Olympic-size opportunities for e-Commerce in Brazil

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Author: Oliver Dowson, CEO, International Corporate Creations

There’s been more media coverage of Brazil in the last few weeks than in most years.

That’s of course been driven by the Olympics, with all the associated questions about infrastructure, environment, what future benefits there will be for the locals after all the investment and whether and where the money could have been better spent. You’ll also have seen the recent impeachment process of Dilma Roussef, followed by demonstrations suggesting the country may be descending into chaos.

 

But no, Brazilians are just getting on with life, and it’s very much business as usual. And for eCommerce companies, that means great opportunities. It may be a developing country, but it’s certainly not third-world in any sense, and has a rapidly-growing middle class. It has a population of over 200 million, of which over 50% are aged between 15-44, and over 90% of those have smartphones. As the only reliable TV signal is via cable (there are 2 main operators), most houses and apartments have high speed internet too.

 

Most people rely on mobile networks for internet - the four main operators, Vivo, TIM, Claro and Oi (all overseas-owned) all have 4G networks covering all urban centres (and therefore around 90% of the population) and 3G coverage is ubiquitous across all populated areas of the whole country. Use of smartphones is so universal that, unlike almost any other country, WhatsApp has become the main communications medium for both B2C and B2B trade.

 

eCommerce in Brazil during Rio Olympics

 

Recent studies show that over 80% of the 15-44 demographic now shop online at least once a month, so it should be a highly promising market for eCommerce. Perhaps the only obvious downside is that disposable incomes are relatively low. However, it’s also not so easy to break into the market from overseas, and new entrants would be well advised to plan to set up a base, however modest, in the country.

 

It’s not just a matter of language – although websites need to be in Brazilian Portuguese, translations are usually easy to implement. The biggest issues to overcome are taxation, import regulations, payment and infrastructure.

 

Brazilian bureaucracy is byzantine and the taxation system is a nightmare to understand, even for local accountants. Any single sale is likely to attract at least 3 separate taxes, and rates and rules can vary from state to state and city to city. The business itself will also be taxed both on turnover and profit. Import duties are simpler – but not by much, and the rates can be eye-watering for some products.

 

eCommerce in Brazil during Rio 2016 Olympics

 

Brazilians are used to buying almost everything (even groceries and fuel for the car) on interest-free credit, with the vendor charging the purchaser’s debit card in 3, 6, 10 or more equal monthly transactions. The credit arrangements are operated directly by vendors, not by banks or card issuers.

 

Solve all those issues, and if you’re selling physical goods you’ve still got to get them to the customers. Courier services are improving continuously, but – perhaps unsurprisingly given the size of the country and remoteness of some areas – there’s no such thing as fixed prices or delivery times regardless of destination.

 

Discouraged? You shouldn’t be. Brazil is a great country with huge potential and can be an ideal market for so many businesses. You just need help – and at every step of the way, from initial research and planning through to implementation and ongoing operations. Success can be achieved much more quickly and affordably than most business people think.

 

The overwhelmingly young workforce is increasingly well-educated, and it’s easy to hire professionals in most sectors who have very good English – and they will all be enthusiastic about eCommerce. In my experience, productivity levels can be impressive. It’s also one of the most pleasant countries to live, work and do business. If the weather alone doesn’t lift one’s spirits, the enthusiasm and “can do” attitude of the Brazilian people will.

 

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