Navigating the E-Commerce Opportunities in Brazil

by Lindsay Lehr 0

Despitepolitical turmoil and a recession, e-commerce in Brazil still seems to bebooming.

E-commerce in Brazil grew by 5.2% in the first6 months of 2016 compared to the first 6 months of 2015

  • Overall growth for Brazilian e-commerce is expected to be 10-15% in 2016 and 15-17% in 2017 in 2017
  • Mobile commerce sales went up by 88% in Brazil between 2014 and 2015
  • 23.1 million online consumers made at least one online purchase in Brazil during the first half of 2016, which is 31% higher than in the same period in 2015
  • 18.8% of e-commerce transactions in Brazil in the first half of 2016 were made with mobile devices

Cross-Border Commerce Challenges

However, this rosy picture has a couple ofthorns. Many merchants opt for a “cross-border” approach with Brazil, in whicha transaction is captured by an international acquirer rather than a localacquirer. The problem with the cross-border approach is that it restrictsmerchants to only
17% of the local e-commerce market inBrazil,which is a $23 billion market. In addition, other factorshamper this approach considerably:

  • 60% of e-commerce sales in Brazil are purchased through an installment plan known as parcelamento, and this is only available through Brazilian acquirers
  • Non-card e-commerce payments are 25% of all e-commerce sales in Brazil and only available through Brazilian banks
  • Only 20% of credit cards in Brazil are enabled for international purchases

As such, it’s crucial for any merchants wishingto take advantage of the
Brazilian e-commercemarket to develop a local strategy that fits shopper habitsand payment methods.

Getting Help
While the infamous custo brasileiro describesthe difficulty of doing business in Brazil—cumbersome regulation, red tape,high taxes, difficulty repatriating funds, among other challenges—there are anumber of e-commerce enablers such as PayU that can help merchants. Enablerscan help with advisory services to set up local payments, facilitateintroductions to local attorneys, handle wire transfers out of Brazil and evenofficial represent a merchant in Brazil in lieu of a legal entity.

Next Steps

Despite the availableresources, merchants still need a deeper understanding of the Braziliane-commerce market from their perspective: how to handle the key logistic andpayment details that will truly allow them to leverage the market and navigatea tricky local landscape.

That’s why Americas Market Intelligence(AMI) developed a 72-page report—Optimizing E-Commerce Paymentsin Brazil—to offerin-depth guidance for merchants, payments officers and e-commerce leaders toavoid common pitfalls and develop powerful strategic workarounds that willdeliver success in Brazil’s e-commerce market.