SAO PAULO, Brazil — Business-to-business platforms are growing in popularity in Latin America and are beginning to attract small and medium-sized companies to the Web with their offers of ready availability and lower cost.
Many of the platforms are located in Miami, which has become the jump-off point and the center for Latin American e-commerce. Executives visit local trade shows to sign up small and medium-sized companies.
Interest is high, analysts said, but knowledge of what the Web can do for companies is still wobbly, necessitating an educational as well as a sales effort among the platforms. The payoff, they added, may not come for years.
But the glitter is already there. The BTB marketplace in Latin America is estimated to top $5.5 billion by 2003, according to a recent study published by Morgan Stanley Dean Witter.
The question is how many of the platforms will still be around to collect on it. So far the platforms have avoided the shakeout that hammered other dot-coms in recent months, including many in Latin America.
BTB still has a grace period as the industry evolves into greater maturity from the currently revolutionary state. “Once that settles down, however, we are definitely going to see a shakeout,” one analyst said.
Platforms vary in size, scope and financial strength. Adquira.com has the deep pockets of Spain's giant Telefonica, long a Latin American powerhouse, to fall back on. Artikos.com is backed by CommerceOne of the US.
Others may not have the capital to survive, especially those that launched this summer and fall after global stock markets bashed the dot-coms, especially if their market estimates are too high.
Asista.com has launched sites in Mexico, Argentina and Brazil since the spring and plans to invest $30 million over the next two years.
But spokeswoman Daniela Garza said Brazil's market for indirect goods and services was already worth $80 billion and totaled $340 billion for all of Latin America. The $5.5 billion Morgan Stanley estimate is anemic in comparison, no matter how small the Internet percentage.
Perhaps that is one reason why Asista recently signed a letter of intent with Axa S.A., a Mexican conglomerate, to buy all its office supplies and equipment through the Asista site.
Axa could be a source of new funds, but more importantly, it lends Asista credibility in its search for SME clients. Such anchor clients could fuel interest among smaller firms that see Axa as a potential customer they could never approach anywhere else.
Other independent platforms, including 1hemipshere.com, ienex.com and latintrade.com, may be forced to use the cash they have to pay their bills, leaving few reserves for the crunch.
Another hurdle that platforms face is Latin America's economic history of high inflation and economic uncertainty. Stability is still relatively new and is something many small firms are not willing to count on.
That may be one reason why technological innovation has lagged among small and medium-sized companies. The region has 10 million such firms, but only 1 million have any form of Internet access.
Smaller companies, of course, face a host of other problems, beginning with logistics, a key to any Web-developed business plan. Too few are in business, and too few are reliable.
Equally vexing are bureaucratic restrictions for which Latin America is famous but which are made harder on the Internet by lack of knowledge and insight on the part of governments.
Business models have to be proved and money found from banks and other financial institutions.
“It will require some time,” one analyst said. But time takes money, and it remains to be seen how much will be available.