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Why Amazon is continuously expanding in Brazil

The e-commerce giant reaps the results of its biggest gamble in online retail market in Brazil

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At the beginning of 2019, Amazon sparked the interest of the online retail market in Brazil when it announced an ambitious expansion into the country. The investment was monumental: the company began its operations selling directly to the consumer, incorporating 11 new categories of products and inaugurating a new Distribution Centre in Cajamar, the metropolitan area of São Paulo–Amazon’s biggest initiative in Latin America.

The choice to expand to Brazil surprised everyone. Until then the company’s actions in the country could be considered timid, even if they were gradually growing. That trajectory began in 2012 with the sale of e-books and, in 2014, with the incorporation of the electronic reader Kindle and printed books. In 2017, the company promoted a large expansion of its portfolio in Brazil with the availability of products in the marketplace and, finally, making its large bet on the online retail market in Brazil in 2019.

“It wasn’t a very difficult decision, choosing Brazil,” says the Head of Retail in Amazon Brazil, Daniel Mazini. In an exclusive interview with LABS, he evaluates the results of the first few months after the expansion of the company in the country and explains how Amazon prepared itself for the Brazilian consumer’s profile.

In an exclusive interview with LABS, Daniel Mazini, Head of Retail at Amazon Brazil, evaluates the results of the first few months after the expansion of the company in the country
Daniel Mazini, Head of Retail in Amazon Brazil

It is a country that attracted us because it had the foundations to do e-commerce

LABS: Why did Amazon choose Brazil to execute this large expansion of online retail?

Daniel:  Amazon started in Brazil in 2012, initially with e-books. In 2014 it started with Kindle devices and afterwards with physical books. So we have a more or less lengthy history in Brazil, with five years of retail sales in physical products. It wasn’t a difficult decision, choosing Brazil: the size of the country, two-thirds of the population connected to the Internet, a very well developed market in terms of payment method—even those Brazilians that are unbanked manage to access payment methods or the famous boleto. People find a way to buy online.

And also the propensity of Brazilians to adopting a digital lifestyle. Brazilians have a record of high use of social media and streaming. It is a country that attracted us because it had the foundations to do e-commerce. Since we arrived in Brazil in 2014 with physical retail, we continue to reinvent ourselves so as to understand the country and its peculiarities.

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Like any new country in which Amazon launches itself, especially in emerging countries that are expanding e-commerce quite a bit, such as India, China, Mexico, we had a recent launch in Australia… These are countries that are growing, all of them have a series of particularities in terms of taxes, logistics, payment methods. And Brazil has its own idiosyncrasies.

LABS: What were the big challenges concerning logistics that Amazon faced here?

Daniel: Can you imagine what logistics is like in India? In the Arab Emirates, there is no postal code, for example. Each country has a series of particularities, and Brazil has its own. The sale of physical books [in Brazil] helped us to understand how to deliver to all of Brazil, how to complete the entire logistics process in reverse, and the characteristics of the Brazilian client. The result of that work with books, through the feedback of clients, left us even more interested in selling other categories.

So in 2017, we began an expansion through the marketplace, which is a perfect way of testing different categories and the receptivity of clients, and complementing this, we saw it as a part of retail. We took a little longer to launch retail. Think that we had to build a distribution center in Cajamar [the interior of São Paulo], we had to understand the question of taxes, delivery of packages to all of Brazil, train our teams to work with different categories, with hundreds of new partners… Today, we have more than 800 companies that have partnered with Amazon. It is a slightly larger effort than the marketplace. When it was ready, we launched it in January, and we are obtaining great results.

I find it interesting to note that the sale of retail grew a lot with the launch [of that new investment], but the marketplace has also grown. Sellers benefit from a better experience with retail. The client returns more often to the site, begins buying not only books, but also other categories, and buys from any of the many retail sellers on Amazon. There are more categories, more sellers, and more traffic in the website. This bolsters our growth. The whole launch, in general, has been positive so far. Our businesses have grown a lot.

Today, Amazon Brazil delivers within the dates stipulated, something similar to what happens in Italy, Spain, and France.

LABS: And logistics in Brazil. How did Amazon work to understand it?

Daniel: For Amazon, it is very important to deliver on the promises that we make to the client. We have a promise of delivery a bit different from other e-commerces that offer a delivery period of several days after confirming payment. Amazon promises delivery in a specific day. It is a different promise, and it is a challenge to follow through on our promise. We take this very seriously.

A peculiar thing about Brazil, which someone from outside would not know before entering Brazil, is the question of tariff barriers. Often, Brazil is like a mini continent. From one state to the next, it is as if I was going from one country to another. You go through customs, through the commission of the fiscal receipt, and other procedures. We had to assimilate this reality and understand that our promise of delivery to the client had to take into consideration the amount of times that we could make that delivery happen. It was something different, which we possibly didn’t expect when we entered Brazil. It was a surprise that forced us to adapt.

Nowadays, we are able to meet close to 100% of delivery promises that we make to clients. A very large part of the time, we deliver on the date promised on a scale not unlike that of Europe. Today, Amazon Brazil delivers within the dates stipulated, something similar to what happens in Italy, Spain, and France.

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LABS: And how did you manage to navigate these difficulties?

Daniel: It is not necessary to navigate around these difficulties. The secret is to understand what is the necessary data so that part of the logistics is already set [in the best way possible]. So we provide all the necessary information to the transport companies. We also learned that sometimes, not everything goes according to plans, and we consider this in our delivery to clients. It is not a question of navigating, but rather of learning the specificities and working with the delivery companies.

When we began to identify that a specific state in Brazil registers a longer period of delivery, we understand that particularity, we understand the fiscal barrier that could be present and we quickly send the needed documentation with the product.

In Brazil it is practically compulsory to offer payment installments and the boleto. Before expanding to retail, we already had that working well in our site.

LABS: How did Amazon prepare itself to serve the Brazilian consumer? Does the company offer local payment methods?

Daniel: In Brazil, it is practically compulsory to offer payment installments and the boleto. Before expanding to retail, we already had that working well in our site. Besides that issue, the question of the habits of Brazilian clients is that they adore a sale, they adore new products. Our system understands this behavior and knows when to offer that which the consumer wants in terms of a varied selection of products with a good price and convenience.

The company created several commemorative dates in Brazil, such as Amazon Day and Book Friday, which is as if it was a Black Friday for those that enjoy reading. We created these dates because we understood that Brazilians like to know that they are getting a good deal and, when they do, they make a big purchase.

We see that, when we offer a free delivery, sales grow in general, yet it also increases the geographical distribution. There are more purchases in the regions of the North and Northeast, which generally have more expensive shipping rates for purchases below BRL 149. This is quite interesting, for a continental country such as Brazil—the difference between clients, depending on the region.

LABS: What are the growth plans of Amazon in Brazil?

Daniel: Since we launched marketplace and now with retail, we have continuous plans for Brazil. We are enthusiastic about our plans, launching more categories ever since we expanded into retail. We continue improving the speed of delivery. We almost doubled our catalog after having expanded into retail in January.

We recently announced that we are training Alexa [Amazon’s virtual assistant] to speak in Portuguese. By the end of the year, we will have updates on this.

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