FORT LAUDERDALE, FLA. (05/31/2000) - To get products from here to there, intact and in time -- there's the rub in Latin America's e-commerce market.
That is why a new business-to-business exchange for Latin American companies called Venta.com Inc. is partnering with United Parcel Service of America Inc., UPS' first business-to-business e-commerce partnership in Latin America.
The companies will jointly design custom logistics and delivery services so that Venta.com can ensure that its exchange's sellers will get paid and that its buyers will receive their goods.
"Latin America is still unfamiliar with the online market, and many people justifiably fear that they will not be able to complete a transaction successfully," said Javier Ergueta, Venta.com's chief executive officer, in an interview today.
The company, based in Mountain View, California, was founded in 1999 and plans to launch its business-to-business "marketplace" in the coming weeks in México.
Venta.com intends to set up shop in Brazil later and expand to Argentina and Chile before the end of the year.
Venta.com's exchange will feature used and surplus computer products and office equipment that companies want to get rid of and that other companies might be willing to buy. The products will be sold via auctions. Venta.com estimates that the market for this type of second-hand and obsolete computer and office products is about $60 billion in Latin America, Ergueta said.
Because it will focus on business equipment, which tends to be pricier than products sold at consumer-oriented auction sites, Venta.com decided it had to have a sound delivery and logistics infrastructure, Ergueta said. The company must shield its clients from the region's bad roads, inefficient delivery mechanisms and fraudulent business transactions, he added.
Thus, the company decided it needed to partner with a delivery and logistics expert that could provide it with tailor-made services, he said. Venta.com chose UPS, which will, in addition to delivering the products, assume an active role in ensuring the validity of the auction process.
Venta.com and UPS will guarantee to buyers that the product they're bidding for has been accurately described on the site and to sellers that they will get paid before the product is delivered. Venta.com generates revenue from service and commission fees, he said.
As part of the deal, Venta.com and UPS plan to participate in joint marketing campaigns, among other things. The UPS partnership will, for the moment, only be in effect in México, he said. A UPS official couldn't be reached to comment on whether this is expected to be the first of several similar partnerships with e-commerce companies in Latin America.
Significant barriers to e-commerce still exist in Latin America, and they must be torn down if online sales are to take off in the region, said Dale Hayes, vice president of e-commerce and technology marketing at UPS, in a recent interview before the Venta.com announcement.
"Progress is being made in Latin America, but we need to continue pressing forward," he said.
In addition to infrastructure problems, there are regulatory issues, such as protectionist customs laws and excessive import taxes, that damage the development of e-commerce in the region, Hayes added.
Others think that as more and more Latin American companies embrace e-commerce, barriers will come down.
"There's a lot of improvement to be had. Many things need to be done to unshackle the region from a lot of poor policies that have hampered economic growth for a long time. If the Internet can be used as a catalyst to motivate changes, that's a great thing," said Matthew Sanders, an analyst at Forrester Research Inc. in Cambridge, Massachusetts.
Although there are several high-profile business-to-business exchanges operating in Latin America already, none are targeting Venta.com's slice of the market, said Ergueta. Dataquest Inc. forecasts that business-to-business e-commerce transactions in the region are expected to total $124 billion by 2004, up from $1 billion in 1999.
Ergueta declined to say how many employees the privately held company has, nor how much money it has raised so far. He didn't identify the company's backers, only saying that they are Mexican and Silicon Valley investors. Ergueta, a native of Bolivia, has degrees from Harvard University and Stanford University, and he has worked at Apple Computer Inc. as Latin America marketing director and at the Boston Consulting Group Inc. as a consultant, he said.
Venta.com, in Mountain View, California, can be reached at http://www.venta.com/. UPS, in Atlanta, Georgia, can be reached at 404-828-6000 or at http://www.ups.com/.