Electronic Commerce

Overview

The growing importance of Internet and E-commerce has not gone unnoticed in Venezuela. However, Venezuela represents around 6 percent of the Latin American Web purchasing market, the same as Colombia. 1999 e-commerce revenues totaled $820million in Venezuela--$800 million from B2B transactions, and $20 million from B2C transactions. The obstacles that exist to the growth of e-commerce in this country are culture, insecure banking system, and unreliable delivery services.

E-Commerce Market Composition

Statistics on Internet usage vary significantly. Chadbourne & Parke, a local consultancy, announced at end-July 2000 that there were 480,000 Internet accounts in Venezuela, with about 600,000 users. Figures from Venezuela's electronic-commerce chamber, Cavecom-e, are more optimistic and suggest that by March 2000 about 1million Venezuelans had access at least once a month to the Internet--about 4% of the population of 24m. Of these web-surfers, 235,000 were subscribers to ISPs, but only around 92,000 made purchases over the Internet. On average, clients spent $30-50 per Internet purchase.

Importantly, research indicates while the majority of those purchases are initiated on the Web they are culminated through a phone call. This tendency reflects the fear of credit card fraud and is a psychological factor that will be overcome in time. Studies indicate Venezuelans mainly purchase software (33.5 percent), hardware (20.3 percent) and computer peripherals over the Internet.

Estimates predict a 25 percent growth rate in the number of final buyers, predominantly business to business users, by the end of the year 2003. As in other countries in the region, business-to-business (B2B) e-commerce has far outpaced business-to-consumer (B2C) e-commerce, according to Cavecom-e. Consumers spent only $20m via the Internet in 1999, whereas companies spent closer to $800m. Figures for 2000 are not yet available (1).

Obstacles to Growth in E-Commerce

Despite growing computer literacy and double digit growth in internet use in recent years, e-commerce has made meager inroads into the oil-rich nation. Some blame the economy. "It is in bad shape. Even the middle and upper classes are hit hard," says Jose Estefano, head of SpeedNet, which sponsors a virtual store called locompro.com (I'll-buy-it.com). Since launching the site in June of 1998, the company had attracted just 200 customers by December of 1999.

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