Published On: Tue, Mar 15th, 2016

Why Should Israeli High-Tech Startups Look for Business in Latin America?

Laura Vaillard -1It is a well-known fact that 93% of Israeli high-tech startups strive to do business in the United States, while only 3% concentrate exclusively on the Israeli market. Another 3% target Europe and South-East Asia and the remaining 1% of companies have their eye on Latin America. Are these numbers the result of a fruitful strategy, or are companies simply following the flock?

In the past, Latin America has lagged behind larger economies like the United States, Europe and Asia, but the acceleration it has experienced over the past few years is driving the digital business ecosystem like never before. According to a study conducted by the International Data Corporation (IDC), the premier global provider of market intelligence, ecommerce in Latin America will be worth US$100 billion by 2018. This represents a 177% increase as compared to 2014.

Regarding mobile phone usage, Latin Americans are some of the most active people in the world, presenting an incredible opportunity for app developers. Studies indicate that 90% of Latin Americans do not leave their house without their mobile phones, 57% never turn them off, 80% access the Internet from their phones and 86% of them search for local information. This appealing target crowd already has their phones in their hands; it is up to the companies to seize the opportunity to sell them different apps or access them through online advertising.

Average online user spending

What are the leading countries in the region?

According to the study conducted by IDC, an average of 6 out of 10 people in Latin America had access to the Internet in 2015. Average access figures were higher for Chile (71%), Argentina (68%) and Colombia (66%). In terms of internet usage, Colombians are the most avid users spending over 430 hours a month online, followed by Mexicans who spend 423 hours a month. This suggests that as long as they are awake, they are connected!

Social media use in the region further supports Latin America’s thirst for connectivity: 7 out of 10 people in the region prefer to access Facebook from their mobile phones, while 8 out of 10 utilize them to talk on Skype or WhatsApp.

Yet it is important to know mobile phones does not win on all fronts. When it comes to watching videos on Youtube, people still prefer to use a laptop or desktop. The same is true for ecommerce: 69% make purchases from their laptops, 29% from the tablets, 24% from their smartphones and 6% from their Smart TVs. Further, choosing ecommerce as a purchasing channel does not mean Latin Americans spending is low. Surprisingly, the average online expenditure surpassed that of their counterparts in the United States. On average in 2015, Americans bought US$2, 042 worth of products, while Brazilians bought US$3, 062, Mexicans US$2, 945 and Colombians US$2, 347.

Even though all countries in Latin America share a common language, their realities and cultures are different. Countries need to be analyzed separately in order to develop a unique strategy for each. While other regions have stunted their growth, Latin America’s numbers are blossoming. The region is a raw gem waiting to be polished. Only great opportunities lie ahead. Let’s seize them together!

Author: Laura Vaillard, Founder and Director of Medialo Consulting

 

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