Could you enlighten Forbes Global with some brief background information on why you started this company and what it could do for this country or potentially in the region?
CompraDirect has a goal of becoming the favorite online superstore for businesses in Central AmericWe offer thousands of products at low prices with delivery to your door. We also offer a sophisticated set of e-procurement software that is guaranteed to save companies time and money.
One of the frustrationsI encountered here in the country is that it is very difficult to find out information on products,it's difficult to import the products because you have to deal with multiple shipping companies, multiple languages and multiple currencies. Dealing with customs can be frustrating and cause delays.
I became more frustrated when I found out that suppliers do not even have catalogs, so if you go to an industrial parts company or office supply store, there is no printed catalog. Some of this lack of marketing may be due to the fact that reliable mail service began here only in late 1999. There was no reliable mail service, and therefore no direct mail, for more than 12 years. Additionally, many of the suppliers deal with imported goods, the prices change a lot and they do not like to publish a fixed price because of the fluctuating exchange rate. These are some of the reasons they do not publish catalogs.
What was so strange to me is that businesses in Latin America have become used to this. It is apparently acceptable to most businesses that when they want to order something they have to drive to visit the supplier to look at everything and discuss prices. Suppliers are simply not on the Internet. Ecommerce is only beginning.
I was coming from an Internet background and a North American business. They way suppliers and buyers do business here was very frustrating for me and I thought that it would be incredibly helpful to be able to have an online superstore website. The businesses here are joining the Internet slowly but the rate of change is increasing and I know that more and more businesses would like to have the same efficiency that North American companies and other companies around the world are experiencing.
So the idea was to build a master catalog with hundreds of thousand of products, with descriptions in Spanish, in the local currency, and to have these sold through a local office that is legally registered in the country and that could issue legal invoices. Legal invoices were also a consideration - to get credit for taxes businesses need to have a specially approved invoice form.
So we figured out what was needed over a number of months. Working out the systems where companies can look on our web page and see in Spanish and local currency and deal with a local office, click on any number of items they would like to buy, from office supplies to track tires to anything of MRO computer office supplies and they can have everything in one invoice. Pay once and then we will deliver to their door from any place of the United States or from the suppliers and they do not need to worry about tracking the shipment, customs, the fact of the exchange rate and that is how we started: bringing efficiency that is well known in North America, to Guatemal
Then we found out that companies, even the more successful were not ready. We had to explain what the Internet is and how it would help them.We had to explain why we needed to put their products in our catalogs and in doing so they would benefit from the Internet.
Suppliers have information on paper and diskettes but they most don't have complete information ina computer systems. Neither did they have pictures of products; everything was generally disorganized. We started to realize how valuable our catalogs would be, actually a lot more than we thought. By providing a platform using our catalogues we had a product that could potentially change the way of doing business in Latin America.
What kind of investment was placed in this project?
By the time the investment is complete it will be around the US$1 million range over the eight month start up period in 2000. We expect to invest another $300,000 in software customization in 2001.
Is it difficult to integrate this business in a country such as Guatemala with this kind of outlook and philosophy . in real time as an online business?
As with any other challenges and opportunities we face anywhere, there is always difficulty introducing a new way to do things. These are the same challenges we faced in the United States with other Internet projects. Except, imagine trying to build an online commerce solution like this back in 1994 or in 1995 when people were not really sure how they are going to save money and they did not understand the Internet.And, many of these companies have been doing just fine for 30 or more years.
The time pressure here is not the same as that in the USA and most suppliers deliver locally for free. But they way orders must be placed here is an incredible waste of time. What shocks me is that the secretary will spend 20 minutes ordering office supplies over the phone, discussing with the salesperson at the office supplier comparing what to buy, how much it is etc; but they are used to it, so they don't think it is a problem area.
I think that as soon as they see the savings, when they see how easy it is to click on and buy and buy everything they need from one site, they will absolutely adopt this system as the preferred way to buy.
The people of Guatemala in my opinion are geniuses -- to do so well in an environment that appears to have so much "business friction". They have managed well up until now, so adding the efficiency of the Internet we will see a miraculous development in the way to do business. I think that in a year, if you come back, you are going to see amazing developments within Internet business. | How have people reacted to this business proposal?
At first we presented the project to PricewaterhouseCoopers and Microsoft and asked if there would be interested in helping us. We presented manuals, a map of the business procedures, not only dialoging it to gain advice but also to have a plan of action to give to our programmers. We then interested Microsoft to take on as a project.
We are working with Microsoft as a strategic partner here in Guatemala and they brought consultants from many different countries to take care of the programming which is almost done. We also have an inhouse programming staff of five great programmers.
PricewaterhouseCoopers became an equity partner from the beginning - they think that this business model will help the companies become much more efficient and save money. Also, we hope that they will also market our software and services across Central America.
Several large companies have already agreed to start buying through us starting in January 2001. We are being well received.
The priority is start with business here in Guatemala first?
We will begin in January, 2001.
Are you planning to extend into the region?
We are planning to go to El Salvador, Honduras and Dominican Republic.
Why the Dominican Republic?
We have an excellent contact and have visited there to check out the market. We found out that there is an undiscovered treasure of business opportunity. Obviously everything has to be imported, very few things are manufactured there. There are many hotels, restaurants and tourism, but it also has an important shipping point to the other Caribbean islands. We are very optimistic about doing business in the DR. Eventually we will have a regional office there for the Caribbean.
Are you equally optimistic with Guatemala?
Yes. A surprisingly large amount of business is done here, and a great deal of it involved relatively few companies. It isn't unusual for a family-controlled group to run dozens of companies. This is good for us; we can visit one executive and obtain the purchasing volume of many companies. We are looking to target the top companies and then go to the smaller companies.
Is the private sector leading the country's initiative?
From my point of view the private sector is the key players on getting the economy forward. But there has to be an agreement between the private sector, the government and the labor organizations to do that. From an outsider's point of view, I can say that when investors come here and understand how this market functions, you can see you can do a lot of business. The rest of the world has not realized this, in fact very few investment reports include mention of GuatemalWith less money than you would need to invest in Brazil you can do more in Guatemala and you will not be bumping into any competition. And, Guatemala is the jumping off point to Central America.
Our reports are conducted every five years, if we were to come to Guatemala in five years time and have the opportunity to speak with you again, how would the company be positioned?
In a few years I will expect that we will be in Guatemala, Southern Mexico, El Salvador, Honduras and The Dominican Republic doing good, solid business. We plan to reolutionize the supply chain flow.
What can you tell us about other lines of business?
Other people at this moment have this idea or something similar. But they will need what we already have -- which is good software that doesn't cost millions and a very rich catalog of products; that is the most powerful advantage that we offer.
How is the progress of the company doing at the moment?
Because the market is relatively small, by contacting the right businesses and leaders, the work is cut significantly and it makes the market very accessible. We expect to become profitable by the end of 2001.
One last thing to our readers, given the readership worldwide of Forbes Global what message would you convey about Guatemala and business opportunities?
I encourage people to recognize the potential in this market. There are misconceptions about Guatemala that hinder investment from the outside. But when you spend time here you realize that the entire tourist related business is going to explode, telecom has some of the largest global players present, the marketplace needs incredible amounts of technology; the potential for large returns on investment is great. Capital is richly rewarded here. |
