Latin America Looks to Microsoft for E-Commerce Leadership

In a poll of 500 Latin American companies, International Data Corporation (IDC) has found that 85 percent of the respondents are currently using or plan to use e-commerce within the next two years, and that Microsoft continues to dominate the mindshare market among companies in the region.

“Overall, Latin America-based e-commerce can be characterized as a very nascent, but growing market,” said Alex Manfrediz, an analyst with IDC Latin America. “It remains to be seen if this interest will translate into aggressive investments in the region or if this is simply overly optimistic projections fueled by the hype surrounding the Internet.”

The companies participating in the study, conducted during June and July, indicate that implementation of e-commerce is still sluggish, with only 11 percent reporting current usage. The finance industry is most aggressively adopting e-commerce solutions throughout Latin America.

Overall, Mexico and Brazil show more progress than Argentine companies. However, recent economic difficulties in Brazil could slow that country’s foray into e-commerce.

Still, the big picture is one of robust activity online, with projections of rapid growth. IDC reports that Web commerce in Latin America reached nearly $167 million (US$) in 1998, an increase of 361 percent over 1997 levels.

Additionally, most major corporations in the areas surveyed are rolling out business-to-business commerce plans or implementations. Of those questioned, most single vendors who are attempting to go online mention Microsoft solutions.

The Rush To Get Online

The rapid growth in e-commerce among Latin American countries clearly has something to do with the unprecedented influx of new users. In 1998, there were 4.8 million users, and projections indicate that the number will increase to about 19.1 million by 2003. Similarities in culture, economic factors and language among the countries would seem to suggest strong potential fore-commerce.

The combination of a rebounding economy and shared business practices among the countries contributes to IDC’s expectation that the region will surpass $8 billion in spending by the end of 2003.

Still An Uphill Climb

Despite the projections, there is still a long way to go before Latin America joins the e-commerce mainstream. “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 division. “The potential is real, but many obstacles have to be overcome before it becomes a reality.”

Roadblocks to Internet commerce progress in the area include weak credit card processing infrastructures, the high cost of basic Internet access for end users, tariff barriers and the high cost of shipping.

The area’s greatest hope may be for corporations outside the region to invest in business-to-business commerce solutions that will speed up transactions, increase security measures and allow the countries to keep pace with countries that are already more advanced in their technology.