Our third stop in the global e-commerce journey will be Brazil. The local market offers rare opportunities for online retailers. To benefit from the potential growth, make use of our insights.
But before jumping into that, let’s have a general idea of the country.
An outlook of the economy and demographics of Brazil
- Population: 209Mn
- GDP: $1,960Bn
- GDP/capita: $9,340
- Urbanization: 87%
- Mostly dependent on the service sector
- Main agricultural products: coffee, soybean, cocoa, wheat
E-commerce in Brazil
Today, Brazil has a 71% internet penetration rate, while only 60% of its population shops online. Considering the size of the country’s population, the difference between these numbers indicates an immense room for growth.
The local market has nearly $24Bn value, and mobile commerce accounts for 32% of the total e-commerce market. More importantly, mobile e-commerce is expected to grow 14% annually, to hit $13Bn in 2021.
Another indicator of future growth is the e-commerce/total retail ratio, which remains at 3.2%.
Latin American giant MercadoLibre dominates the marketplace with 60Mn users. However, 230,000 new market entrants furthered competition in the past year.
Trends in the local market
The increasing number of smartphone users and mobile commerce growth forecasts forces companies to prioritize their mobile platforms.
Millennials tend to purchase electronics via e-commerce, resulting in a 42% share of total e-commerce value. The travel category comes next with a 29% share.
The cashback sites are responsible for most of the online store traffic, on account of their popularity.
Facebook has a 130Mn advertising audience in Brazil, larger than 1/5 of the European population in total.
Advantages of operating in the Brazilian market
Both the size of the country and its low e-commerce penetration rate promise a tremendous growth prospect. Furthermore, micro and small enterprises will have 29% of the total e-commerce revenue, according to the Brazilian E-commerce Association.
Insights into the market
1/3 of the population do not have bank accounts, but the Central Bank of Brazil launched the Boleto system in 1993 as a solution, which is widely used in online payments (25%). Boleto (voucher) has a due date, and customers can pay it in cash at ATMs, banks, participating supermarkets or post office.
Although credit cards dominate the current market with a 59% share, digital wallets grow faster than any other payment method (5.6% increase in 2 years).
Many Brazilian companies provide chatbots to improve customer satisfaction, which offers 24-hour shopping assistance.
Another innovative solution, parcel lockers are in service for several years, where customers can collect their packages with QR codes sent to their emails. These pick-up points resolve convenience problems and reduce logistic costs.
The market has a lot of room for growth and the competition is harsh. When formulating a strategy keep in mind:
- Mobile shopping platforms are on-demand and account for 32% of the total e-commerce market.
- SMBs will have a large share from the growing local market (29%) soon.
- Boleto Bancario is a widely used payment method initiated by the Central Bank of Brazil, applying to the 35% unbanked population.
- E-wallets experience fast growth and will account for 13.6% of total payments in 2021.
- Chatbots are becoming more and more common, where the absence of one could be attributed to ill customer service.
- Consumer electronics is the dominating category mostly purchased by millennials.