Defending Against Disruption in Latin America · Agile Innovation Business Strategy Client Experience Purpose & Change Management 10. AMI Mexico survey results ... disruptor of cash,

Defending Against Disruption in Latin AmericaA webinar presentation

• Introduction

• Why we are obsessed about disruption

• Results of our Airbnb-hotel survey

• Our recommendations to Airbnb and hotel brands

• What sectors are vulnerable to disruption?

• Disruption trends in other industries:

• Payments

• Logistics

• Health

• Q&A

Webinar agenda

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Introductions

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AMI is the leading independent Market Intelligence provider in Latin America

AMI is Latin America’s leading

Market Intelligence and

Advisory group.

AMI’s founding partners are

pioneers in the field of Market

Intelligence in Latin America,

with over a quarter century of

experience in the region.

AMI has experience in over 30

Latin American and

Caribbean markets.

AMI is a member of

SCIP

Strategic and Competitive

Intelligence Professionals.

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About your webinar presenters

John PriceManaging Director

Ricardo ÁlvarezConsumer Services

Practice Director

Guillaume CorpartManaging Director

Healthcare Practice Director

Diego RodríguezLogistics Practice Director

Diego MedonePartner, IG Motion

Abel DelgadoDigital Marketing Director

Lindsay LehrPayments Practice

Director

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Wherever possible, AMI has verified the accuracy of information provided by third parties, but does not under any

circumstances accept responsibility for such inaccuracies should they remain unverified.

It is expected that webinar attendees will use the information provided in this report in conjunction with other

information and with sound management practices. AMI therefore will not assume responsibility for commercial loss

due to business decisions made based on the use or non-use of the information provided.

Legal Notice

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Poll question #1

How much market share do you expect to be taken

by new disruptive business models in your industry

inside Latin America over the next five years?

0-5%

6-10%

11-20%

21-40%

41-70%

71-100%

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Why Disruption?

Why Now?

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Why disruption? Why now?

Mobile technology

Inefficient service sector

Regulatory openness

Financial conditions

The services sector

70% of the LatAm economy

$4 trillion USD

Vulnerable to disruption

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AMI – IGMotion alliance

DIAGNOSE

DEFINE

DECIDE

DELIVER

Consumer market research

B2B market research

Competitive intelligence

Political & regulatory intelligence

Economic forecasting

IGMOTION

GLOBAL

ADVISORS

Go to Market Strategy

Operational Models

Sales & Marketing Strategy

Envisioning

Coaching & Board Advisory

Digital Transformation

Agile Innovation

Business Strategy

Client Experience

Purpose & Change Management

10

AMI Mexico

survey

results

Airbnb vs hotels

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Airbnb is far more effective than hotels at converting awareness into preferenceHotel loyalty programs do help, to a degree

Base: Have traveled in P12 months n=1,186 Base: Have traveled in P12 months n=1,186 Base: Have hotel loyalty program n= 115

Airbnb / total sample Airbnb / own hotel loyalty programHotel

Preferred

UM Often

U P 12M

Ever tried

Awareness

12

Hotels are losing customers under 35 years of ageWomen are stronger adopters of Airbnb than men

58

42 43

57

63

51

4346

5456

42

37

51

38

Male Female 18-34 35-54 55+ A/B C+ C/C-

Demographic Profile

Hotel Airbnb

13

47

53

41

32

41

65

42

6263

47

74 75

61

42

51

64

0

10

20

30

40

50

60

70

80

Total Hotel Users Airbnb Users 18-34 35-54 55+ A/B C-/D+

NPS Score: Promoters (9-10) minus Detractors (0-6)

Hotel Airbnb

How much would you recommend Airbnb to family and friends? where 0 = I would not recommend it and 10 = I would recommend it extensively.

Next, Airbnb will steal share of 35-54 year oldsStrong NPS scores are indicative of word-of-mouth preferences

15 14

Hotel/LP Airbnb/HLP Delta

It is a better option when traveling to a dangerous city 81 32 49

I prefer to use it when the company pays for it 73 35 38

Has a better reward program 72 36 36

It is best for business travel 74 43 31

It offers Interesting promotions with other companies 69 44 25

When I have a problem, is easy to solve it 73 49 24

I feel safe during my stay 82 63 19

Has great customer service 76 59 17

Where hotels still outshine AirbnbBusiness travelers in LatAm cities remain a strong segment for hotels

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Hotel/LP Airbnb/HLP Delta

It helps me save money 40 78 38

It offers comms w/host thru app 46 74 28

Is for Millennials 31 59 28

It helps me control my budget 49 71 22

Is innovative 60 78 18

It gives me the opportunity to meet new people 56 71 15

It offers unique experiences 54 67 13

Where Airbnb outperforms hotelsCost conscious – under 50 – leisure travelers is Airbnb’s sweet spot

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To hotels To Airbnb

• Add safety questions to the evaluation scores

• Create unique promotions for women with

safety focus

• Enhance the product via partnerships / new

product development to enhance its USPs:

• Authentic experiences (Airbnb adventures)

• Meet new people (connect to other

travelers)

• Push “better value for my money” towards SME

biz market

Our recommendations

• Focus on safety – use “negative” advertising

against Airbnb

• Visualize the customer service of a receptionist

versus an absentee Airbnb host

• Widen the customer experience by teaming up

with other service providers

• Invest deeper in loyalty programs

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The AMI – IG Motion approach

to disruption consulting

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Are using mobile, and sophisticated digital interactive tools

to determine who to trust, where to go and what to buy.

PEOPLE

Are undertaking their own digital transformations, rethinking

what customers value most, creating operating & business

models that take advantage of what’s newly possible for

competitive differentiation using sophisticated technologies.

BUSINESSES

The challenge for business is how fast and how far to

go on the path to digital transformation to succeed

New paradigms & behaviors generated by the influence of new technologies

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PERMANENT MONITOR

DIAGNOSE

DEFINE

DECIDE

DELIVER

Hypothesis

Market Intelligence

Competition

Clients

Regulation

We start conducting research and market intelligence studies and

assessments, to be immersed in deep dives about different critical

scenarios, hence, you will be better prepared to answer hypothesis

whether is it to explore market attractiveness; increase market

share; improve client experience; gain operational efficiency, avoid

risk, consider M&A opportunities, or even create sustainable growth;

just to mention a few.

Changing nature of competition

Broad access to analytical tools and approaches

Technology driven strategic opportunity

Ability to prototype at low cost

Importance of technical feasability

Technology driven strategic opportunity

Our strategy frameworkWe use a frame of 4Ds: Diagnose, Define, Decide and Deliver, where, Diagnose it is the key component of the knowledge value chain.

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Rapid decisions and

learning cycles

North Star embodied

across the entire

organization

STRUCTURE PROCESSSTRATEGY PEOPLE

Network of

empowered teams

Dynamic people

model that ignites

passion

TECHNOLOGY

Next generation

enabling technology

• Shared purpose and

vision

• Sensing and seizing of

opportunities

• Flexible resource

allocation

• Actionable strategic

guidance

• Clear flat structure

• Clear accountable

roles

• Hands on governance

• Robust communities

of practice

• Active partnership and

ecosystems

• Open physical and

virtual environments

• Fit for purpose

accountable cells

• Rapid iteration and

experimentation

• Standardized ways of

working

• Performance

orientation

• Information

transparency

• Continuous learning

• Action oriented

decision making

• Cohesive community

• Shared and servant

leadership

• Entrepreneurial drive

• Role mobility

• Evolving technology

architecture, systems

and tools

• Next generation

technology

development and

delivery practices

Five trademarks of agile organizationsWhile each trademark has intrinsic value, our experience show that true agility comes only when all five are in place and working together. They describe the organic system that enables organizational agility.

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Poll question #2

What needs improving most in your company to

embrace disruption/defend your market share?

1. Lower our costs and prices

2. Improve our customer user experience

3. Bring innovative new products/services to market much

faster

4. Disintermediate – i.e. get closer to our customers (take

out the middle man)

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Latin American

disruption

landscape

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LatAm disruption drivers and obstacles

Drivers

Smart phone adoption

Under-utilized overhead

Disintermediation

Poor customer U/X

Oligarchies/supplier over-

concentration

Traffic

Labor & process inefficiencies

Idle labor

Cultural acceptance

Barriers

Regulations

Political interference

Capital intensity

Scarcity of skills

Disruption vulnerability driver score

Disruption obstacle score

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-

2

4

6

8

10

12

12 14 16 18 20 22 24 26 28

Ready to disrupt or partially disrupted

Requires promotion Disruption vulnerability driver score

Dis

rupti

on o

bst

acle

score

Commercial water usage

Consumer banking

SME banking

Notary Public

University education

Casinos/gambling

Network TV

Department stores

Last mile logistics

Taxi services

Legal services

Graphic & industrial

design

Movie

theatres

Car rental

Industrial

equipment

rental

Publishing

& printing

General

practice

medicineSkilled

tradesmen

Business

hotels

Discount

stores

Customs brokerage

Cable TV

Private jet travel

4-5 star

hotels

Media

production

Supermarkets

Specialty retail

Boat rentals

Pre-K education

Funeral

homesHome

services

Consulting

services

Beauty/hair

salons1-3 star

hotels

Convenience

stores

Ready to disrupt or

partially disrupted

Protected by lobbying

Already disrupted

The next generation of

disruptible services

Which service sectors are ripe for disruption in LatAm

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▪ Uber, one of the most

successful digital commerce

merchants on the planet took

nine years to win 15% of adult

Americans as customers.

▪ In Mexico, Uber reached the

same market penetration

threshold in 4.5 years,

expanding from 20 drivers in

2013 to 500,000 in 2018.

1. Mexico

3. Peru

5. Chile

6. Brazil

7. Argentina

Global rankings (out of

190 countries) of Netflix

hours watched per

customer

▪ In 2017, LatAm was Airbnb’s fastest

growing market in the world (148%

booking growth).

▪ >250,000 Airbnb listings across LatAm.

▪ Latin America is Coursera’s fastest

growing region worldwide.

▪ Soon after Spanish language courses

were made available, Coursera

registered more new customers in

Mexico than the US for a quarter.

Latin Americans are proven adopters of disruptive models

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New disruptors are more than just direct competitors

Originally

disrupted the

fragmented

home delivery

marketLast mile logistics

Poised to become a leading

disruptor of cash, by digitizing

payments for the unbanked.

30,000 + Rappitenderos

(independent delivery men and

women) will soon be delivering

e-commerce parcels across the

region.

Originally disrupted

the Network TV, Cable

TV and Movie theatre

industries

Gaming market

Netflix original productions

disrupts the movie and

television production industry

Netflix’s next disruptive foray is

expected to be in gaming, as

large as the film industry

Eco-system impacts

Rappi will broaden

LatAm’s addressable

e-commerce market

Consumer advertisers

lose an important

promotion channel

27

Practice

Outlooks on

Disruption

28

Disruption in

LatAm

Payments

Presented by:

Lindsay Lehr

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Brazil’s leader trailblazing a cultural change“Você acredita que cuando todo mundo ganham junto é mais legal que sozihno? Então o Iti é para você.”

“Justo”

“Democrático”

“Transparente”

“Fácil”

“Brasileiro”

• Mobile app enabling QR code payment

• Not required to be an Itau account holder

• 1% commission paid by receiver

• Payments in real time

• Mobile app enabling QR code payment

• P2P and P2M payments

• Launching Q3What could limit its impact?

• Credit cards only

What is new about iti?

30

Industry evolution to come as QR grows

Payments finally are becoming consumer- and merchant- oriented

Downward pressure on fees

• Moving from a commission-

based business model to data

monetization

• Players willing to sacrifice fees

for scale and engagement

• MDRs trending toward zero

Openness

• EMVCo QR code standards in

Colombia and Argentina

• CoDi in Mexico

• Open banking regulation in

Mexico and Brazil

Real-time payments

• Instant P2P payments

• Faster payments to merchants

• Development of real-time ACH

31

Industry evolution to come as QR grows

Who wins? Consumers, merchants, innovative first movers

Those able to change their revenue generation model

Who loses?Incumbents not open to change

32

Disruption in

LatAm Logistics

Presented by:

Diego Rodríguez

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Disruptor leaders in Logistics

▪ Logistics disruptors are focusing on automating and digitizing processes

▪ Import /export documentation

▪ Customs brokerage

▪ Backhauling

▪ Freight forwarding

▪ Last mile delivery

Where is it happening?

34

Drivers and Facilitators of disruption in LAC

▪ Venture capital advances at big steps with logistics as one of the

shiniest stars

▪ Brazil, Mexico, Chile, Argentina and Colombia are the focus of

interest for investors

$-

$500.00

$1,000.00

$1,500.00

$2,000.00

$2,500.00

$3,000.00

$3,500.00

$4,000.00

2016 2017 2018 2019F

Venture Capital

Venture Capital Flowing to LACLAC Physical E-commerce Forecast (USD billions)

0

20

40

60

80

100

120

2017 2018 2019 2020 2021 2022 2023

▪ Spillover effect of e-commerce demands to other industries

▪ Weak footprint of brick and mortar retail (1/20th that of US) –

see next slide

AcceleratorDriver

Source: AMI internal analysis, LAVCA.org

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What legacy companies can do?

License’em: A

productivity

enhancer

technology can

keep you alive to

fight another day.

Work for/with ’em:

Light asset operations

and marketplaces can

be your future?

Compete with

’em: Watch, learn, copy

and improve.

Buy’em: Deep pockets and

limited footprint in LAC.

36

Disruption in

LatAm Healthcare

Presented by:

Guillaume Corpart

37

Argentina

Colombia

France

Nigeria

Germany

Korea

Mexico

United States

Russia

Brazil

Japan

India

China

Emerging marketsDeveloped

economies

Number of hospitals by economy Number of hospitals by country

Advanced economies

28%

China23%

Latin America

22%

Other emerging markets

27%

• Access is the biggest challenge facing healthcare in Latin America today.

• More importantly: Access to Quality care in a Timely manner.

Challenge: Access to Q care in T manner

38

▪ Public healthcare systems are saturated, resulting in long

wait times and/or lower quality care.

▪ Demographics will only further compound this issue.

▪ Private initiatives are filling the gap.

1. Technology is broadening access▪ 1DOC3 answered >90 M patient questions, free.

2. Pharmacies become primary care facilities▪ Low cost consultations at the pharmacy.

▪ Point of contact for HC needs, even insurance.

▪ Need for universal patient records.

3. Low cost clinics increase treatments▪ Salud Digna grows to 60 clinics in 14 years.

▪ 80% of patients pay OOP.

▪ Why successful? Faster, Easier, more Accessible (monetarily

and physically).

LatAm Population: 650 M

Private insurance8%

Potential for private insurance

12%

Public insurance71%

Uninsured9%

Private initiatives broaden access

39

▪ Hospitals in Latin America do not have same leveraging

capabilities as those of the US.▪ 45 beds vs 160 beds

▪ Further enhanced in the private sector

▪ Hospitals have limited ability to invest in high cost / hi

technology equipment.▪ CT / MRI can cost >$500k

▪ Currency risks

▪ Manufacturers offering alternative to financing through “pay

per use” models.▪ Burden of financing is on the manufacturer

▪ Need high volumes of data to develop model correctly

▪ Equipment + Service bundling

▪ Pharma – starting to see initiatives towards “pay per outcome”

models

▪ Move towards value based care

LatAm Hospitals: 21,750

5% (492)

19% (10)

3% (25)

6% (85)

8% (372)

19% (939)

25% (59)

12% (61)

19% (192)

23% (627)

70%

77%

40%

64%

72%

Average

Chile

Colombia

Mexico

Brazil

X-Ray CT Scanners MRI

Imaging equipment penetration

Private, 57% Public, 41%

Other, 2%

Pay per use / Pay per outcome

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Questions/Answers

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John PriceManaging Director

About AMI

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AMI is Latin America’s leading independentmarket intelligence consultancy

Our founding partners helped pioneer the field of market intelligence in Latin America

Our consultants have advised a third of the region’s 100 largest strategic investors over a span of two decades

AMI consultants have conducted over 3,000 client engagements in Latin America since 1993

Our holistic approach to market intelligence is unique. We combine market research, competitive intelligence, political analysis and economic forecasting in our studies.

[email protected]

+1 (305) 773-1141

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