IDC: B2B Marketplaces Sprouting Up in LatAm

FORT LAUDERDALE, FLORIDA (08/15/2000) - Latin America is being flooded with Internet-based marketplaces that promise to make it easier and cheaper for companies to buy and sell supplies, a situation that will force many marketplaces to merge, according to an International Data Corp. (IDC) study released on Tuesday.

These Web sites, called "e-marketplaces" by IDC and commonly known as business-to-business exchanges, feature products from a variety of suppliers and act as a neutral broker. Corporate buyers are attracted to these Web sites because there they can find products from competing suppliers and compare prices, features and services, and make an informed purchasing decision.

Meanwhile, marketplaces help suppliers reach buyers.

But things are getting confusing in Latin America, warns Anna Giraldo Kerr, a research manager with IDC's Latin America research unit in Framingham, Massachusetts.

"It's becoming a very blurry picture. There are lots of initiatives being worked on, and every one is being called a marketplace" when not all deserve to be referred to as such, Kerr said.

For a business-to-business exchange to be a true marketplace, it has to be run by a neutral third-party and be designed to serve many buyers and many sellers.

If it tilts toward the sellers, then it's considered by IDC to be an electronic-distribution tool, and if it's designed with buyers in mind, then the market researcher considers it to be an electronic-procurement tool.

So far, IDC has identified about 50 bona fide e-marketplaces in Latin America, but "every day there are maybe 10 announcements of new marketplaces being formed," she said. IDC plans to have a more definite count in a future study.

But a period of consolidation is unavoidable, she added.

To succeed, e-marketplaces must localize their services to the countries they are serving and help educate the region's companies about the advantages of using the Internet to do business, Kerr said. Those that survive will reap great benefits, because IDC expects Latin American corporate buyers and suppliers to embrace e-marketplaces for the advantages they bring, she said.

IDC expects e-commerce spending in Latin America to grow from US$1.45 billion this year to $10.95 billion in 2003. This figure includes both retail sales, also known as business-to-consumer e-commerce, as well as sales between companies, better known as business-to-business e-commerce.

IDC is owned by International Data Group Inc., the parent company of IDG News Service.

IDC, in Framingham, can be reached at +1-508-872-8200 or at http://www.idc.com/.

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