Case Study Submarino. Com

Introduction

In 1999, Antonio Bonchristiano launched Submarino.com, an international online store. Submarino.com was founded through an investment by a leading private equity firm in Brazil. The huge success of Amazon.com inspired Antonio Bonchristiano and GP investment to create and invest in an online store. Following the footsteps of Amazon.com, Antonio Bonchristiano wanted to introduce the same business concept in Latin America. In 1999, Submarino.com bought Book Net, a Brazilian online bookseller and following the same growth mode opened new online stores in Latin America and in Spain. Submarino.com continued with its expansion policy and quickly access to different geographical markets. The company sold books, CDS, and toys. Latin American

60% of total population of this region was under 30 years of age and higher birth rates were expected to add another 50 to 60 million populations in next 10 years or so.

Poverty was the biggest challenge in the progress of e-commerce in Latin America. As compared to developed countries like United States, the average GDP per capita was extremely low and more than 100 million people in Mexico and 173 million in Brazil were living below the poverty line. Access to credit cards was low the medium to pay while shopping online. The use of credit card was 27% in Argentina, 18% in Brazil, and 22% in Mexico.

There were also region specific socio-economic and cultural barriers that affected the uniformity of e-commerce in that region. Region’s poor telecommunication and logistics infrastructure was also the major hurdle. Due to insufficient investment in Government owned telecommunication system the access to telephone lines was extremely

With his investment background he was able to secure large amounts of private funding to bankroll Submarino.com. The company overcame operation challenges and expanded rapidly in a short amount of time. Submarino however, still faces some difficulties making profit and returning investments to their investors. Submarino has to find additional way to achieve their investor’s desired return on investment. They have to lower operation cost and increase revenues generated through the portal. They may also have to be more aggressive in Spain to gain additional market shares. They possibly will have to reconsider an Initial Public Offering or find a strategic partner to obtain extra capital and resources for the company. These options will promote longevity for Submarino and better position them in the competitive