Thank you for sharing!

Your article was successfully shared with the contacts you provided.
On a cool, early summer evening, the cobblestone streets of Pamplona are teeming. University students, freed from school for the day, giggle as they flirt with one another and furiously thumb instant messages on their cell phones to friends. It seems like the last thing these very social Spaniards need is help with matchmaking. Scenes like this make Joe Cohen smile. In fact, the large numbers of young, techno-savvy Spanish consumers convinced the senior vice president of international at Match.com, Inc., the Richardson, Texas�based online dating service, to launch a Spain-based site late last year. With 500,000 registered members, the results so far have beaten Cohen’s expectations. But that figure represents a small slice of what Cohen estimates as Match.com’s potential Spanish market. To reach those lovelorn singles, his company is aggressively promoting the site. “We project Spain will be one of our best-performing markets,” he says. At first glance those rosy forecasts seem misguided. The Internet business � and high-tech generally � have struggled in Spain. The reasons go beyond the global dot-com collapse. In Spain home computers are still scarce, Internet connection costs remain high, and the country’s warm climate and outdoor culture reflect a taste for face-to-face socializing. Just 25 percent of the country’s 40 million inhabitants used the Internet last year, according to Forrester Research, Inc., and The Spanish Electronic Commerce Association reports that only 23 percent of them surfed more than once a month. Spanish consumers bought $1.34 billion worth of goods over the Internet last year, but that’s far below levels in France and Germany. The business-to-business sector has sputtered, too, with just one-third of Spanish companies working with vendors or corporate customers over the Internet, according to the Spanish commerce association. But market researchers eMarketer, Inc., Jupiter Research, and PricewaterhouseCoopers forecast Internet growth rates for Spain that will outstrip most western European countries in coming years. A projected spike in cell phones with Internet capabilities, and more affordable PCs are expected to draw more Spaniards into cyberspace. Lured by these estimates, plus a stable economy, a new e-commerce law, and a high concentration of young professionals, foreign companies are panning for online riches in the country. High-profile investors include Monster Worldwide, Inc., eBay, Inc., and Office Depot, Inc. It helps that there isn’t much local competition. Spain experienced a late 1990s dot-com boom that crashed two years ago. There aren’t many survivors left to challenge newcomers from Europe and the United States. “In Spain you don’t see the typical European pattern of one or two strong local competitors challenging the American giants,” says Tom Ewing, a London-based European market analyst at Nielsen/NetRatings, Inc. “Certainly in e-commerce, the local players haven’t made [an] impact.” To corral the Spanish Internet market, say those operating there and industry analysts, U.S. corporations have to carve out a niche, market heavily, and adapt their strategies to local norms. Above all, lawyers, multinational executives, and others say, American companies should recognize that the business model that works in Peoria � or even Paris, for that matter � might not be the one that takes hold in Pamplona. Bullish Projections During the first wave of Spain’s Internet gold rush, local companies stumbled by trying to do too much too quickly. Terra Networks, S.A. (commonly called Terra Lycos), for example, once had grand ambitions of becoming the America Online of the Spanish-speaking world. At press time, the Internet service provider was about to be sold to its majority shareholder and Spain’s dominant telecom company, Telef�nica S.A. To many, Terra’s $2 billion sale marks the bottoming out of Spain’s Internet sector. But Jos� Mateu, Terra’s genial general counsel, isn’t pessimistic about Spanish e-commerce. Companies, foreign and domestic, now are more realistic about what they can accomplish. “This is not a sprint,” he says. “This is a marathon.” Analysts second these sentiments. Jupiter, the information technology firm, estimates that Internet surfers in Spain will grow 30 percent, to 13 million, in the next three years � western Europe’s third-highest growth rate, behind France and Portugal. PricewaterhouseCoopers is predicting equally rapid growth. And while the $1.34 billion in e-tailing sales in Spain is low, it’s double the 2001 volume and dramatically higher than the $20.4 million in online sales for Spain in 1998. Spain already boasts one of the highest cell phone penetration rates in the world, with 84 percent of the population toting mobile phones. That passion is one reason why many predict that, when the Spanish masses start to surf, they’ll do it over the latest generation of cell phones, with their built-in Internet capabilities. Another factor in Spain’s favor is that its economy is holding its own, unlike European neighbors Germany and Italy. Spain’s central bank projects an unspectacular 2 percent growth in gross domestic product for the year. But unemployment is down to around 11 percent from a peak of 18.8 percent in 1995, home sales are booming, and local stores are packed with shoppers. New laws that implement stiff data protection and define liability for sellers should also appease consumers and online vendors. The newest regulation is a 2002 e-commerce law that, according to local lawyers, spells out for the first time the rules of Spain’s virtual highway. It governs Web site contracts and responsibility for site content, among other basic issues. “Before that law no one could anticipate the liability of an online retailer or service provider,” says Diego Ramos, an associate in the Madrid office of Squire, Sanders & Dempsey. “Now at least we have clear rules.” The Personal Touch But even with these advantages, online companies still have one significant challenge: how to appeal to the Spanish consumer or business executive in a culture that places a premium on known brands and personal relationships. “Human contact is highly regarded here,” explains Terra’s Mateu. The preference for face time means that older Spaniards in particular aren’t quick to trust a vendor they can’t see. And they also view shopping trips as opportunities to socialize. Still, “people are beginning to change,” says Maria Garcia Nielsen, a former McKinsey & Company consultant who runs an online office supply company and a business-to-business incubator in Madrid. “But there are cultural issues, more so in the consumer area, and anybody who intends to sell in Spain needs to take that into account.” The Iberian skepticism toward unknown sellers also means that consumers place a lot of faith in established local brands, says Mateu and others. For this reason, El Corte Ingl�s, the privately held department and grocery store chain that dominates the retail market, and various Spanish banks, including La Caixa, the country’s largest savings institution, are leading the push to e-commerce. According to Forrester, 95 percent of Spain’s Internet users bank online, a rate comparable to the United Kingdom’s. “People trust banks,” adds Sergio Gimenez, a partner in the Barcelona office of Mullerat. Companies that have partnered with the bank “benefit from that trust,” he says. Picking Partners Monster Worldwide, Inc., is one foreign company that understands the importance that Spanish consumers place on familiar brands. The New York�based online jobs site, which entered the Spanish market in 2000, has formed alliances with local Web portals like eresMas.com, Terra, and Ya.com to promote its service. And it seems to be working. “We’ve had a very good experience with partnerships,” says Hernan Daguerre, the head of communications for Monster Europe. Monster also retooled its business plan to meet the country’s needs. When the company first ventured abroad in 1996, it simply exported its tested strategy of encouraging job hunters to use its site for free, hoping that companies would come to its Web page and pay to log on to tap the pool of potential workers. But the global economic slowdown that began in 2001 put an end to that. Spanish job hunters flocked to the site not long after it opened only to find fewer “help wanted” postings as companies curtailed hiring. Monster then focused its Spanish sales and marketing efforts on recruiting companies looking to fill jobs. And that meant targeting small and midsize businesses, which account for some 80 percent of Spain’s corporate sector. It also reached out to blue-collar workers, which company research shows make up 51 percent of the country’s 18.6 million workers. Today Monster’s Spain strategy is still a work in progress. But with 600,000 nonpaying registrants and as many as 1,500 paying companies, Daguerre is optimistic. “The demand [for jobs] is already there,” he says. Creating A Market But for some U.S. niche players in Spain the demand isn’t there yet, and they face years of building up a market for their goods and services. Amazon.com, Inc., for example, has decided to stay away � at least until the country gets more wired. In 1998 the Seattle-based discount e-tailer purchased a German online bookseller with a Spanish Web affiliate. But Amazon closed the site down after just a few months, because traffic was so low. However, an Amazon spokeswoman says the company hasn’t ruled out a return if Internet usage takes off. But both Match.com, which set up a stand-alone dating service Web site last October, and eBay, Inc., the Santa Clara, California�based Web auctioneer that expanded to Spain in 2002, say they’re in the market for the long run. eBay is trying to get around the fact that Spain doesn’t have a tradition of offline auctions, let alone yard sales full of old records and used toasters. Likewise, the concept of finding a mate through a personal ad is foreign to younger generations who congregate in plazas or at all-night dance clubs. Cohen, the Match.com executive, recognizes that the concept of online dating in Spain is a new one that has yet to meet wide acceptance. To change that perception Match.com, like Monster.com, has lined up partnerships with local portals, among them Xanadu.com, Ya.com, and La Opini�n Digital, a daily news site. Cohen hopes the company’s strategy of creating market demand will coincide with the projected surge in Internet users, giving Match.com a huge lead over rivals. He says that the demographics are in Match.com’s favor. “People in Spain tend to get married later in life than in other European countries,” says Cohen, “so there’s a natural crossover between a high singles population and the [older age at which] people really engage in online dating.” Spoken like a true Internet bull.

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at [email protected]


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.