Beyond: New York
The Internet Age:
Latin America's Borderless Future.
by Fernando Espuelas Week of June 02
- 08, 2000
Fernando J. Espuelas is the
founder, Chairman of the Board and CEO of StarMedia Network, a leading global online
network for Spanish and Portuguese-speaking audiences, and one of the most recognized
Internet brands in Latin America. Founded in 1996, StarMedia was the first Latin American
New Media company to be traded on the Nasdaq. Espuelas has been honoured as one of the
Leaders of the Millenium by Time Magazine, and was presented with the 1999
Business award by New York Magazine. He is a coveted speaker in the United States, Europe
and throughout Latin America on topics related to the growing Latin American Internet
market. Prior to launching StarMedia, he was Managing Director of Marketing Communications
for A.T.&T. Caribbean and Latin America, and a senior executive with Ogilvy &
Mather in both the U.S. and Latin America. A native of Uruguay, he holds a Bachelor of
Arts degree from Connecticut College.
"Lady Luck is on the side of
(Virgil, Roman poet)
Between the population of Latin America and
the Hispanics living in the U.S., 500 million people in the Western hemisphere speak
Spanish or Portuguese. That represents an enormous market block of consumers sharing
language and cultural values.
The history of Latin America has been one characterized by conflicts and division,
triggered by the Spanish and Portuguese colonization. The occasion finds Brazil in a
strong position, placing third in preference among international investors. This is yet
another sign of the regions strength, on the path to leadership in the so-called new
economy and this performance would be even more astonishing, were protective
Nonetheless, sustained efforts to create the Mercosur trade group, designed to form a
block capable of competing with the European Union, with the Asian "Tigers" and
with NAFTA, has encountered obstacles of a logistical nature. At the risk of sounding
excessively optimistic, I am going to affirm that the coming revolution that will once and
for all turn this region into a powerful player in international trade is called the
Internet. Counting Spanish and Portuguese speaking people in North and South America,
about 26 million individuals are plugged in, and their number grows exponentially.
After all, the unifying mark of the common Spanish language and its similarity with
Portuguese spoken by one-fifth of Latin America's population represents a
facilitator that alone could ensure a tremendous step forward in generating business in
the region. This would consolidate the much-expected and inexorable transformation that
will lift the developing Latin American economies and make them contenders among the
Since the language is not a missing link but rather a unifying factor, the Web is
undoubtedly the keystone to this profound change in the world's economy a change as
significant as the very discovery of the New World. Countless surveys show that Latin
America is the one market where the Web grows at the fastest rate. Brazil in particular is
firmly ensconced in third place, right after the U.S. and China, with prospects of
receiving billions of dollars in investments over the next few years.
Consumers of information will be the leaders of that revolution.
The most revealing finding in the latest survey, made by the Laredo Group for StarMedia,
in which 22,000 Internet users were interviewed between December 1999 and January 2000, is
that 90 percent of respondents feel that the Internet is already breaking down the
barriers between Latin American countries. This may not be all that surprising, but it
should give food for thought to those who claim that Brazilians have no cultural affinity
with Argentines, that
Argentines have little in common with Chileans, etc.
And there is more: two-thirds of the respondents said that the Internet was going to fuel
economic and political changes in Latin America proving that, in the common
perception, the world is to be restructured not in a future revolution, but in the
present. And the revolution is driven by the power of the Internet as a compelling new
business media, in a geographically unlimited economy.
The simple reason why the digital media, destined to establish the future market, has such
a transforming effect is that it will change the focus of power. Henceforth, it is the
consumer who will wield the power. Whenever the domestic market is insufficient and
non-competitive hence inflationary the revolution is only a mouse click
away. Equipped with three-dimensional interactive resources, in possession of
price-research tools and inventory-control management software, and endowed with control
of the supply/demand equation that makes for fair prices and quality products, the Latin
American consumer will following in the footsteps of his U.S. predecessor
turn what he still considers a leisure-time experience into a purchasing habit... and what
a difference it will make.
It will, first of all, put an end to that logistic logjam mentioned at the outset
and it will do so right now, i.e., in a few months which in terms of Internet time is
equivalent to a few years. Latin American consumers who, even with the wherewithal, cannot
find what they want in local brick-and-mortar stores, start having the riches of the world
thrown open to them, with a wide variety of choices in distant cities, nations and
Without getting dressed or leaving his or her home, the consumer calls the shots: all
thats needed is a digital platform. Under the new dispensation, it is the
distributors and manufacturers who are now at the mercy of the market with the new
consumer on top the information consumer.
For the first time in 500 years of post-Discovery Latin America, the consumer will have
access to a tremendous variety of information on product characteristics and prices. This
will give him the power to make inter-competitor comparisons great news for
inflation fighters. Marketing skills, branding and product come-ons will be matched by
on-line experience, by pre-sale, sale, and post-sale satisfaction and (of course) by
For those who are still dubious about the growing power of Latin American e-commerce, let
me quote a couple of other information nuggets from the Laredo survey. Of those
interviewed in '00, 42 percent said they had already bought on the Net, compared to 29
percent in the '98 survey. So far as "time on-line" is concerned, today's users
averaged 10.4 hours per week, against 8.2 hours in '98.
These data confirm that an Internet company's success will depend on two critical factors:
first, the availability of means of connection; second, how these operate i.e.,
what is the user's on-line experience. There has been a lot of talk concerning the
importance of content, now that free access is coming to Latin America (in rapid
expansion, particularly in Brazil). Of course the drop in access prices will bring new
users to the Internet. But I must stress that
content will not be the sole determining factor in audience expansion; rather, it will be
how the viewer will react to that content. In other words, how the latter is packaged.
Amount of content is not enough. You need interactivity plus accessibility.
Otherwise you wind up with content cemeteries. And we should remember at this point that,
as in all other media, the Internet will tend towards audience concentration. In the
States, for instance, the 10 largest sites control about 65 percent of the audience and 85
percent of the advertising revenue.
So, how does one go about conquering one's audience? Where will the Internet be available?
Answer: Wherever the information consumer is plugged in. That may be the refrigerator, or
the microwave, in the car, on the cell phone, on pay phones, palmtops or on interactive
TV. Using dial-up, mobiles, or broadband. Consequently, any retailer in the new economy
who wants to stay alive will have to be present everywhere in the digital market
not only on desktops but at all the doorways to e-commerce.
And the great challenge will be to offer products and services in a multiplatform strategy
that deals with the interactive component of the new media. Just as in the real world, it
is more expensive to gain a new customer than to hang on to one who is satisfied. If the
purchasing experience was good, the customer will return. Otherwise the customer will not
only fail to come back, but badmouth the seller to boot. Gutsy entrepreneurs will have to
remember that buying will occur not only on desktops but (in incredible amounts!) on the
mobile Internet or via high-speed connections. And in all of them the customer experience
will have to be good.
Real-life marketing logic may be different, but there are a lot of similarities in the
virtual world, if the Internet is to accomplish its task of doing away with the separating
walls. The store will have to be kept clean, inventories up-to-date, clerks well trained,
quality products.... and, of course, attractive prices.
Only one thing is certain: the revolution is on its way. All we can do is send a message
to those who still refuse to join it: If you are not going to cannibalize your own
in-store sales, others will do it for you. Why? Because the time of the consumer has
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