When the Brazilian Postal Service announced, in August 2018, that it would start charging the postal dispatch for all international goods arriving in Brazil, there were multiple negative expectations. However, 6 months after the fee was implemented, the result in practice can be amazing and veers away from the most pessimistic scenarios.
Before the announcement, the BRL15 fee was required only from buyers of goods taxed by the Brazilian IRS upon arriving in Brazil. The expansion of the fee charging for all foreign products was received with distrust by consumers and companies.
Some e-commerce businesses saw the postal dispatch as an obstacle for their companies to thrive in Brazil, the most expressive market in Latin America. For Brazilians, the anticipated fear was that the final value of international purchases would no longer be as advantageous as it was before the fee. At that moment, there seemed to be no room for a conclusion that was not drastic, but the future also had twists that none of the sides could predict.
About six months after the implementation of the postal dispatch, it is possible to make a more accurate diagnosis. In what aspects did charging the fee change the purchasing profile of Brazilians? What should be the strategy of e-commerce businesses in this scenario?
LABS answers these questions.
Postal dispatch: What is it and what changes did it cause?
Contrary to what many people believe, the postal dispatch is not a tax and is not related to the product freight. In fact, it is the collection of a BRL15 fee for, according to the Brazilian Postal Service, covering the support for customs handling in general.
The fee collection is intended for maintaining activities such as X-ray inspection, solving problems related to products that are prohibited, hazardous or that require special care, and other services.
Since August 2018, the fee is charged on international orders arriving in the Brazilian territory. The Brazilian Postal Service justifies charging the fee with the need to maintain the quality of services after the significant increase in the number of foreign goods in Brazil. According to the company, the number of orders varies between 100,000 and 300,000 per day.
The postal dispatch has become part of the reality of those who buy and sell online. When the good arrives in Brazil, the buyer is notified about the need to pay the fee so that the order shipment is concluded, and has a 30-day period to make this payment. Otherwise, the product is sent back to the country of origin.
There are several types and categories of shipping, which vary according to the country of origin and the consumer’s preference. For products coming from China, one can choose between ePacket, China Post, Singapore Post, Hong Kong Post, and others. Orders from the United States, on the other hand, can be delivered via USPS Priority Mail and EMS Express, for example.
Although there is no systematic survey on the fee collection in each type of shipment, reports from consumers and brands indicate that the experience in relation to postal dispatch may vary considerably according to the package category.
In any case, the period of six months eloped since the beginning of the postal dispatch charge offer more security to answer some questions. How did the Brazilian consumer react to this change? Did he simply stop buying online?
If you suspect that the answer to the last question is “no,” you are right. The 27-year-old public servant Juliana Cleto is a good example of the profile of Brazilian consumers after the collection of the postal dispatch. Before the fee, she gave priority to smaller, low-value products.
“I used to buy a lot. I shopped at least twice a month, the most different things, from home decoration items to bicycle accessories, for example,” she says.
Juliana highlights that, even after the implementation of the fee, she and her husband continue to buy international products.
After the postal dispatch, I only bought objects with a higher value. I thought it was no longer worth buying items below BRL100 or BRL50
Despite the fact that implementation of the postal dispatch has decreased the shopping frequency, larger international orders with higher average ticket continue to be advantageous for her. “My husband bought a monitor for drawing from China already knowing about the BRL15 charge,” she says.
It is no exaggeration to say that Juliana represents the change in the profile of Brazilians after the postal dispatch charge. The number of transactions actually fell, but this does not mean that the consumer stopped buying. He started to better plan his purchases so that they have a viable price when compared to the fee value.
If previously Brazilians did not think twice before making a BRL50 purchase, for example, now they organize to make transactions of higher value and, thus, minimize the impact of the postal dispatch fee charge.
This was the conclusion of a survey conducted by EBANX with three major global retail e-commerce businesses that operate in Brazil.
The analysis, which took into account the periods before and after the collection of the postal dispatch, identified that the number of transactions decreased, but the value of the average ticket increased considerably.
The result of this new scenario in practice can be analyzed in the chart below.
In other words, buying from abroad is still advantageous for Brazilians.
A global standard
The collection of the postal dispatch may even be something new in Brazil, but other countries have been using similar fees for a long time.
In Argentina, the third largest market in Latin America, there is the Puerta a Puerta, a fee also charged on foreign products in the country and that, last April, went through a reduction in its bureaucracy, becoming an example of how updating the regulation of the flow of purchase can positively influence the consumer’s decision.
Before this new version of Puerta a Puerta, the system from Correo Argentino to charge fees and taxes was slow and laborious, which yielded many criticisms from the users. The late modernization, however, did not stop the growth of e-commerce businesses that bet in the country.
Even with the economic instability, it has gone through, Argentina reported an increase of 50% in e-commerce in the past seven years. In 2018 alone, e-commerce grew 37.5%, according to the WebShoppers Report.
The similarities with Brazil indicate that charging fees similar to the postal dispatch does not represent an obstacle to the virtuous growth of e-commerce.
Beyond the Latin American scenario, large European economies also charge fees that do not negatively influence the e-commerce. In some cases, such as Spain, the fee is calculated based on the total value of the purchase. Even so, the e-commerce invoicing in the country in the second quarter of 2018 grew 27.2% in relation to the same period of the previous year, a record rate. The data comes from the National Commission of Markets and Competition (Comisión Nacional de los Mercados y la Competencia (CNMC).
A new process, but not an obstacle
Despite having surprised Brazilian consumers, accustomed to not having this type of fee, the postal dispatch has certainly not kept them away from online purchases. On the contrary: there is more detailed planning so that the total value of the purchase is advantageous considering the fee.
The negative forecasts, therefore, were not confirmed and Brazil is still the largest market in Latin America. For e-commerce businesses wishing to explore the country’s potential – or those already investing in Brazil –, the ideal is to elaborate strategies to understand this new behavior from Brazilian consumers.
It is a heated, growing market, with consolidated consumers who are not shaken by the slightest sign of changes in the cross-border process. There are plenty of reasons to invest in Brazil, and the time is now.