Global E-Commerce: Central and South America - Business-to-business E-commerce Set To Take Off

BUSINESS-TO-BUSINESS E-COMMERCE SET TO TAKE OFF

In early 2001, World Trade pointed toward Latin America as the next great market for business-to-business e-commerce, claiming that the first few years of the new century would see the rise of a range of new B2B exchanges and startups, while the leading firms for the long term would take root. Unlike most North American firms, much of Latin American business, according to World Trade, still relied on manual, paper-based accounting, procurement, and inventory management systems. Because of this, the switch to B2B market exchanges should add significantly more than incremental benefits to companies in Central and South America, promising to dramatically streamline their value chains. Forrester Research predicted that, in the early 2000s, business-to-business transactions would account for 93 percent of all Latin American e-commerce activity. By 2004, Forrester indicated that B2B e-commerce in Latin America, including Mexico, would total $76 billion.

Business-to-business development in Central and South America also was aided by the fact that, compared to North American firms, industries in that region were heavily fragmented and relatively inefficient. Therefore, they stood to benefit from the ability to trade goods and supplies online rather than using the established infrastructure. World Trade insisted that successful business-to-business ventures in South and Central America would be those that catered to industries with high fragmentation among both buyers and sellers, company and industry-wide inefficiency, little to lose in overhauling existing technological infrastructures to incorporate B2B e-commerce, and large size.

Among the large markets that were most likely to embrace business-to-business e-commerce in South America are Brazil, Chile, and Argentina. Not only are these countries home to the region's strongest economies overall, their technological infrastructures are the most advanced. Because B2B frameworks are most effective in large marketplaces where liquidity is relatively assured, these countries were the most ideal.