FORT LAUDERDALE, FLORIDA (07/13/2000) - Four multi-billion dollar Latin American companies have banded to create an Internet marketplace where companies from the region will be able to buy and sell goods and services.
The Web site will feature a catalogue of so-called indirect goods and services, which are products and services that companies need in order to operate, such as office supplies and janitorial work, but that aren't central to their core business, the companies said Thursday in a statement about the venture.
This type of Web site, known as an online exchange, has become popular because it simplifies companies' procurement processes -- that is, the buying of supplies and services -- and because it drives down prices.
Online exchanges simplify procurement processes by allowing users to place orders directly from the Web site, instead of by phone, fax or regular mail, methods that usually take longer and lead to more errors in the processing and fulfillment of the order.
Meanwhile, buyers tend to find less expensive products and services at online exchanges because exchanges consolidate in one place products and services from a variety of competing suppliers, and that promotes price wars.
The four partners -- Alfa SA de CV, Bradesco Group's Bradespar, Cemex SA de CV and Votorantim Group -- feel confident that they will be able to draw enough buyers and sellers to the site to make it profitable. The partners estimate that sales of indirect goods in Latin America by 2003 will reach US$700 billion, and that 10 percent of that total will be sold via the Internet.
They expect to nab a decent chunk of that business, but so do the many other exchanges that have been launched recently for Latin America. These include Asista.com Inc., which in March received US$8.5 million from J.P. Morgan Capital and Morgan Stanley Dean Witter Private Equity, Mercantil Inc., which is backed by BancBoston Capital, and Artikos.com, a joint venture between Commerce One Inc. and Grupo Financiero Banamex-Accival, one of Mexico's largest banks.
The exchange will be operated by a joint venture launched by the partners called Latinexus, which will be based in Miami and is expected to begin operating in the fourth quarter of this year. The partners have chosen Ariba Inc.'s software platform for business-to-business operations.
The partners believe that Latinexus will prove particularly attractive to small and medium-size companies, which often lack bargaining power when dealing one-to-one with suppliers and which often don't have the money to acquire all the computer products needed to automate procurement.
The company will generate revenue from charging for transactions, subscriptions and from services, such as handling of import and export operations and offering tax services.
Alfa is a Mexican business group involved in a variety of industries, including food and auto parts. It had revenue of $4 billion in 1999 and can be reached at http://www.alfa.com.mx/.
Bradespar is the unit of Brazilian financial services firm Bradesco Group in charge of activities unrelated to financial investments. The Group's bank, Banco Bradesco, had revenue of $8.7 billion in 1998. It can be reached at http://www.bradesco.com.br/.
Cemex is a Mexican cement manufacturer with operations in over 60 countries.
Its 1999 revenue was $4.8 billion, which makes it the third largest cement manufacturer in the world, according to financial information firm Hoover's Inc. It can be reached at http://www.cemex.com/.
Votorantim is a Brazilian conglomerate that does business in the fields of energy, cement and metals, among others. It amassed $4 billion in revenue in 1999. It's at http://www.votorantim.com.br/.