Report: Latin America Poised for B2B Boom

Latin American companies will conduct $10.9 billion (US$) in online business-to-business (B2B) transactions in 2001, with the figure rising to $63.8 billion by 2005, according to a report released Friday by the Yankee Group.

Yankee said a large number of developing enterprises have joined the few companies that have been transacting online in the region since the mid-1990s.

“We were quite frankly surprised by the number of businesses that expressed the fact that they were now sourcing online,” Grant Smith, senior analyst for Yankee’s Latin American Internet strategy planning service, told the E-Commerce Times.

Cutting Red Tape

The firm sees groups from all industries moving to the Web to do business, though manufacturing, wholesale and retail sales, and financial services will see the greatest volume of transactions in coming years.

The arrival of undersea cable and the availability of increased bandwidth are leading to an “interregional connectivity” that is fueling the boom in the region, said Smith.

Smith added that Yankee found “anecdotal evidence” that smaller companies in the region, as they get more sophisticated computers, are shifting their purchases to the Internet.

Brazil To Lead Growth

Brazil will account for 51 percent of the total B2B e-commerce volume by 2005, the firm said.

“It’s a result of the size of the market and speed with which Brazilian companies are bringing to bear an intense focus on B2B initiatives,” said Raphael Duailibi, Brazil market strategies analyst at Yankee.

Mexico, Argentina and Chile are also leading the shift to the Web, the firm said.

The trend benefits the U.S. in that it is “clearly fueling increased demand for servers, for e-commerce solutions, software — the whole gamut of different pieces that have to come together” to make e-commerce work, said Smith.

Report Echoes Other Findings

The report is the second this week to point to Latin America, Brazil in particular, as a hot market for e-commerce.

On Monday, the Boston Consulting Group and Visa International issued a report focusing on the consumer market that predicted $580 million in online sales for the region this year. That report found that consumer-to-consumer auctions were the most popular form of e-commerce in the region.

Forrester Research also sees the region as a growing e-commerce force, with B2B accounting for 93 percent of the growth as overall transaction volume rises to $82 billion by 2004.

Big Picture

Forrester analysts said a combination of currency-stabilization moves, liberalized trade policies and improvements in telecommunications and computer technology will help fuel growth in coming years.

To put the numbers in perspective, however, Forrester has predicted that online sales in Latin America’s six largest markets in 2004 will total 1.2 percent of e-commerce worldwide.

Six percent of Latin Americans are expected to have Internet access by 2003, compared to 70 percent of U.S. citizens, according to International Data Corp. (IDC).