The conditions are right for creative online retailers to establish a significant business on the Internet. There are substantial barriers to growth, such as high telephone and computer costs and the lack of adequate delivery systems, these appear to be falling. The challenge for retailers is to move fast to establish an early and dominant market presence.
Total consumer online sales in Latin America, in both domestic and international sites will exceed $160 million, with approximately $90 million going to US based online retailers. Brazil dominates the current e-commerce market, representing 88% of all Latin American based online sales. Mexico, the second largest market, accounts for 6% of sales. Nicaragua has tremendous opportunity, it just needs to invest in its infrastructure quickly.
Nicaragua has not possessed a competitive advantage to other countries in manufacturing, design or research and development of Information Technology since its own internal demand has not required it to. Currently, Nicaragua does not possess key factors to succeed in Information Technology Development such as: they lack an adequate infrastructure, the literacy rate is low, high underemployment, and there is no significant non agricultural sector. In addition the government is not targeting Information Technology as an area of expansion. Instead, the government is targeting agriculture, tourism, and export processing zones for expansion.
Nicaragua lacks IT companies investing in the country. The country must succeed in the following areas before IT investment will occur:
Improve:
- Telephony infrastructure
- Literacy rate
- Political Stability
- Economy
- Secondary and Tertiary education
- Other key industrial sectors
In addition, the country needs to keep the market free to decide the best technologies to use and not to bind the legal system or process to a technology that might become obsolete. National laws governing electronic transactions should not freeze in place any particular technology. Instead, they should be drafted in general terms so as to accommodate technological innovation over time. Technology specific rules are too rigid to keep pace with technological change.
Electronic commerce should not be subject to rules and requirements that are more burdensome than the rules and requirements that apply to traditional commerce under national law. In order to encourage electronic commerce, there will often be a need for rules that are more transparent and flexible than those that some governments currently provide for traditional commerce.
Strong intellectual property rights protection is essential to the continuing development of electronic international trade. Intellectual property protection helps reduce the risks of online piracy and keep the environment for electronic commerce stable.
For growth in online retailing in Nicaragua, a number of conditions need to first appear:
- Internet access costs (telephone rates, Internets service provide charges and PC costs) need to fall closer to international levels.
- Retailers and payment platform providers will need to address consumers' lack of confidence in online payment systems.
- Consumers will be looking for more reliable and cost effective delivery infrastructure in order to be confident that products ordered online will arrive at their homes.
As Nicaragua continues to progress in the e-commerce age they must provide a more compelling consumer value proposition relative to the U.S. competitors. The market is fragmented and cluttered with many small players with unexciting shopping sites. Online retailers in Latin America need to use the functionality of the Web to provide greater convenience, deeper selection, better service and more competitive offerings. In conclusion, Nicaragua must contain its high costs, unstable economic conditions, regulatory mazes, and poor telecommunications infrastructure before they can truly focus on a viable e-commerce industry.
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