With a population of over 212 million, Brazil is the largest market in Latin America. Among them are 100 million Internet users and this is considered the region with the highest growth potential in the e-commerce market.
According to e-commerce DB statistics, in 2021 Brazil’s e-commerce market will be worth $26.1 billion (about 36.38 trillion won), ranking 15th in the world. According to a report by Statista, this is more than double the level of 2019, and the growth rate compared to 2020 is close to 30%. It is also expected to grow at an average of 30% annually until 2024.
▲ Participation in the Brazilian e-commerce market (source: nocnoc)
For Brazilian e-commerce, 78% of sales come from e-commerce platforms, and competition between platforms is more fierce than monopolized by one or two companies. The US Bureau of International Trade reports that Amazon, Mercado Libre, Magalu, Shopper, Aliexpress, Americanas, Submarino and Shoptime have the highest usage rates.
In particular, after the outbreak of Corona 19, as e-commerce in Brazil experienced explosive growth, foreign platforms such as Amazon, Ali Express and Shopee began to attract attention, alongside local platforms in Brazil. It was analyzed that the local base in Brazil maintains its competitiveness by offering imported goods and facilitating the adherence of cross-border sellers to the local base.
Nocnoc, a Latin American platform based in China, analyzed that “even for many e-commerce users, sales competition is fierce, so if a product does not appear on the cover, it is unlikely to sell.” According to Noknok’s research, 94% of consumers did not look for products beyond the third page, and 56% of respondents did not even look at the second page.
Because of this, suppliers have to outperform their competitors in various aspects such as price, delivery, performance, customer service and marketing. However, Nok Nok points out that many marketers do not invest enough time and effort in improving their exposure.
It is also worth paying attention to the consumption patterns of the middle class. Most middle-class consumers in Brazil expect high-quality products and usually buy from their favorite brands, but at the same time prefer low prices and explore ways to increase value for money.
Noknok suggested that they should have price competitiveness such as coupons, cash back and discounts because there are many consumers who go the extra mile to look for the lowest prices. The number of consumers using price comparison sites is also growing.
Payment systems are one of the areas to focus on. 55 million Brazilians do not have a bank account, and more than half do not use a credit card. The U.S. Office of International Trade warns that the most commonly used credit cards do not accept international transactions, making cross-border websites an even bigger hurdle.
Consumers without a bank account typically use wire transfers to purchase goods or services. For an online purchase, the seller issues a card with a barcode, transaction details, expiration date, etc., and the buyer collects and pays in cash at an ATM, bank or post office.
At the end of last year, the Brazilian central bank launched a system called ‘PIX’, which is gaining popularity. It is a system that enables the electronic transfer of money from financial institutions such as banks. Scan the QR code in the app and enter the password. There are currently around 110 million users.
Credit card use is low, but installment payments are common. Since more than 50% of e-commerce sales in Brazil are made through installment payments, Noknok notes that this is an important factor when making a purchase decision.
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