To find the right logistics solution was always one of the biggest challenges in the Brazilian market. In a country with continental proportions, only Correios, the country’s state-owned Postal Service, can offer the capillarity needed to reach all consumers, even in the most remote regions.
Since 2017, Correios has made an impressive effort to meet consumers’ and international retailers’ expectations, with fewer losses and more efficient processes, through the implementation of the so-called postal dispatch. Through this fee, the state-owned company carries out a set of services: from support to customs treatment to X-ray inspection, storage, collection and transfer of taxes (if any), to maintaining communication with recipient and sender, in addition to returning the parcel when the recipient does not pay the applicable taxes.
In practical terms, the Correios’ strategy in recent years focused on driving the market to increase adherence to products with positive profit margins for the company, avoiding the high volume of small packages that negatively affected the company’s overall operation.
“When this happens [less volume of small packages], you can see a natural evolution of Correios’ operation in general. There it is a fundamental thing, the revenue grows, the operation starts to receive more investment, and then everything starts to evolve. We still can’t say we have a first-world operation, but compared to what it was a few years ago, there is a considerable improvement,” says André Boaventura, CMO at EBANX, the global fintech that provides payment solutions to international companies in Latin America, and director at LEVE, the logistic arm of the fintech.
Nevertheless, since 2019, relevant players in Latin America’s e-commerce industry, such as MercadoLibre, have launched its own freight operation to deliver parcels in Brazil – and startups, such as Brazilian logistics unicorn Loggi, started to bet on new logistics solutions in the country.
But then the pandemic came, bringing a sea of uncertainty and the need for solutions.
“The beginning of the pandemic was alarming. We thought that everyone would save more money, we had fewer flights, consequently, fewer things would arrive in Brazil. What we saw after around 3 months of a pandemic was actually the opposite: consumers kept buying from international e-commerces. Purchases have not stopped and companies need to make it arrive here in Brazil, so it is worth investing more in logistics,” explains Gabriela Rodrigues, logistics specialist at LEVE.
Pick-up model and vertical integration
With the increase in new users joining e-commerce encouraged by social isolation, logistical innovations have won even more relevance. The package pick-up model is an example: previously uncommon among Brazilians, now the possibility of picking up your product seems to be one of the greatest promises in the sector – both for companies and consumers.
While on the one hand, private logistics solutions have in this model a way to scale within the Brazilian territory, facing the current capillarity of Correios and maintaining the speed of delivery; on the other, consumers have the chance to faster access the product.
The partnership between the Brazilian firm Clique&Retire and logistics giant DHL to deliver products in lockers in Rio de Janeiro marks the stronger arrival of this trend in the country. For LEVE’s specialist, the pick-up model is, in fact, one of the main trends to take off in the next few years.
“The locker is super relevant, especially if we think about the last mile delivery made by Correios. The ideal scenario would be all Brazilians having an open mailbox, it could even be at a Correios office. So, Correios would have much less chance of errors than trying to deliver everything at home, it would be delivered to the open mailbox and the consumer would pick it up there,” she says.
But this is not the only trend gaining ground in the country. The verticalization of logistics solutions by the main retail players in Brazil have never been so strong. Among the international giants, Mercado Livre stands out with its delivery platform Mercado Envios, but other major global brands such as AliExpress choose to have their own flights to Brazil in order to reduce delivery times. Regardless of the model, the fact is that these are solutions aimed at specific niches, revealing a real effort from the market to set the pace of logistical improvements in the country.
For Boaventura, many of these players will start crossing the lines that separate one thing from another. “It is the same with fintechs. Nowadays everyone is part of the payment process, but it is not overnight that you become a payment company. So, I think entering and expanding business models is very natural for retailers and marketplaces. But behind this will be many players who are already in the industry,” he stresses.
Even with the Brazilian retail market looking for its own solutions, comparisons with logistical solutions from countries such as the United States, where Amazon’s next day delivery, for instance, has wide coverage, do not apply. In Brazil, the reality is that days are needed to reach all regions.
But what is undeniable is that everything points to a shorter gap in delivery times between local and international players. “With all the effort that so many players have made, we will see deliveries from China to Brazil with 7 to 10 days in up to 2 years. We are living in a pandemic moment with fewer flights and that was a big loss. But as normality resumes, there is no reason to be more than 7 to 10 days,” Boaventura highlights.
Payment innovations and the impact on logistics
In a country where the bank slip Boleto Bancário is still such a popular payment method, PIX, Brazil’s newly launched instant payment system, arrives as a promising advance in all aspects, including the logistics sector. “Currently I have a 2 to 3 days gap from the date the purchase was confirmed to the date this information arrives at the warehouse. With instant confirmation, all payments made until noon will also arrive on the same day in the warehouse,” explains Rodrigues.
For Boaventura, the possibilities for improving user experience with PIX are endless.”If the shopping experience is good, the delivery time is reduced, the whole shopping journey works well and for this reason, you buy again, then, it’s a virtuous cycle for e-commerce.”
In terms of scalability, it is too early to say whether PIX alone will be able to move some needles in the logistics sector, but with no doubt, the new payment method represents a further step towards a balanced delivery time between local and international players.