South America E-commerce 2006
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Business Development e-commerce overview South America (Draft - 09/2006 - V 0.1)
CONTENTS
Strategy ....................................................................................................................... 3
SOUTH AMERICA ............................................................................................. 5 BRAZIL .............................................................................................................. 6
2
Strategy First Six Months •
Study of local market o Competitors o Partners o Suppliers o Prioritize Targets
•
Develop a Business Model to offer to Prospects o Transportation costs o Import Taxes o Custom taxes and storage costs o Supply costs o Front End software (Portuguese and Spanish) o Interfaces and Plug-ins o Commercial Modelling o Return of Investment
•
Develop Proposals and place them.
Second half-year •
Evaluation of the work done (with two possible lines). o First line: Develop Local Structure and a local office. o Second line: Continue home-based office.
•
IF First Line: Develop local maintenance service and structure.
•
Initiate South America contacts: Argentina and Chile (and Mexico???).
Second Year (using First Line) •
• • •
Divide Brazil in three regions: o Northeast-North o Southeast – west o South Define Account Managers for Brazilian regions. Help to develop the Brazilian framework Business Model in Argentina, Chile. Initiate contacts: Uruguay, Peru, Colombia, and Venezuela.
3
Third Year • •
Sediment position in Argentina and Chile (Mexico???), by having local maintenance service and training services. Help to develop the Brazilian framework Business Model in Uruguay, Peru, Colombia, and Venezuela.
4
South America It is a region with a peculiar manner of “doing business”. They are very sensitive to regional government policies; the social pyramid is amazing, the social network is very important to the success of business and they have some constraints to foreigner business, mostly when they are not established in their country (South America countries). The motivation of those constraints is the experience that when something goes wrong the foreign company closes the door and go home or as the currency exchange floats, and in most countries are not very stable, the products and service may became inaccessible. So it is very important to have local presence and an established position, not only for sales, services but also for maintenance and parts reposition. Others issues, in the region, are the problems with taxes and charges, precarious infra-structure, bureaucracy which facilitates corruption, and the fault of commitment in business practices. This determines a specific practice that many times is not understood and unbelievable to Europeans. The most important and more stable South America economies are from Brazil, Argentina, Chile and Mexico. And they are the suggestion to begin the market development. First approach will be in Brazil, and than the other countries, in which order, it will depend on the development of the local contacts and current local policies and economy. But the estimative is to dedicate, at least, the first six months exclusively to Brazil.
Some South America e-commerce key figures: Argentina The expectation is that e-commerce (B2C), in 2006, reach 560 millions of euros. This represents a 60% growth on on-line transactions over 2005. Argentina ends 2005 with 10 millions Internet users and can end 2006 with more than 13 millions users. The average transaction changed from 12 euros to 36 euros. And it is expected to rise to 72 euros motivated by the on-line sales expansion of consumption products, like digital cameras, computers and others. The B2C market is concentrated in “free sales” and auction sites like ebay. The retail market has a small participation.
5
Source: Prince & Cooke y Carrier y Associados, September 2006.
Chile The e-commerce (B2B and B2C) transactions in Chile reached US$ 8.250 millions (6.496 millions euros) in 2005 and it is expected to be U$ 10.500 millions (8.267 millions euros), 25% growth, in 2006. The B2C market is expected to reach in 2006 around US$ 250 millions (196 millions euros). In 2005 this market increased 115% motivated by an increment of on-line users’ maturity and the offer of travel tickets and on-line gambling. Internet users in 2005 were around 6.5 millions with an increase of 20% over 2004 and it is expected to be around 7 millions at the end of 2006. Source: Prensa de la Camara de Comercio de Santiago, Chile, July 2006.
Mexico (It is Central America)
The e-commerce (B2C) reaches 2.384 millions of pesos (165 millions euros) in 2004. In 2004, first quarter, was registered 450 millions pesos (31 millions euros) and at the same period in 2005 rose to 806 millions pesos (56 millions euros), an increase of 81%. There are around 17 millions Internet users, in July 2005. 36% of internet users sad that they expend between 400 and 1000 pesos (27 and 76 euros), on-line shopping, in August 2005. Source: AMIPCI, Mexico, August 2005.
Brazil In 2005, the e-commerce (B2B and B2C) rose 30%, reaching US$ 65.3 billions (51.41 billions euros). The B2C market was US$ 3 billions (2.36 billions euros), in 2005. User Profile There are 33 millions Internet users and only 16% buy on-line. The average ticket was R$ 321.00 (119.00 euros) in January 2006 (source: camera-e.net). Payment profile: 6
• • • • • •
Bank bill 83% Credit card 57.8% Bank deposit 48% Debit card 28.9% Virtual credit card 12% Electronic cheque 4.8%
In June 2006, 13 millions used the Internet, and almost 70% were by broad band. The record of connected hours is with Brazil. Home user stays, on average, 20 hours surfing. It is more than Japanese and American score. Some B2C Brazilian Market Leaders (revenue from 2005) • • • • • • • • • •
GOL – Brazilian airlines – Tickets – US$ 1.110 millions (866.14 millions euros). Visanet – Credit card – US$ 769 millions (605.51 millions euros). Submarino – retail – US$ 245 millions (192.91 millions euros). Magazine Luiza – retail – US$ 76 millions (59.84 millions euros). Ponto Frio – retail – US$ 62 millions (48.81 millions euros). Comprafacil – retail – US$ 32 millions (25.19 millions euros). Lojas Colombo – retail – US$ 10 millions (7.87 millions euros). Flores Online – Flowers – US$ 3.4 millions (2.67 millions euros). DVD World – retail – US$ 3.3 millions (2.60 millions euros). Beephoto – retail – US$ 1.7 millions (1.33 millions euros).
Source: INFO specialised IT Magazine, August 2006.
7
CONTENTS
Strategy ....................................................................................................................... 3
SOUTH AMERICA ............................................................................................. 5 BRAZIL .............................................................................................................. 6
2
Strategy First Six Months •
Study of local market o Competitors o Partners o Suppliers o Prioritize Targets
•
Develop a Business Model to offer to Prospects o Transportation costs o Import Taxes o Custom taxes and storage costs o Supply costs o Front End software (Portuguese and Spanish) o Interfaces and Plug-ins o Commercial Modelling o Return of Investment
•
Develop Proposals and place them.
Second half-year •
Evaluation of the work done (with two possible lines). o First line: Develop Local Structure and a local office. o Second line: Continue home-based office.
•
IF First Line: Develop local maintenance service and structure.
•
Initiate South America contacts: Argentina and Chile (and Mexico???).
Second Year (using First Line) •
• • •
Divide Brazil in three regions: o Northeast-North o Southeast – west o South Define Account Managers for Brazilian regions. Help to develop the Brazilian framework Business Model in Argentina, Chile. Initiate contacts: Uruguay, Peru, Colombia, and Venezuela.
3
Third Year • •
Sediment position in Argentina and Chile (Mexico???), by having local maintenance service and training services. Help to develop the Brazilian framework Business Model in Uruguay, Peru, Colombia, and Venezuela.
4
South America It is a region with a peculiar manner of “doing business”. They are very sensitive to regional government policies; the social pyramid is amazing, the social network is very important to the success of business and they have some constraints to foreigner business, mostly when they are not established in their country (South America countries). The motivation of those constraints is the experience that when something goes wrong the foreign company closes the door and go home or as the currency exchange floats, and in most countries are not very stable, the products and service may became inaccessible. So it is very important to have local presence and an established position, not only for sales, services but also for maintenance and parts reposition. Others issues, in the region, are the problems with taxes and charges, precarious infra-structure, bureaucracy which facilitates corruption, and the fault of commitment in business practices. This determines a specific practice that many times is not understood and unbelievable to Europeans. The most important and more stable South America economies are from Brazil, Argentina, Chile and Mexico. And they are the suggestion to begin the market development. First approach will be in Brazil, and than the other countries, in which order, it will depend on the development of the local contacts and current local policies and economy. But the estimative is to dedicate, at least, the first six months exclusively to Brazil.
Some South America e-commerce key figures: Argentina The expectation is that e-commerce (B2C), in 2006, reach 560 millions of euros. This represents a 60% growth on on-line transactions over 2005. Argentina ends 2005 with 10 millions Internet users and can end 2006 with more than 13 millions users. The average transaction changed from 12 euros to 36 euros. And it is expected to rise to 72 euros motivated by the on-line sales expansion of consumption products, like digital cameras, computers and others. The B2C market is concentrated in “free sales” and auction sites like ebay. The retail market has a small participation.
5
Source: Prince & Cooke y Carrier y Associados, September 2006.
Chile The e-commerce (B2B and B2C) transactions in Chile reached US$ 8.250 millions (6.496 millions euros) in 2005 and it is expected to be U$ 10.500 millions (8.267 millions euros), 25% growth, in 2006. The B2C market is expected to reach in 2006 around US$ 250 millions (196 millions euros). In 2005 this market increased 115% motivated by an increment of on-line users’ maturity and the offer of travel tickets and on-line gambling. Internet users in 2005 were around 6.5 millions with an increase of 20% over 2004 and it is expected to be around 7 millions at the end of 2006. Source: Prensa de la Camara de Comercio de Santiago, Chile, July 2006.
Mexico (It is Central America)
The e-commerce (B2C) reaches 2.384 millions of pesos (165 millions euros) in 2004. In 2004, first quarter, was registered 450 millions pesos (31 millions euros) and at the same period in 2005 rose to 806 millions pesos (56 millions euros), an increase of 81%. There are around 17 millions Internet users, in July 2005. 36% of internet users sad that they expend between 400 and 1000 pesos (27 and 76 euros), on-line shopping, in August 2005. Source: AMIPCI, Mexico, August 2005.
Brazil In 2005, the e-commerce (B2B and B2C) rose 30%, reaching US$ 65.3 billions (51.41 billions euros). The B2C market was US$ 3 billions (2.36 billions euros), in 2005. User Profile There are 33 millions Internet users and only 16% buy on-line. The average ticket was R$ 321.00 (119.00 euros) in January 2006 (source: camera-e.net). Payment profile: 6
• • • • • •
Bank bill 83% Credit card 57.8% Bank deposit 48% Debit card 28.9% Virtual credit card 12% Electronic cheque 4.8%
In June 2006, 13 millions used the Internet, and almost 70% were by broad band. The record of connected hours is with Brazil. Home user stays, on average, 20 hours surfing. It is more than Japanese and American score. Some B2C Brazilian Market Leaders (revenue from 2005) • • • • • • • • • •
GOL – Brazilian airlines – Tickets – US$ 1.110 millions (866.14 millions euros). Visanet – Credit card – US$ 769 millions (605.51 millions euros). Submarino – retail – US$ 245 millions (192.91 millions euros). Magazine Luiza – retail – US$ 76 millions (59.84 millions euros). Ponto Frio – retail – US$ 62 millions (48.81 millions euros). Comprafacil – retail – US$ 32 millions (25.19 millions euros). Lojas Colombo – retail – US$ 10 millions (7.87 millions euros). Flores Online – Flowers – US$ 3.4 millions (2.67 millions euros). DVD World – retail – US$ 3.3 millions (2.60 millions euros). Beephoto – retail – US$ 1.7 millions (1.33 millions euros).
Source: INFO specialised IT Magazine, August 2006.
7
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