Why Brazil’s Passion for Online Shopping Goes Way Beyond Amazon

Why Brazil’s Passion for Online Shopping Goes Way Beyond Amazon

Brazil’s a real head-scratcher for many ambitious companies. On one hand, it’s a market in economic turmoil with concerns about political stability. On the other, it’s a significant emerging economy and one of Latin America’s stand-out markets. Brazilians have big consumer ambitions, especially when it comes to online shopping and cross-border eCommerce.

Brazil is certainly a large market, both geographically and population-wise. It is the world’s 5th largest country and 9th largest economy, and GDP has risen steadily over the last few decades.

While Brazil may have experienced recession in the last 10 or so years, there have been recent signs of a recovery. Despite the turmoil, for many eCommerce retailers Brazil is too tempting an opportunity to pass up. That may be why online giants like Amazon, eBbay, Walmart, and Alibaba have all thrown their hat in the ring and to get a foothold in the Brazilian market.

Approach with caution

Brazil is regionally significant because it’s such a big chunk of the wider Latin American market. In 2017, Brazil made up 38% of the eCommerce market in this part of the world, and it’s often used as a base for operations in the wider region. Be aware, however, that Latin America isn’t a homogenous mass. Most countries in Latin America are mainly Spanish speaking, whereas Brazil’s main language is Portuguese.

It’s also a mistake to lump Brazil in with the area’s other major economy, Mexico. Not only are the two geographically further apart than people tend to realize, they are also very different culturally and linguistically. Don’t make the mistake (as many brands have) of trying to lump all Latin American markets together and dealing with them as a single unit.

Palacio de Bellas Artes, Mexico

Brazil and Mexico differ in language and culture, despite being two of Latin America’s major economies.

Brazilians expect to see content in their own language, which for most is Brazilian Portuguese. A small proportion of the population speaks indigenous languages, and  some immigrant populations use Japanese, German, or Polish at home. But for most Brazilians, Brazilian Portuguese service is essential.

A PR Week study identified that having support in Portuguese was important to 70% of Brazilians, and 4 in 10 rejected brands that didn’t offer content in their language. It’s surprising how often brands try to penetrate this market with badly repurposed language content, or attempt to use English or Spanish, which few Brazilians speak.

Quirks and idiosyncrasies

Unlike many emerging markets, Brazil has a number of well-established financial institutions, with financial practices that are rather unique to the Brazilian market. Because Brazilian financial preferences can be idiosyncratic, it’s best to offer a range of payment options at checkout. About a quarter of the population doesn’t have access to a bank account, and online shopping is usually done via credit card.

This is a relief to retailers frustrated by the cash-on-delivery payment methods popular in other large emerging markets. However, Brazilians have a particular quirk when it comes to payments: they love to pay by installments, especially for luxury goods. This is true even of Brazil’s wealthier citizens.

One of the benefits of this practice is that bigger-ticket items seem more affordable to less wealthy individuals. That means luxury brands and car retailers may find it easier to approach people who aren’t high earners by emphasizing the affordability of payment installments.

Brazil may be a major target for online giants like Amazon and Alibaba, but it’s local contenders who have the most loyal followings, like Americanas and Netshoes (a sportswear company). Mercado Livre, an Argentinian platform that offers marketplaces and online auctions, is also hugely popular in the Brazillian market.

Mercado Livre homepage

Mercado Livre is one of Brazil’s biggest eCommerce marketplaces and a huge Amazon competitor in South America.

Brazil’s regulatory and business environment is challenging and unique, and it’s believed some practices can only evolve and survive in Brazil’s idiosyncratic environment. If outside brands are to make a go of it here, they must work to understand the country’s unique retail landscape.

Local competition from experienced eCommerce brands may be why Walmart decided to ditch the online side of its business in Brazil and focus only on bricks-and-mortar stores.

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Walmart’s eCommerce offering never took off locally in the face of fierce domestic rivalry. With Amazon now set to open its own local warehouses here, it remains to be seen if this giant can succeed where Walmart failed.

Despite the economic and political turmoil in Brazil, eCommerce continues to grow a a rapid rate, and more growth is forecast. It’s clearly a tough market to enter, as Walmart quickly discovered.

Despite the hazards, major players like Amazon are still venturing into Brazil in the hopes of getting in on things early. If you’re willing to weather Brazil’s attempts to achieve stability, this will surely become an exciting market where consumers are eager to shop online.

Written by Tina Wayland
Tina Wayland

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