Although consumer-oriented portals in Latin America play an “important role”in converting Web users to online buyers, the majority of local and regionalportals in the area still have a long way to go before they become a viable e-commerceforce, according to a new report released Thursday by research firm International Data Corp. (IDC).
The report warned that the failure of portals to beef up theironline shopping capabilities — and meet surging consumerdemand — will have a chilling effect on the overall growth of e-commercein Latin America.
For instance, IDC found that only 61 percent of the local portals providedconsumers with online payment processing capabilities, while three-quartersof the regional portals supplied this feature.
The report also said thatlocal portals offered just one-third of the shopping assistance featuresneeded to run a fully loaded e-tail site, while regionalportals offered about half of those features.
IDC advised portal operators to revamp their existing e-commerce strategies bydiversifying their revenues, which are still largely dependent on the struggling online advertising market.
Like their North American counterparts, consumer portals in Latin Americaare in the midst of a “significant” shakeout, said IDC.
“Driving this shakeup is the failure of portals to meet consumer demands forcommunications, content, and e-commerce features and consequently attractand retain loyal Internet users,” the report said.
In its assessment of the efforts being taken by dot-coms to combat theindustry downturn, IDC said that many regional portals are stepping up theirstrategies to gain local market share, putting heightened competitive pressure on smaller local players.
In order to make such inroads, the report said, portals will need togreatly expand their offerings.
For example, IDC found that both local and regional portals provideextensive content in the arts, entertainment and news categories, butneither supply comprehensive business and financial content. Moreover, only 17 percent of the local portals and one-quarter of regional portals offer online banking features.
Another study released in January by eMarketer also examined thedifficulties that online business-to-consumer (B2C) firms have faced in Latin America.
eMarketer found that low rates of Internetpenetration, limited personal computer ownership, and a low level of credit card usage arepreventing Latin American consumers from spending online. For theregion as a whole, eMarketer said the Internet penetration rate is only 2.7percent, compared with nearly 40 percent in the United States.
Instead, eMarketer said that Latin American e-commerce will be drivenlargely by business-to-business (B2B) transactions in the coming years.
Looking at the Top Six
To compile data for its study — entitled “Latin America’s Consumer Portals:Identifying Strengths, Weaknesses, Similarities, and Differences” — IDCexamined a total of 26 portals and their role in fostering consumere-commerce in the region.
Researchers analyzed three portals per country in the top six Latin Americanmarkets as well as leading regional players, including America Online LatinAmerica, El Sitio, StarMedia, Terra, Tutopia, Universo Online, Yahoo!, andYupi.