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This year, economists expect that Brazil’s economy will shrink by 1% in real terms and by as much as 15% in dollars due to maxed out credit cards, rising inflation, and government increases on prices for fuel, electricity, and transportation. In the last year, consumer spending has stagnated and could even decline by 3% in 2015. However, the Brazilian e-commerce industry seems to be excelling despite all of these indicators. Price savings and the convenience of online shopping caused Brazilians to spend $30 billion online last year, which marks an increase of 9% since 2013.
According to a study done by Internet Retailer, the Latin American region is the second-fastest growing e-commerce market in the world. Of the 500 e-commerce businesses ranked in this study, 299 were based in Brazil. Due to traffic delays in major cities within the country, many consumers prefer to take advantage of the online discounts provided by e-commerce sites and shop there instead. This could be part of the reason that Brazil is considered to be 2 to 3 years ahead of other Latin American e-commerce markets. Another possible factor could be that 60% of its citizens are under the age of 30 and are highly technologically-inclined.
Cross-border transactions accounted for $2.7 billion or 9% of all e-commerce transactions in Brazil last year. Currently, there is a lack of product choice for the upper-middle class, so while the potential for "e-import" growth is great, there are numerous problems that need to be addressed. For example, most foreign merchants only accept international credit cards, to which access is highly restricted in Brazil. As a result, only the wealthy who can afford to travel and open an account overseas are able to make purchases through foreign websites. Most middle-class citizens typically use domestic cards or pay online via a boleto bancario (a pre-deposited payment), but neither of these forms of payment are accepted internationally.
A model for making international goods more accessible to the Brazilian middle-class is a 2012 start-up company called EBANX. This online payment provider signs up foreign merchants and collects payments on their behalf, therefore enabling the Brazilian consumer to pay using local payment methods. EBANX currently has over 7 million registered members and processes $35 million in online purchases a month, and expects that this figure will triple by the end of 2015. If this mark is reached, EBANX alone could help expand Brazil’s e-imports by 40%. Since only an estimated 2-3% of Brazilians might qualify for international credit cards, EBANX is a great solution for the 25% of Brazilians that are viable e-commerce customers so long as they are able to pay domestically.
The potential to expand e-commerce companies to Brazil is now greater than ever. Businessmen wishing to take advantage of this opportunity will have to learn how Brazilians shop and also choose an efficient shipping carrier. In regards to consumer tastes, the most commonly purchased online goods in Brazil are books, music and movies, apparel, toys and games, and consumer electronics. Choosing a shipping carrier is also an important decision due to the fact that private shipping carriers often include surcharges that aren’t billed until after a package has been shipped. Since traditional postal methods often require items to pass customs before they are delivered, research should be done to assure quick shipping time for a reasonable price.
To learn more about starting and expanding an e-commerce company, please review the Guide for e-Commerce Expansion hosted by the National e-Commerce Extension Initiative.
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