E-COMMERCE DEVELOPMENT: NATIONAL AND REGIONAL EXPERIENCES, POLICIES AND STRATEGIES FOR CENTRAL AMERICA AND THE CARIBBEAN

1. E-COMMERCE DEVELOPMENT:NATIONAL AND REGIONAL EXPERIENCES, POLICIES AND STRATEGIES FOR CENTRALAMERICA AND THE CARIBBEAN Noah Elkin Senior Analyst, eMarketer, Inc. UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT Regional High-Level Workshop 25-27 June 2002 Curaçao, Netherlands Antilles

2. E-business: more than just selling online • Business practices and process that are facilitated by and/or centered in and around the Internet • Applies to companies with direct consumer-facing operations as well as those that deal primarily with other firms along a value chain • Involves extension of internally automated enterprise to trading partners, distributors and customers • ERP, SCM and CRM systems all fall under e-business umbrella

3. B2B is the place to be • Businesses transacting directly or via electronic marketplaces/exchanges buy and sell in greater quantities and with greater regularity than the average consumer • Online exchanges in a state of evolution, but good prospects for commodity-based exchanges in some sectors • Success factors include: • Links to local, regional and international markets • Knowledge of local industry • Real transaction capabilities • Capacity to expand the marketplace’s geographic coverage in order to attract members from throughout the region

4. Online retail: still room to grow • Focus on the customer and customer experience • Clear, easy-to-navigate web sites • Providing training on how to shop online can build trust and loyalty • Guarantee: • Security of transaction process • Ease of payment • Offer: • Payment options • Reliable order fulfillment • Responsive customer service

5. Complications • Protracted timeframe for roll-out • Involves fundamental changes in business relationships and practices • Requires considerable up-front expenditures • Software acquisition and integration • Consulting fees • Complexities of integrating Internet-based information platforms into legacy systems • Transition dependent in large part on overcoming economic and ICT infrastructure constraints

6. Barriers to e-business • Limited availability of: • Fixed telephone lines • Broadband connections • High access costs: • Connection fees • Monthly line rental • Internet access (dial-up and broadband) • Limited purchasing power/economic resources • Consumers • Businesses, esp. SMEs

7. Other issues to consider • Cultural and linguistic differences that affect consumer behavior and traditional business practices • Geographic dispersion of region’s population • Resource sharing • E-business initiatives must promote effective competition and not undermine established trade agreements or broader goal of regional development

8. Goal: identify key target sectors • Plans should include short- and long-term components: • Take advantage of existing areas of strength • Development of new businesses indigenous to the region • Target market segments not previously explored • Promising sectors: • Travel and tourism • Textiles • Agricultural products, especially coffee • Online gaming and gambling • Software development • Remittances

9. Opportunity for small and micro-enterprises • Structural importance for Central American and Caribbean economy • Relative lack of access to and visibility on the Internet indicates an opportunity worth exploring • Keys to building the Internet presence of micro-enterprises and SMEs: • Provide training and technical assistance • Exchange/adaptation of best practices • Help them connect to national and global supply chains (for procurement and selling/exportation purposes)

10. Bridging the divide—El Salvador: Infocentros Association • Adapted from Red Cientifica Peruana Internet kiosk model • Franchise system encourages sustainable development of ICT sector and achievement of scale • Scale generates power in the marketplace, giving the enterprise a stronger position when negotiating with infrastructure providers • Training programs offer potential for social multiplier effects

11. Bridging the divide—Costa Rica: • Focus on developing local production and use of ICT • Efforts to increase the number of trained IT and engineering professionals through the Costa Rican Technological Institute (among other facilities) • Adoption of investment-friendly legislation and incentives for multinational corporations to set up assembly operations in the country • Investment in ICT services and infrastructure for the population at large

12. Conclusions • Continue to invest in modernization of ICT infrastructure • Provide private sector with incentives, including for the construction of technology parks, call and data centers • Accompany build-out with computer literacy and training programs • Exchange and adapt best practices from around region and from leading e-business practitioners

13. Conclusions • Target key sectors • Develop more secure transaction and payment mechanisms • Work in conjunction with banks • Awareness campaigns about process and security of buying online to overcome consumer and business aversion to e-commerce • Work in conjunction with consumer groups/business and trade organizations

14. Thank You! For more information please contact: Noah Elkin Senior Analyst, eMarketer, Inc. nelkin@emarketer.com (212) 763-6052