Latin American Portals Struggle with E-Commerce

Although consumer-oriented portals in Latin America play an “important role”in converting Web users to online buyers, the majority of local and regionalportals in the area still have a long way to go before they become a viable e-commerceforce, according to a new report released Thursday by research firm International Data Corp. (IDC).

The report warned that the failure of portals to beef up theironline shopping capabilities — and meet surging consumerdemand — will have a chilling effect on the overall growth of e-commercein Latin America.

For instance, IDC found that only 61 percent of the local portals providedconsumers with online payment processing capabilities, while three-quartersof the regional portals supplied this feature.

The report also said thatlocal portals offered just one-third of the shopping assistance featuresneeded to run a fully loaded e-tail site, while regionalportals offered about half of those features.

Critical Stage

IDC advised portal operators to revamp their existing e-commerce strategies bydiversifying their revenues, which are still largely dependent on the struggling online advertising market.

Like their North American counterparts, consumer portals in Latin Americaare in the midst of a “significant” shakeout, said IDC.

“Driving this shakeup is the failure of portals to meet consumer demands forcommunications, content, and e-commerce features and consequently attractand retain loyal Internet users,” the report said.

In its assessment of the efforts being taken by dot-coms to combat theindustry downturn, IDC said that many regional portals are stepping up theirstrategies to gain local market share, putting heightened competitive pressure on smaller local players.

In order to make such inroads, the report said, portals will need togreatly expand their offerings.

For example, IDC found that both local and regional portals provideextensive content in the arts, entertainment and news categories, butneither supply comprehensive business and financial content. Moreover, only 17 percent of the local portals and one-quarter of regional portals offer online banking features.

E-Biz Hurdles

Another study released in January by eMarketer also examined thedifficulties that online business-to-consumer (B2C) firms have faced in Latin America.

eMarketer found that low rates of Internetpenetration, limited personal computer ownership, and a low level of credit card usage arepreventing Latin American consumers from spending online. For theregion as a whole, eMarketer said the Internet penetration rate is only 2.7percent, compared with nearly 40 percent in the United States.

Instead, eMarketer said that Latin American e-commerce will be drivenlargely by business-to-business (B2B) transactions in the coming years.

Looking at the Top Six

To compile data for its study — entitled “Latin America’s Consumer Portals:Identifying Strengths, Weaknesses, Similarities, and Differences” — IDCexamined a total of 26 portals and their role in fostering consumere-commerce in the region.

Researchers analyzed three portals per country in the top six Latin Americanmarkets as well as leading regional players, including America Online LatinAmerica, El Sitio, StarMedia, Terra, Tutopia, Universo Online, Yahoo!, andYupi.

2 Comments

  • This is obviously saying there is a big opportunity for some bright entrepreneurs to fill the gap. Or is it?.

    I AM unfortunately ignorant of South America. Does the region suffer from major infrastructure problems,lack of will in Governments, lack of credit card ownership, banks that just don’t get it, a culture that does not buy things in a non face to face environment ( I know this point has definitely slowed the take up of e-commerce in my home country Australia).

    Any comments would be great. Having been involved in building e-commerce enabled portals, I’d love to know what’s holding them back in South America.

    Regards

    Peter Kearney

    http://www.ecompublishing.com

  • The actaul IDC piece may be something quite worth to read, if only to confirm its inherently biased “ugly American” 1950’s mentality, as proven by their reference to AOL Latin America as one of the leading players in the region!

    If the authors of the study had taken off their cultural-bias blindfolds, maybe (I’m guessing here) they would have noticed that AOL Latin America represents less than 2% of all active web-access accounts, and only because they’re counting the 33% of its users currently trying their service for free for 3 months!

    C’mon: give US a break!

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