LATIN AMERICA'S ONLINE MALL IS GETTING CROWDED (int'l edition)

While most Brazilian supermarket managers are worrying about keeping the produce section stocked, Antonio Joao Andraues of Pao de Acucar is scrambling to revamp the chain's site on the World Wide Web. Orders via the Internet account for just 10% of Pao de Acucar's thriving home-delivery service. But since it is cheaper to handle orders from the Web site than by phone or fax, Andraues aims to double the online business this year. ''The Internet is a way for us to reach people, and we had better take advantage of it,'' says Andraues, director of Pao de Acucar's delivery operations.

From Monterrey to Montevideo, Latin American companies are catching on to the Internet as a tool for targeting shoppers. In the next two years, the number of Internet users in the region is expected to soar from 8.5 million to about 34 million, says Bruno Haring, Puerto Rico-based senior vice-president for advertising agency Nazca Saatchi & Saatchi. And the number of Latin Web sites, most of which are operated by businesses, could triple in the next year, to over 500,000.

''CACHET.'' Thanks to economic stability and falling trade tariffs, personal computers have become affordable to Latin America's mid- to high-income earners. As a result, the information technology market has exploded. Brazil, for example, banned foreign-made computers until 1992 and kept the Internet closed to the public until May, 1995. Then President Fernando Henrique Cardoso's Real Plan, which slashed annual inflation from nearly 1,000% to 4%, unleashed a wave of consumer activity. About 2.5 million PCs were sold in Brazil last year, compared with 44,000 in 1993. Brazil now has more than 1 million Internet users and could have 7 million by 2001.

To most Latin Americans, shopping on the Web seems like science fiction. Only 29% of Internet users in the region have made purchases over the Net, compared with 48% in the U.S., according to Nazca Saatchi & Saatchi. But analysts predict electronic shopping will catch on fast. ''Latin Americans are very friendly to new technology,'' says Luis Zuniga, Latin America vice-president for Digital Equipment Corp., which has set up Internet security software for companies in the region. ''They like to try things that have cachet, and the Internet has cachet.''

Brazil is setting the pace. Universo Online, an access provider and Web site jointly owned by the Abril Group media conglomerate and Folha de Sao Paulo newspaper, includes a virtual mall featuring 26 stores and companies. Flowers, compact disks, books, and clothing are sold, as well as PCs from Compaq Computer Co.'s Brazil site. Mom-and-pop businesses are getting into the act, too. Ricardo Aureimma, owner of Ali-Taxi, a Sao Paulo taxi service, set up a home page last year that lets customers hail taxis. Although the site has registered a mere 1,050 hits, Aureimma insists his $1,500 investment makes sense ''for the long term.''

In some Latin markets, including Brazil, up to 60% of Internet users are 30 or younger, a prime target for consumer-goods companies. Many of the cybernauts buy products that are unavailable or more expensive in local stores. Take Carlos Maimone, 22, who designs Web pages for Argentine companies. From his home office in Buenos Aires, Maimone orders jazz compact disks from CD Universe, a U.S.-based Web site. Even with shipping costs, Maimone pays less than he would in Buenos Aires, where CDs typically cost $20 apiece.

One obstacle to Internet growth could be the region's often inadequate phone lines, which limit the use of high-speed modems. In the wake of telecom privatization, service should improve. For many, the convenience of buying over the Net outweighs the hassles. Pao de Acucar even takes orders from U.S. residents buying groceries for elderly relatives in Brazil. And to keep business booming in January, deep in the Southern Hemisphere summer, Pao de Acucar has extended its Internet delivery service to the beach.

Quoted from Business Week, Jan. 30, 1998 edition
By Ian Katz in Sao Paulo, with Andrea Mandel-Campbell in Buenos Aires
http://www.businessweek.com/premium/06/b3564014.htm

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Last revised on 7 Feb., 1999
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