1. Jupiter Electronic Commerce In Latin America Lucas Graves Jupiter Communications “Latin America: Clicks and Mortar” LABA, Stern School of Business 6 October 2000

2. © 2000 Jupiter Communications Jupiter 2 Landscape: “Caveat Emptor” Hinders Electronic Commerce

3. © 2000 Jupiter Communications Jupiter 3 Three Key Obstacles to Online Commerce in Latin America Consumer Attitudes Fulfillment Challenge Payments Problem

4. © 2000 Jupiter Communications Jupiter 4 Online Shopping Holds Little Appeal for Future Users 79% 62% 60% 59% 58% 49% 46% 45% 44% 41% 35% 34% 33% 13% 57% 0%20%40%60%80%100% Health Daily News Research for Work Research for School Online Banking Research Products and Local Content E-mail Travel Information Personal Web Page Sports Research for Financial Weather Games Chat Online Trading Purchase Goods Online Source: Jupiter Consumer Survey,(5/00); n=125 Percent of Respondents “Interested” or “Very Interested” in Each Activity If They Had Internet Access 83% Uh oh.

5. © 2000 Jupiter Communications Jupiter 5 Credit Card Challenge Less Grave Online All Respondents 52% 48% Respondents Who Are Very Likely to Get Internet Access 22% 77% Own Credit Card(s)Do Not Own Credit Card(s) Respondents Who Have Internet Access at Home 88% 12% Source: Jupiter/IBOPE Consumer Survey,(11/99); n=1200

6. © 2000 Jupiter Communications Jupiter 6 Payment Fears Pose Serious Problem in Latin America 7% 42% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% SafeUnsafe Very Somewhat Source: Jupiter/Ibope;(5/00) n=1200 “How Safe Do You Think It Is to Use a Credit Card to Buy Things Over the Internet?”

7. © 2000 Jupiter Communications Jupiter 7 Weight of Brick-and-Mortar in Latin America CompanyCategoriesGeography Pao de Acucar Brick & Mortar GroceriesBrazil Garbarino ElectronicsArgentina Fiera Online only PCs, electronics, books, videos, toys, CDs, beauty Regional Disco Brick & Mortar GroceriesArgentina Tematika BooksArgentina Submarino Online only Books, videos, CDs, toys, DVDs, videos, MP3 Regional Americanas Brick & Mortar Electronics, CDs Brazil

8. © 2000 Jupiter Communications Jupiter 8 Outlook: Barriers to Online Commerce Will Give Way

9. © 2000 Jupiter Communications Jupiter 9 Consumer Online Spending Reaches $8.3 Billion in 2005 $0.2$1.2 $2.2 $0.5 $8.3 $5.8 $3.7 13% 21% 24% 31% 34% 27% 18% $0 $1 $2 $3 $4 $5 $6 $7 $8 $9 $10 1999200020012002200320042005 0% 20% 40% 60% 80% 100% (in billions) Total Online SpendingPercent of Online Buying Source: Jupiter Internet Commerce Model, 02/00

10. © 2000 Jupiter Communications Jupiter 10 Tenure Holds Back Online Shopping in Latin America 49% 24% 27% 20% 57% 23% 26% 34% 40% Latin AmericaUnited StatesWestern EuropeNewbieIntermediateVeteran Source: Jupiter Internet Commerce Model, 02/00

11. © 2000 Jupiter Communications Jupiter 11 Site Efforts Will Capitalize on Rising Tenure $ Online Tenure Site Shows Advantages Browsers Buyers Site Builds Trust

12. © 2000 Jupiter Communications Jupiter 12 Online Advantages Translate Into Loyalty Bonus Online Retail Off-line Retail Online Advantages: Convenience, Returns Mistrust of New Channel Loyalty Time / Transactions First Online Transaction

13. © 2000 Jupiter Communications Jupiter 13 Cross-channel Quick Fixes Won’t Prove Sustainable SustainabilityInitial Value trust boost in-store returns supplier leverage drive traffic in-store pick-up in-store pay high low

14. © 2000 Jupiter Communications Jupiter 14 Mandate: Win Consumer Confidence Online

15. © 2000 Jupiter Communications Jupiter 15 Customer Service Combines Benefits and Reassurance Encryption Privacy Policy Entertainment Customization Selection Price Accessibility Convenience Rich Information Live Assistance Return Guarantee Fraud Protection Communicating Benefits Communicating Safety Customer Service Security Audits / Seals

16. © 2000 Jupiter Communications Jupiter 16 Returns Lead the Customer Service List In Latin America Simple, generous return policies:Simple, generous return policies: –In-store returns via retail partnerships –Free shipping for returns –No questions asked –Say it loud

17. © 2000 Jupiter Communications Jupiter 17 Build Trust and Win Loyalty With Credit Card Owners $ $ $ $ $ Has Credit Card Shops Online Shops With Credit Card Ease of Conversion Loyalty Opportunity

18. © 2000 Jupiter Communications Jupiter 18 Support Alternative Payments but Encourage Credit Cards Drive credit card transactions:Drive credit card transactions: –Link to loyalty programs –Independent / supplemental fraud protection –Phone orders

19. © 2000 Jupiter Communications Jupiter 19 Thank you. lucas@jup.com