Fri, 01/01/2010 - 01:00 | by admin
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Why has Amazon been so successful? And what are the lessons for Latin American entrepreneurs? Those are two of the questions that bUSiness CHILE put to Diego Piacentini, senior vice-president for international business at the online retailer, during his recent visit to Chile.
An Italian now based in the United States, Piacentini joined Amazon in 2000 and has got to know entrepreneurs in Latin America through Endeavor, a non-profit organization that promotes entrepreneurship. As a member of its advisory board, he has been mentoring a Chilean Internet company, Betazeta, and has participated in two of the meetings - the latest in Chile - at which Endeavor selects promising entrepreneurs to receive guidance, mentoring and other forms of non-financial support.
What do you see as the main challenges for entrepreneurs in Latin America as compared to the United States?
They’re not about entrepreneurship per se. There are amazing entrepreneurs in Latin America. I believe they have to do with access to financing - credit and venture capital. I’d compare the situation in Latin America to that in some countries in southern Europe like Greece, Spain and Portugal.
That’s especially true outside Brazil because its potential - like that of India and China - is so high that it attracts a lot of foreign capital and innovation. The challenge is more in countries the size of Chile and Colombia… where you’d expect local financing or local banking support for local companies.
The need for local venture capital industries to finance entrepreneurship and innovation is an old story in countries like Chile. What do you think holds back their development? ?
I’m going to speculate but, in the Anglo-Saxon world and in some Scandinavian countries, there is higher propensity to risk and making mistakes from a business standpoint is totally acceptable. That’s the biggest difference I found in moving from Italy to the U.S. That overall culture helps the development of the venture capital ethos because, as you well know, venture capitalists make money on a very small portion of their investments and the majority are - well - just an attempt.
And then there’s size. The U.S. market is so big and vibrant and that’s also why you see so many venture capitalists going to China. Amazon is in China and I’m impressed with the number of venture capitalists that are just throwing money at local companies - good or bad. It’s reminiscent of 1997, 1998 and 1999 in the U.S. when everyone was throwing money at Internet companies without even thinking about whether they were good or bad.
So they’re heading for trouble…?
Well, I don’t know about that... Out of that chaos, that mess, maybe some good companies will survive.
You say that there are good entrepreneurs in Latin America. What about their propensity to risk? ?
Of the entrepreneurs at the ten companies I’ve met with so far, it’s very high; a couple of them came from failures.
So what makes them different? ?
The majority of them have studied in the U.S. or England, and mostly in the U.S.
Where do you see the opportunities in Latin America at the moment? Where should entrepreneurs be looking? ?
It’s not sector-specific. There are, however, going to be opportunities in technology. If you’re in countries like Chile, Colombia or Ecuador, which are not big enough to attract U.S. or other foreign companies, there’s going to be room for local companies to develop their skills focusing on the local market. In Endeavor, I’ve seen everything from companies developing technology for neonatology machines in hospitals to Internet companies and companies developing software for geographic location systems.
In the U.S., e-tail currently accounts for around 6% of total retail sales. How do you see that figure growing? ?
At some point, it’s going to be 15-20% of total commerce but it’s going to take 10 or 15 years to get there. Now, in some sectors, it’s already more than that. In books, it’s probably about 25% in the U.S. and about the same for DVDs.
Is that going to continue increasing in those sectors? ?
Yes, but don’t forget that many of those businesses are going to go digital no matter what. Books will continue to exist but, out of the 350,000 titles that are available at Amazon both in paper and on Kindle, 48 out of 100 purchases are on the Kindle.
And that’s in just two years? ?
The Kindle was launched in June 2007 so it’s two and a half years. It has grown way faster than we thought.
What’s the secret of Amazon’s success? ?
I’d say that being focused from day one on making sure that the customer is happy with his purchase. Now, you’d say that every company says that but we’ve actually done it. From day one, when a customer called to say a book hadn’t arrived, we didn’t ask him to file an application. We’d just reship the book, even if it was the postal service’s fault.
Also, all our software systems were developed in-house. We built every single line of code, keeping in mind what’s the right thing for the customer. For example, if you pre-order a DVD and, by the time we ship, the price has dropped, we automatically charge you the lower price.
How much of Amazon’s business is international? ?
North America, including Canada, accounts for 52%; the other 48% is international. Our international sites are in the UK, France, Germany, Japan and China.
Why have you started selling other products such as groceries? ?
We sell everything; there’s nothing you cannot buy on Amazon. In fact, books are no longer the majority of our business, but what we call electronics and general merchandising.
But aren’t groceries a different business? ?
True, but when you start to like shopping in a trusted place and you can buy anything, you do buy anything.
So Amazon is set to become an online department store? ?
We are an online department store.
You obviously enjoy working at Amazon; what’s most fun about it? ?
Obviously our growth, but also the sense of innovation, of changing things. One way or another, Amazon has changed the way people shop and the way customers expect satisfaction. So many things that we invented have now become standard, like customers’ reviews.
Ruth Bradley is the Santiago correspondent of The Economist.
Successful Entrepreneurship
By By Ruth BradleyPrintSend to friend
Why has Amazon been so successful? And what are the lessons for Latin American entrepreneurs? Those are two of the questions that bUSiness CHILE put to Diego Piacentini, senior vice-president for international business at the online retailer, during his recent visit to Chile.
An Italian now based in the United States, Piacentini joined Amazon in 2000 and has got to know entrepreneurs in Latin America through Endeavor, a non-profit organization that promotes entrepreneurship. As a member of its advisory board, he has been mentoring a Chilean Internet company, Betazeta, and has participated in two of the meetings - the latest in Chile - at which Endeavor selects promising entrepreneurs to receive guidance, mentoring and other forms of non-financial support.
What do you see as the main challenges for entrepreneurs in Latin America as compared to the United States?
They’re not about entrepreneurship per se. There are amazing entrepreneurs in Latin America. I believe they have to do with access to financing - credit and venture capital. I’d compare the situation in Latin America to that in some countries in southern Europe like Greece, Spain and Portugal.
That’s especially true outside Brazil because its potential - like that of India and China - is so high that it attracts a lot of foreign capital and innovation. The challenge is more in countries the size of Chile and Colombia… where you’d expect local financing or local banking support for local companies.
The need for local venture capital industries to finance entrepreneurship and innovation is an old story in countries like Chile. What do you think holds back their development? ?
I’m going to speculate but, in the Anglo-Saxon world and in some Scandinavian countries, there is higher propensity to risk and making mistakes from a business standpoint is totally acceptable. That’s the biggest difference I found in moving from Italy to the U.S. That overall culture helps the development of the venture capital ethos because, as you well know, venture capitalists make money on a very small portion of their investments and the majority are - well - just an attempt.
And then there’s size. The U.S. market is so big and vibrant and that’s also why you see so many venture capitalists going to China. Amazon is in China and I’m impressed with the number of venture capitalists that are just throwing money at local companies - good or bad. It’s reminiscent of 1997, 1998 and 1999 in the U.S. when everyone was throwing money at Internet companies without even thinking about whether they were good or bad.
So they’re heading for trouble…?
Well, I don’t know about that... Out of that chaos, that mess, maybe some good companies will survive.
You say that there are good entrepreneurs in Latin America. What about their propensity to risk? ?
Of the entrepreneurs at the ten companies I’ve met with so far, it’s very high; a couple of them came from failures.
So what makes them different? ?
The majority of them have studied in the U.S. or England, and mostly in the U.S.
Where do you see the opportunities in Latin America at the moment? Where should entrepreneurs be looking? ?
It’s not sector-specific. There are, however, going to be opportunities in technology. If you’re in countries like Chile, Colombia or Ecuador, which are not big enough to attract U.S. or other foreign companies, there’s going to be room for local companies to develop their skills focusing on the local market. In Endeavor, I’ve seen everything from companies developing technology for neonatology machines in hospitals to Internet companies and companies developing software for geographic location systems.
In the U.S., e-tail currently accounts for around 6% of total retail sales. How do you see that figure growing? ?
At some point, it’s going to be 15-20% of total commerce but it’s going to take 10 or 15 years to get there. Now, in some sectors, it’s already more than that. In books, it’s probably about 25% in the U.S. and about the same for DVDs.
Is that going to continue increasing in those sectors? ?
Yes, but don’t forget that many of those businesses are going to go digital no matter what. Books will continue to exist but, out of the 350,000 titles that are available at Amazon both in paper and on Kindle, 48 out of 100 purchases are on the Kindle.
And that’s in just two years? ?
The Kindle was launched in June 2007 so it’s two and a half years. It has grown way faster than we thought.
What’s the secret of Amazon’s success? ?
I’d say that being focused from day one on making sure that the customer is happy with his purchase. Now, you’d say that every company says that but we’ve actually done it. From day one, when a customer called to say a book hadn’t arrived, we didn’t ask him to file an application. We’d just reship the book, even if it was the postal service’s fault.
Also, all our software systems were developed in-house. We built every single line of code, keeping in mind what’s the right thing for the customer. For example, if you pre-order a DVD and, by the time we ship, the price has dropped, we automatically charge you the lower price.
How much of Amazon’s business is international? ?
North America, including Canada, accounts for 52%; the other 48% is international. Our international sites are in the UK, France, Germany, Japan and China.
Why have you started selling other products such as groceries? ?
We sell everything; there’s nothing you cannot buy on Amazon. In fact, books are no longer the majority of our business, but what we call electronics and general merchandising.
But aren’t groceries a different business? ?
True, but when you start to like shopping in a trusted place and you can buy anything, you do buy anything.
So Amazon is set to become an online department store? ?
We are an online department store.
You obviously enjoy working at Amazon; what’s most fun about it? ?
Obviously our growth, but also the sense of innovation, of changing things. One way or another, Amazon has changed the way people shop and the way customers expect satisfaction. So many things that we invented have now become standard, like customers’ reviews.
Ruth Bradley is the Santiago correspondent of The Economist. 
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