| BUSINESSWEEK ONLINE : APRIL 3, 2000 ISSUE | ||||||||
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| INTERNATIONAL -- LATIN AMERICAN BUSINESS
Going, Going, Going...Out of Business? (int'l edition) As he strides through the busy Sao Paulo offices of Gibraltar.com.br, Dennis Herszkowicz is feeling pretty good. He and partner Marco Scabia, both 25, have just wrapped up a second round of private financing for their Internet auction site, surpassing the $1.2 million they raised in a first round. Their six-month-old company is about to hire 20 new employees and expand into adjacent offices. ''It's a lot of work, but this is a fun business to be in,'' says Herszkowicz. He's not the only one who thinks so. Gibraltar is one of as many as 50 Latin American online auction houses in what is perhaps the region's most crowded Internet space. The relative ease of building an auction site has encouraged Netrepreneurs from Mexico to Argentina to join the fray. A basic software package can be had for as little as $50,000, and there's no need for inventory or a distribution network. And the fact that gross margins for some of the more successful U.S. sites, such as eBay, run at near 80% is another lure. But already, a shakeout is coming. Most of the Latin auction sites don't have any revenues, never mind profits. Only the more established operators have begun to charge fees to list products or commissions on successful transactions. The survivors will be those with pockets deep enough to bombard the Latin public with advertising. ''In this business, if you don't get funding, you can't do marketing. Then no one besides your competitors knows you exist,'' says Alec Oxenford, CEO of DeRemate.com, whose backers include Citigroup and Merrill, Lynch & Co. GOOD ODDS. Competition among Latin cyber-auctioneers is getting so intense that Marcio Macedo de Almeida, an Internet analyst at Banco BBA Icatu in Sao Paulo, predicts that only a handful will make it to yearend. One with good odds is MercadoLibre, a Miami-based outfit backed by Chase Capital Partners. Miami-based DeRemate.com and Lokau.com, the leading site in Brazil, also stand a chance. Other contenders are Subasta.com Inc., based in Ft. Lauderdale, Fla., which is strong in Spanish-speaking markets, and Paris-based iBazar Group, which is focusing its Latin efforts on Brazil. Smaller players may have to target niche audiences to stay alive. ''Emerging from the pack isn't easy,'' says Herszkowicz, whose site contains hard-to-find items from rare videos to old military paraphernalia. For MercadoLibre and DeRemate, on the other hand, collectibles take a back seat to items such as computers and consumer electronics. With the marketing war heating up, the most valuable item some of these sites may have to put up for sale is themselves. By Ian Katz in Sao Paulo and Cristina Lindblad in New York _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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