. This is ar ewer tha i

Spai where there is oe coectio or ever 4.5 ihabitats, or

i the US, where this oe or ever 3.9. There is a similar situatio

i persoal computers. While i Spai, there are 504 computers

or ever 1,000 ihabitats, a i the US, the same gure is 932,

the regio has a average o just 180 or ever 1,000 iiviuals.

i s oble h he owh es e o hose oe wold expe

o a regio with a computer ecit: each ear, the umber rises

b just 10%-11%, a growth has bee slowig i recet ears,

whh es h L ae wo eh he e leels o

Spai a the US util 2031 a 2044, respectivel. The gap is smaller i mobile phoes.

At the e o 2009, the peetratio o mobile telephoes i the regio stoo at 100.7%, arahea o the US where the gure was 90% a ol slightl behi Spai at 112%. I act,

sx oes he eo heed leels o peeo hhe h h o Sp. a l

actor here, however, has bee the evelope o prepai

oble elephoe sees whh do o eqe h he se

possesses a curret accout, a creit car or eve a kow

aress, which are all ke prerequisites or e-Commerce.

ths expls why he eholoy p wdes whe we

lyze ewe eholoes. Oe o he ey bles he

teholoy adopo do s he peeo o oble

telephoes with broaba iteret access. I Spai, 11.3% o

the populatio ows oe while the gure i the Uite Statesis 14.6%. These are ot high staars. I some coutries i

Asia, the peetratio o mobile broaba excees 90%. The

so L ae s ey dee: js wo o o eey

100 ddls ows elle elephoe wh py o

trasmit ata at high spee. Urugua a Puerto Rico, which

have bee the quickest to aopt this techolog, peetratio

stas at just 4.8% a 4.9% respectivel. We must watch closel how this variable evolves

i the uture as mobile broaba is essetial or mobile electroic commerce, reerre to

as m-commerce, which is expecte to grow rapil give the serg betwee cosumptio

d pobly o oble elephoes.

Report ofE-Commerce in LatinAmerica 2010

Mobile DominionComparing the evolution of the quantity of differenttechnologies across Latin America (in millions)Source: World Bank, Cisco and AmericaEconomia

2001 2002 20062004 20082003 20072005 2009

600

500

400

300

200

100

Personal Computers

Broadband SubscriptionsMobile Telephones

Latin DisparitA decade of development of e-Readiness,selected countries in Latin AmericaSource: AmericaEconomia Intelligence

ArgentinaBrazil

ChileMexico

PeruUruguay

VenezuelaCentral America

1

0,6

0,8

0,4

0,1

0,9

0,5

0,2

0,7

0,3

0

2001 20052003 20072002 20062004 2008 2009


13/16

Report ofE-Commerce in Latin

America 2010

PrOmOting BankingAt the e o 2009, there were 205 millio creit car users i Lati America (represetig

a peetratio o 37%) a 381 millio (70%) owe a ebit car, ot o all which ca be

use i electroic commerce. The gure represets a sigicat icrease rom ve ears

o (espelly o deb ds) lhoh hee s sll pley o oo o owh. Oe o

he obsles o e-coees deelope s he led epe o deb

cars or olie operatios, sas Guillermo Rospigliossi, executive irector o Emergig

chels vs. Ebl deb ds o e-coee epeses oe o he bess

oppoes es o he pye se d qly beoe oe o he

des o ole sos s hs hppeed oe e es.

I compariso, the US ha a stock o 576 millio creit cars at the e o 2009

(188%) while Spai ha 44 millio (95%). The Bakig Sstem iicator also iclues

he ol s o deposs s popoo o gDP d he be o oed elle

hes (atms) s poxy o desd s py o eleo sos

a the use b cliets o operatios outsie bak braches. The regios 277,000 ATMs

represets a ver low average peetratio o this techolog, with barel 0.5 ATMs or

ever 1,000 ihabitats, compare with 1.4 i Spai a 1.7 i the US.

B s he seh o spply whee he deepes deees wh he eeee

coutries ca be ou. To stu this variable, a sample o retail operators with aual

sales o more tha US$500 millio were aalze base o the suppositio that these

compaies have the acial a techical resources ecessar to a lauch a olie

sales campaig. O the sixt operators aalze, just 31 ha a olie strateg, i.e. a

sol webse. i ode o ese he poe o he ole hels o hese

operators, site trac was aalze (usig the Alex.com service a GoogleTres as

sources) a compare with total sales. While Brazilia retailers achieve 492 site visits

or ever US$1,000 o each operators total sales, the Argetiea compaies coul ot

ee hee wo se ss. ths shows h he ole o sos o he el soesremais much more importat that their olie trac, which

s lso l o ee sles.

ths do lso esed he possbly o py oes

persoal taxes olie, a activit which attracts large umbers

o people o oe sophsed ee sos. Oly

Chile, Guatemala, Mexico a Peru score i this iicator.

the es he ehss o y o soe x opeos

ole b o x pyes e hey e los o

the opportuit to improve their eciec a iorm the

wde poplo bo hs pye ehod.

mOrE OPPOrtunitiESthe e-redess do d s sb-dos see o

shed lh o he esos behd he he dspy he

deelope eleo oee oss L ae.

the behes h sepe he eo wh oe deeloped

markets are wie. To overcome them, growth must be accelerate. The umber o iteret

users hit 181 millio i 2009, a aual rise o just 9% compare to growth o arou

20% i previous ears. However, the regio remais ull o opportuities a aoptio

o mobile techologies is high, creatig space or the evelopmet o iitiatives i this

el comparable with those i more avace markets.

Alternatives to moneHistoric evaluation of banking componentsin Latin AmericaSource: AmricaEconoma Intelligence

Credit Cards (000)Debit Cards (000)Automated Telling Machines

400,000

2001 2003 2005 20072002 2004 2006 2008 2009

200,000

300,000

100,000

350,000

150,000

250,000

50,000

0


14/16

This small nationhas advanced

rapidly in adoptingnew technologies. Nowonder that Uruguayis the country withthe highest use ofmobile broadbandin the region (almost5% in 2009) with highlevels of penetration

for complimentarytechnologies, suchas PCs, mob i let e l ephones andothers. It also hasone of the regionslowest xed broadband connection costs, the result of a government driveto improve technology infrastructure which has attracted many technologycompanies to operate in the country. However, the retail industrys onlinepresence remains low and has not been accompanied by governmentinitiatives to develop electronic government services.

With all the rightconditions in

place to develope-commerce, Braziln o w l e a d s t h eregional e-Readinessindex. Latin Americaslargest economy notonly has the largestnumber of PCs perinhabitant in theregion but also thelowest broadbandcosts and the highestuse of bank creditand deb i t cardsin Latin America.Brazilians growing wealth is leading them to try new technologies inincreasing numbers. While they may not have the regions highest levelof mobile telephone penetration (95.7%), they are one of the leadersin mobile broadband (4.3%). Brazils retail operators have been veryaggressive in expanding their online presence, from wholly onlinecompanies like Submarino.com to traditional retailers like Americanas.com and Walmart. One pending challenge for Brazil is e-Government:Brazils complex tax system has been an obstacle to developing an onlinetax payment system. However, Brazil, which spent more than US$13billion in B2C transactions in 2009, is the country closest to matchingSpains e-Commerce conditions.

Argentineansare amongst

the fastest in theregion in adoptingnew technologies.Argentinaspenetration levels formobile telephones,b r oadband andm ob i l e i n t e r ne tare amongst the

highest in Lat inAmerica. However,the country faceshuge challengesin developing itsbank ing sec to r ,where deposits represent just 21% of GDP, implying that a signicantproportion of transactions occur outside the nancial system. This hasprevented retail operators from launching more robust internet strategiesand the relatively greater weight of online operations between consumers(C2C) which use payment mechanisms, limiting growth.

Chi le is Lat inAmericas

most connectedeconomy. Broadbandpenetration is theh i g h e s t i n t h eregion. It has theh ighes t leve l o f online purchasesper inhabitant and itsbanking system hasthe highest level ofcoverage. Chileansare also the leadersin the consumption ofmany technologiesand Chi le is theregional leader in e-Government. For example, 77% of Chilean f reelancetaxpayers pay their personal taxes over the internet, thanks to a profoundeffort by the countrys tax authority over the last ve years which hasallowed many to become familiar with online payments. However, mobilebroadband has not grown as fast as expected and connection costshave risen relative to those in neighboring countries which has led theauthorities to seek mechanisms to cut prices.


URUgUAy: 0.48

BRAZIL: 0.95

ARgENTINA: 0.46

CHILE: 0.63

AnALySIS Of E-REAdInESS By COUnTRy And ITS BREACHES

Breaches in e-Readiness betweencountry and Spain and region average

Spain Latin America Brazil

Source: AmericaEconomia Intelligence1.2

1

1.5

0.5

1.75

0.75

1.25

0.25

0

Market

volume

Infrastructure

Banking

System

Potential

Supply

Technology

Adoption

E-

READINESS


Spain Latin America Uruguay

Source: AmericaEconomia Intelligence

1.2

1

1.5

0.5

1.75

0.75

1.25

0.25

0

1.2

1

1.5

0.5

1.75

0.75

1.25

0.25

0


Spain Latin America Chile


1.2

1

1.5

0.5

1.75

0.75

1.25

0.25

0


Spain Latin America Argentina


Market

volume

Infrastructure

Banking

System

Potential

Supply

Technology

Adoption

E

-READINESS

Market

volume

Market

volume

Infrastructure

Infrastructure

Banking

System

Banking

System

Potential

Supply

Potential

Supply

Technology

Adoption

Technology

Adoption

E-

READINESS

E-

READINESS


15/16

Connectivity isa critical part

of President HugoChavezs Bolivarianrevo lu t i on . Thegovernment hasinvested signicantr e s o u r c e s i npromotingbroadband accessthrough nationalized

telecommunicationscompany CANTV.This explains whysubscription feesare so low (US$14)in one of the regionsmost expensive countries and the rapid growth in broadband connectionsin recent years (up 55% in 2009 alone), the fastest in the hemisphere.E-Commerce, however, has largely been developed through purchasesfrom foreign stores and C2C operations. The government has undertakenfew initiatives to encourage the payment for services over the internetand local retail operators are barely present online, weakening overallconditions.

Puerto Ricosproximity and

economic links withthe US make thecountry a specialcase in terms ofe-Commerce. Asignicant proportionof Puerto Ricosinternet users buyonline and spendlarge sums doingso, a reflection oftheir high per capitaincome. However,access to bankingremains below theLatin American average, the country lacks a robust local retail industrywhile its technological infrastructure is just average. However, the smallCaribbean state is improving its position through mobile commerce, witha penetration rate of 5%.

Carlos Slimshomeland has

just 77.6 mobiletelephones for every100 individuals (oneof the lowest levelsof penetration in theregion), and just oneout of ten Mexicanspossesses a creditcard. These twoindicators exemplifythe huge challengesMexico faces interms of technologyadoption and itsbanking system.Mexicos retail industry is powerful but it has not made much onlineprogress. Walmart does not have a transactional website in Mexicoalthough it does in the US and Brazil. However, there are other factorswhich helped Mexico achieve fourth place regionally for e-Readiness. Aswell as the advantage of the size of its market, the Mexican governmenthas made important steps towards e-Government and today allows manytax operations, including tax payments, to be carried out online. Lastyear 410,000 Mexicans did so, the largest number of online tax payersof any country in the region.

At the end of2009, there

were twenty millioninternet users inC o lom b ia , i n acountry with just twomillion broadbandsubscriptions.T h i s h i gh l i gh t sthe importance ofpublic connection

s i t e s , s u c h a scybercafs, schoolsand businesses,in developing aninternet culture. Thismovement has beenhelped by government which has launched various e-Government initiatives.For now, only companies can pay their taxes online but a platform thatallows individuals to do so is in the works. Colombia, however, facesmajor challenges in terms of technology adoption (fewer than two in everyone hundred Colombians possess a mobile broadband connection andthere is just one computer for every twelve people) and banking (just16.6% of the population owns a bank credit card).

Report ofe-Readiness in Latin

America 2010

PUERTO RICO: 0.50

VENEZUELA: 0.45

MEXICO: 0.52

COLOMBIA: 0.37

Spain Latin America Puerto Rico



1.2

1

1.5

0.5

1.75

0.75

1.25

0.25

0

1.2

1

1.5

0.5

1.75

0.75

1.25

0.25

0


Spain Latin America Mexico


Breaches in e-Readiness betweencountry and Spain and region averageSource: AmericaEconomia Intelligence

Spain Latin America Venezuela

1.2

1

1.5

0.5

1.75

0.75

1.25

0.5

0


Spain Latin America Colombia

Source: AmericaEconomia Intelligence1.2

1

1.5

0.5

1.75

0.75

1.25

0.25

0

Market

volume

Market

volume

Infrastructure

Infrastructure

Banking

System

Banking

System

Potential

Supply

Potential

Supply

Technology

Adoption

Technology

Adoption

E-

READINESS

E-

READINESS

Market

volume

Market

volume

Infrastructure

Infrastructure

Banking

System

Banking

System

Potential

Supply

Potential

Supply

Technology

Adoption

Technology

Adoption

E-

READINESS

E-

READINESS


16/16

The e-Readiness indicator reects the conditions that a country offers for the development of e-Commerce. It does this byconsidering twenty economic and technological variables, shown in the table below, which are selected or their econometricpoe s well s he poe e o he by os dsy expes o he e owh o B2c eleo oee.Time series were developed or each o the variables, covering 2001 to 2009, creating a complete database which will providegreater statistical solidity. As the different indicators use different units of measurement, the value 1.00 was taken for each

indicator to represent the value o Spain in 2009, using this country as a reerence as in the 2008 version o the study. A countrywll he le of oe hn o less hn 1.00 dependng on how opes o he ndo of Spn n h e. the soesor the data used in this study include the World Bank, CEPAL, the International Monetary fund, Cisco, 3G Americas, Alexa.com, banking and nancial regulators in each country as well as the corresponding tax authorities.We would like to thank each one o the sources that helped us to obtain the inormation, the industry leaders who shared theiropnon on he ehodolog of he sd nd vs in who sppoed he eon of hs epo.


Conditionsi n C e n t r a l

America vary from

country to country.Panamas bankingsystem is one ofthe most robustin the region whileEl Salvador andGuatemala lead thehemisphere in termsof mobile telephonepenetration. Theisthmus, however,has the regionslowest indicatorfor infrastructure and technology adoption, signicant obstaclesthat must be overcome if e-Commerce is to prosper. The potential,however, is enormous. The integration of Central America and itsproximity to the US are major advantages.

CENTRAL AMERICA: 0.46

METHOdOLOGy

Peru is one ofLatin Americas

m o s t d y n a m i c

economies whichwill be an advantagewhen it comes tocreate the conditionsnecessary to develope-Commerce. One ofthe most importantpending tasks istechnology adoption.There are just overs e v e n m o b i l etelephones for everyten inhabitants andless than three broadband subscriptions for every 100 Peruvians.Less than 1% has access to a mobile broadband connection. Theretail industry has not made great efforts online. Only the Wong chainof supermarkets has made an effort to create an online catalog but theproject is limited.

PERU: 0.34

Spain Latin America Peru



1.2

1

1.5

0.5

1.75

0.75

1.25

0.25

0

Spain Latin America Central America



1.2

1

1.5

0.5

1.75

0.75

1,25

0.25

0

Market

volume

Market

volume

Infrastructure

Infrastructure

Banking

System

Banking

System

Potential

Supply

Potential

Supply

Technology

Adoption

Technology

Adoption

E-

READINESS

E-

READINESS

e-Readiness

Strentgh osupply

Strength o

retail

Online tax

payments

Mobile

broadbandCredit cards

Fixed

telephonyPopulation

Big players

Broadbandsuscribers

Broadbandprice

Availability oproducts

%25-35 y/o

Online trafc

Internet users Personalcomputers

% o big retailersthat sell onlineOnline B2C

spendingATM

GDPper capita

Mobilesphones

e-buyersDebit cards

Technologyadoption

BankingInrastructureMarket volume

Deposits as %o GDP

visa-america-economia-ecommerce- study-2010-eng

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