Diego Fernandez thinks he is on to something when it comes to online marketplaces in Spanish-speaking Latin America. Consumers in the region are hungry for Western brands, he says, and his time growing up in Guatemala coupled with 11 years of working with logistics companies and marketplaces to get U.S. goods delivered all across Latin America give him a competitive advantage that the likes of behemoths Amazon.com Inc. and eBay Inc. do not have.
“It’s a difficult market to understand from the outside, but my team sees the opportunity and what we need to do because we live here,” Fernandez says. “I have lived in Guatemala all my life.”
Fernandez is the CEO of Iguama.com, an online marketplace that will begin selling in November products from U.S. brands to consumers throughout Spanish-speaking Latin America. Iguama, which is based in both Guatemala and Miami, will enable shoppers to pay for purchases with local credit and debit cards or with cash at banks through agreements with local financial institutions.
U.S. merchants, in turn, ship goods to one of Iguama’s warehouses in Miami or Texas. From there, Iguama takes care of customs documents and gets the goods to the shopper. Shoppers making purchases through the site will see the all-in price, including taxes and shipping, Fernandez says. Iguama will make money by taking a commission fee of each sale, he says.
Iguama has partnerships with carriers including DHL, the United Parcel Service and FedEx, as well as Skypostal Networks and Transexpress, which are both based in Miami and specialize in delivery from U.S. to Latin America. To provide shoppers with payment options, Iguama has also signed deals with Citibank in Latin America and Credomatic, a financial institution backed by the bank BAC.NET that issues and processes payment cards throughout Central America.
“In Latin America, it is critical to partner with local banks in each country so that customers can pay with local debit cards as well as through online and offline banking,” Fernandez says.
Iguama is going to market with a strong arsenal. It’s attracted seed funding from private investment fund PeopleFund.com, Fernandez’s former employer, and it’s also tapped veteran e-commerce executive Bruce Matthews as executive vice president of business development. Matthews comes from computer and consumer electronics retailer TigerDirect, where he worked for 24 years, most recently as vice president of business development. Tiger Direct is owned by Systemax Inc., No. 29 in the Internet Retailer Top 500 Guide.
And then there is Fernandez himself, who has more than a decade of experience in Latin America e-commerce and logistics. Fernandez got his start in logistics in 2003 working with Mail Boxes Etc. where he headed up a service that provided Latin American shoppers with a U.S. address they could use to shop online at stateside merchants.
From there, he moved on to PeopleFund in 2009, where he helped launch the first iteration of Iguama, which, through a partnership with Amazon.com Inc., listed products from the U.S. marketplace on its site and enabled shoppers to buy Amazon goods with local payment cards or with cash at banks. Participating merchants shipped goods to a U.S. warehouse where Iguama took care of getting the goods to shoppers’ doorsteps. From 2009 to the beginning of this year Fernandez says the site did around $25 million in gross merchandise volume. When Amazon pulled the plug on the deal earlier this year, Fernandez and his team started investing in the technology needed to run its own marketplace separate from Amazon.
Iguama is also going to market with two things many start-ups do not have—a database of two million customers who registered or purchased from the original Iguama and a brand that shoppers throughout Latin America are familiar with. Next week it is launching a social platform where Latinos will be able to tell Iguama the stores and the brands they want on the site.
“This is a social movement,” Fernandez says. “We want to hear customers’ voices.” He says Iguama will be different from the likes of Amazon, and eBay Inc. and the leading online shopping portal based in Latin America, Mercado Libre, in that it will give merchants the flexibility to fully control their brand and operate their own branded store fronts. It also will do marketing on behalf of the merchants, many of whom will have never sold into Latin America before, Fernandez says. He declines to name any merchants that have signed up with Iguama.
Consumers will be able to follow merchants they like and merchants will be able to launch e-mail campaigns and offer specific promotions by country, Fernandez says. “We really are focusing on giving the brand space and doing marketing on their behalf,” Fernandez says. “We know Latin American and we can reach people here.”
While evidence suggests it’s done its legwork, Iguama may face stiff competition from the likes of eBay and others. EBay this summer launched an Amazon Prime-like shipping program for Latin America. For a $49 annual fee, online shoppers in Colombia, Chile and Mexico can get free shipping for a year on purchases from eBay merchants in the U.S. EBay also has been ramping up marketing efforts in Latin America recently. In May, eBay launched localized sites in Latin America enabling consumers in 18 countries throughout the region to shop eBay’s online and mobile marketplaces in Spanish and Portuguese using local currencies. As of the end of 2013, more than two million Latin American shoppers purchased items off eBay.com in English and using U.S. dollars, the company says. With the new localization efforts, that number has grown 40% to 50% so far for 2014, eBay says. It also says the number of items purchased from Mexico is up 30% in the first half of 2014 compared with a year earlier.
Smaller players could be formidable competitors as well. Miami-based Traetelo, an online marketplace that, like Iguama, focuses on getting coveted U.S. goods to Spanish-speaking Latin America says its sales are growing about 200% annually in its top Latin America markets of Chile, Venezuela and Peru.
Despite potential headwinds, Fernandez insists Iguama will offer a better selection of U.S. brands and stores than the competition. The company name clearly illustrates that mission, “igual” means equal in Spanish and the “ama” at the end is short for America. The spirit behind the name, essentially Equal America, is that the site will give Latin America shoppers access to the same stores they would find on a shopping trip to the U.S.
“We are the online mall with the U.S. stores that many Latinos want,” Fernandez says. “We will become the place where Latin Americans discover and shop everything they can’t get at home.”Favorite