View From 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 the brave"
(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 region’s strength, on the path to leadership in the so-called new economy – and this performance would be even more astonishing, were protective barriers eliminated.

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 industrial nations.

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 continents.

Without getting dressed or leaving his or her home, the consumer calls the shots: all that’s 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 cost/benefit considerations.

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 arrived.

Related site:
StarMedia (Spanish or Portuguese only)