Global Ecommerce: Brazil

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Brazil is an emerging, dynamic and lucrative ecommerce market that will explode from currently 40m online consumers to over 180m ecommerce buyers in the next five years–an astonishing 70% annualized growth rate. Brazil’s ecommerce market place is the 10th largest in the market worldwide right now and accounts for 60% of the ecommerce in LATAM.

The Federal Republic of Brazil is the largest country in both South America and the LATAM region and is the world’s 5th largest country by both area and population. The capital is Brasilia and the country home to approximately 200m consumers.

Brazil’s Internet penetration equates to about 109m users representing more than 50% of the global Portuguese-speaking population worldwide. More importantly for ecommerce, there are currently 40m buyers online and it is estimated that this will increase massively to an amazing 180m consumers by 2018-a booming online consumer growth rate of about 70% per year.

Key Trends

Brazilians prefer search. Almost 80% of Brazilians surveyed by Ipsos use the Internet to look for new brands and products. Brazil leads the way in LATAM with 142 searches per person per month.

Worldwide events are forcing upgrades to Brazil’s transportation and telecommunications infrastructure. The 2014 World Cup followed quickly by the 2016 Summer Olympics are adding to vast investments in Brazil’s needed aviation, ground transportation and information expansion. Such improvements will positively impact and increase Brazil’s ecommerce potential by improving the movement of goods and information-and increasing the world’s view of both Brazil’s immediate opportunities and its vast potential.

Demographics are hugely positive. 79% of young people the middle class in large cities buy online. As with many emerging markets, this entire generation is much more likely to be online, mobile and keen to consume digitally. This specific Brazilian trend is emphasised by a young Internet population: 18% of users are aged 18-24 and 30% of all users are age 25-34.

Fashion and accessory shopping is big. The fashion and accessory industry in Brazil is dynamic and growing, currently driving 21% of online retail sales. Additionally, increases in volumes drive this category in attracting first time buyers due to lower prices online.

Smartphones are on. Users are up 100% in recent years to 18% in 2012 and the country is the number one app developer in LATAM thanks to the nationwide entrepreneurship boom.

Shift in customer care. While telephone customer care still remains the most popular type of customer care in Brazil, customer care via e-mail, on-site (i.e. live chat), and social networks continues to rise – especially with consumers under the age of forty.

Opportunities and Challenges

Domain name. The ‘.br’ country-code top-level domain name is an extension that represents Brazil. This is a good investment for those who want to reach the growing number of internet users there, giving regional recognition and web presence but you will need a local contact for registration and this will need to be renewed yearly.

Relatively high taxes and complex bureaucracy. Brazil has a global reputation that is well earned in some respects: high taxes and a sometimes confusing set of conditions set on businesses. It’s important to understand the local tax structure and other conditions and rules for ecommerce; which won’t always be easy.

Web design. Brazilian shoppers care about product quality, customer service, ease and security and this should be emphasized. Brazillian women controlled 66% of Brazilian family consumption in 2010, so it’s ideal to market to a female audience. When optimizing your site, it is vital to localize links and content to Brazilian Portuguese.

Marketing with digital adverts are also a good idea, according to eMarketer. Digital ad spending in Brazil will surpass $4 billion by 2016 and 47% say that online ads are influential in their purchasing decisions. Another pragmatic way to market products in Brazil is to use Facebook. Brazil is the second largest country in terms of users, 65 million and the only country in the top 10 with decent growth figures (2.61%). Also ad impressions in Facebook saw a 173% growth during the past year.

Payment types. Brazil has a fragmented payment culture with only a small penetration of credit and debit cards. But the biggest challenge is clear: Brazil ranked as one of the countries reporting the highest percentage of consumers experiencing card fraud as in 2012, according to ACI Worldwide. Instalment payments are very common in Brazil, allowing consumers to purchase even simple household products online and pay for them over time. For those who don’t have credit cards or bank accounts, Boleto Bancáriois is the leading payment method. It is a small slip that customers can print out and pay at a bank.
Mobile Brazil

Brazil’s has a high mobile phone penetration. Mobile devices are the second most used way in Brazil to go online, and a whopping 79% of consumers in Brazil use their mobile phones in at least part of the purchasing process.

Mobile payments represent a significant opportunity in Brazil, as mobile phone penetration is much higher than credit card use. Smartphones are owned by 50% of the population of whom 12% used their device for an online purchase, another 20% own tablets of whom 6% used their tablets as online shoppers. The country is the number one app developer in LATAM, with an average of 2.9 shopping apps per user, 2,835 start ups just in 2013 with 237 dedicated solely to ecommerce. Interestingly, one third (34%) of online shoppers drop their basket due to a complex navigation or the non-responsive aspect of a website.

The Brazilian Crystal Ball

Just the basic proliferation of Internet users means that the Brazilian market will continue to grow enormously in the coming years. This will be aided by the fact that mobile payments are expected to become a key driver in the continued growth of ecommerce.

Currently confusing local rules and a complex tax and delivery system can make Brazil a challenge to penetrate; but one that is definitely worth it given the absolute explosion of online buyers and large current and future market opportunities.

Businesses are combining different methods of purchasing to employ tactics like click-and-collect to make it easier for the consumer to get what they want.

More broadly, Portuguese remains a globally powerful language allowing access to numerous key markets of clear opportunity in ecommerce. Among the many locations, it will also allow retailers to tap into key South African nations.

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