U.S. To Foster Argentinean E-Commerce

The United States has unveiled a pact with Argentina to help bring the South American country’s e-commerce capability up to speed with Asian and European competitors.

Through the bilateral trade agreement, the two governments will aim to expand customer choice, increase competition and create new jobs by promoting greater market opportunities for merchants.

“This policy initiative about the principles that should guide the development of e-commerce is a perfect complement to our joint efforts to expand participation by all citizens of both nations in the digital economy,” U.S. Secretary of Commerce William Daley said.

Daley solidified the deal this week on a visit to Buenos Aires, the fourth stop of his Latin American Business Development Mission.

Holding Loose Reins

The pact is based largely on the same principles that the Clinton administration is trying to follow in promoting e-commerce in the United States. Primarily, the two countries agreed to let the private sector take the lead in developing Argentina’s e-commerce market and business practices, with government agencies offering assistance and guidance where appropriate.

Argentina agreed to “avoid imposing unnecessary regulations or restrictions on electronic commerce,” instead encouraging self-regulation by the industries that choose to expand into the Internet realm. The Argentine government, with guidance from the United States, will also work with its country’s private sector to train and support small businesses throughout Latin America to use the Internet for international trade.

Argentina will put together a private sector group to provide a special package of hardware, software and support for small companies. Daley is also lobbying on behalf of U.S. businesses to promote privatization of previously state-owned enterprises.

Plenty of Work

Despite the two governments’ optimism, research firm Jupiter Communications, Inc. (Nasdaq: JPTR) says that Latin American countries in general lack three key components necessary to foster an electronic commerce boom.

Though many researchers, including Jupiter, are predicting a bright future for Latin American e-commerce — with a possible worth of $8.3 billion (US$) by 2005 — Jupiter notes that growth “is not just there for the taking.”

The report says that comparatively few people in Latin America use credit cards, most industries have not established reliable order fulfillment infrastructures, and PC ownership and Internet access rarely reach beyond the handful of major cities.

Even with those barriers, merchants in Argentina have been trying to establish a domestic e-commerce business, according to the Argentinean Electronic Chamber of Commerce and local researcher Planeta GaiaSur.

In December, both reported that the number of online retailers in Argentina had grown by 66 percent since 1998, and that the merchants, predominantly based in the capital city of Buenos Aires, have followed the global e-commerce trend of putting books, music and collectibles online first.

Thirteen percent of Argentina’s online merchants do not have storefront locations, and 25 percent have begun selling goods to overseas markets, the GaiaSur study said.

How to Break the Barriers

Argentina is among the three countries that are expected to lead the Internet and e-commerce revolution, along with Brazil and Mexico. The online population across the region will continue to grow at a rapid rate, Jupiter says, to about 66 million users by 2005.

In those countries, 34 percent will shop online by that time, up from 13 percent in 1999, but Internet use throughout Latin America will only reach 12 percent in that period.

“Businesses that succeed in capturing those dollars will be those that apply innovative solutions to the barriers present in Latin America’s online markets,” Latin America analyst Lucas Graves said.

Graves added, “First mover advantage and fast follower strategies won’t be enough here. Explosive growth forecasts act as a powerful magnet drawing many U.S., European and Latin businesses to this young Internet economy. But so far, too many companies are simply trying to replicate every business model dreamed up in the U.S. over last five years.”

Jupiter argues that companies will have to take an optimistic view of these barriers. Low PC penetration, for example, means an opportunity for such non-PC devices as TV set-top boxes, the researcher notes.

Low credit card use means financial institutions will have to be creative in marketing those essential e-commerce tools or in finding other ways to finance online consumer purchases.